3,000,000 SHARES
DIGITAL RIVER, INC.
COMMON STOCK
($0.01 PAR VALUE)
UNDERWRITING AGREEMENT
__________, 1998
BT Alex. ▇▇▇▇▇ Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
As Representatives of the Several Underwriters
c/o BT Alex. ▇▇▇▇▇ Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Digital River, Inc., a Delaware corporation (the "Company"), and certain
stockholders of the Company as listed herein (the "Selling Stockholders")
propose to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 3,000,000 shares of the Company's Common
Stock, $0.01 par value (the "Firm Shares"), of which 1,750,000 shares will be
sold by the Company and 1,250,000 shares will be sold by the Selling
Stockholders. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be references to the Underwriters. The
respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto, and the
respective amounts to be sold by the Selling Stockholders are set forth opposite
their names in Schedule II hereto. The Company and the Selling Stockholders are
sometimes referred to herein collectively as the "Sellers". The Company and
[certain of the Selling Stockholders] also propose[s] to sell at the
Underwriters' option an aggregate of up to 450,000 additional shares of the
Company's Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and
the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to each of the Underwriters
as follows:
(i) A registration statement on Form S-1 (File No. 333-67913)
with respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462 (b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means (a) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Shares, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "Preliminary Prospectus." Any reference
herein to the Registration Statement, any Preliminary Prospectus or to the
Prospectus shall be deemed to refer to and include any supplements or amendments
to any Prospectus, filed with the Commission after the date of filing of the
Prospectus under Rules 424(b) or 430A, and prior to the termination of the
offering of the Shares by the Underwriters.
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement. Each of the subsidiaries of the
Company as listed in EXHIBIT A hereto (collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement. The Subsidiaries are the only
subsidiaries, direct or indirect, of the Company. The Company and each of
the Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of their business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect
on the business, properties, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole. All of the outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned by the
Company or another Subsidiary free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interest in the
Subsidiaries are outstanding. All prior securities of the Company (and its
predecessor in Minnesota) have been duly authorized and validly issued, are
fully paid and nonassessable, and were issued in compliance with the
applicable federal and state securities laws.
(iii) The outstanding shares of Common Stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; the Shares, including all shares to be sold by the Selling
Stockholders, have been duly authorized and when issued and paid for as
contemplated herein will be validly issued, fully paid and non-assessable;
and no preemptive rights of stockholders exist with respect to any of the
Shares or the issue and sale thereof. Neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common
Stock.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct as of the date therein
indicated. All of the Shares conform to the description thereof contained in
the Registration Statement. The form of certificates for the Shares conforms
to the corporate law of the jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein by, and will
conform in all material respects, to the requirements of the Act and the Rules
and Regulations. At the time it became effective, the Registration Statement
and any amendment thereto did not contain and will not contain as of the Closing
Date and Option Closing Date (both as defined in Section 2 hereof), any untrue
statement of a material fact and did not omit, and as of the Closing Date and
Option
Closing Date will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and
will not as of the Closing Date or the Option Closing Date contain, any
untrue statement of material fact; and do not omit, and will not, as of the
Closing Date or the Option Closing Date, omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as
to information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf
of any Underwriter through the Representatives, specifically for use in the
preparation thereof.
(vi) The consolidated financial statements of the Company
and the Subsidiaries, together with related notes and schedules as set forth
in the Registration Statement, present fairly on a consolidated basis the
financial position and the results of operations and cash flows of the
Company and the consolidated Subsidiaries, at the indicated dates and for the
indicated periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as disclosed
herein, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary financial and statistical data
included in the Registration Statement presents fairly the information shown
therein and such data has been compiled on a basis consistent with the
financial statements presented therein and the books and records of the
Company. The pro forma financial information included in the Registration
Statement and the Prospectus present fairly the information shown therein,
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements, have been properly compiled
on the pro forma bases described therein, and, in the opinion of the Company,
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(vii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(viii) There is no action, suit, claim or proceeding pending or,
to the knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise, which, if
determined adversely to the Company or any of its Subsidiaries might result in
any material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and of the Subsidiaries taken as a whole or to prevent the
consummation of the transactions contemplated hereby, except as set forth in the
Registration Statement.
(ix) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial statements
(or as described in the Registration Statement) hereinabove described, subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the Registration
Statement) or which are not material in amount. The Company and the
Subsidiaries occupy their leased properties under valid and binding leases
conforming in all material respects to the description thereof set forth in the
Registration Statement.
(x) The Company and the Subsidiaries have filed all Federal,
State, local and foreign income tax returns which have been required to be filed
and have paid all taxes indicated by said returns and all assessments received
by them or any of them to the extent that such taxes have become due. All tax
liabilities have been adequately provided for in the financial statements of the
Company, and the Company does not know of any actual or proposed additional tax
assessments.
(xi) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise), or prospects of the Company and its Subsidiaries taken as a whole,
whether or not occurring in the ordinary course of business, and there has not
been any material transaction entered into or any material transaction that is
probable of being entered into by the Company or the Subsidiaries, other than
transactions in the ordinary course of business and changes and transactions
described in the Registration Statement, as it may be amended or supplemented.
The Company and the Subsidiaries have no material contingent obligations which
are not disclosed in the Company's financial statements which are included in
the Registration Statement.
(xii) Neither the Company nor any of the Subsidiaries is or
with the giving of notice or lapse of time or both, will be, (i) in violation of
or in default under its Certificate of Incorporation or Bylaws or (ii) in
material breach of or default under any agreement, lease, contract, indenture or
other instrument or obligation to which it is a party or by which it, or any of
its properties, is bound and which default is of material significance in
respect of the condition, financial or otherwise of the Company and its
Subsidiaries taken as a whole or the business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole. The execution and delivery of
this Agreement and the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party, or of the Certificate of Incorporation or
Bylaws of the Company or any order, rule or regulation applicable to the Company
or any Subsidiary of any court or of any regulatory body or administrative
agency or other governmental body.
(xiii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(xiv) The Company and each of the Subsidiaries holds all
material licenses, certificates and permits from governmental authorities which
are necessary to the conduct of their businesses. Except as specifically
disclosed in the Prospectus, the Company and each of the Subsidiaries has
sufficient trademarks, trade names, patents, patent rights, mask works,
copyrights, licenses, approvals and governmental authorizations to conduct its
business as now conducted and as proposed to be conducted; and except as
specifically disclosed in the Prospectus, neither the Company nor any of the
Subsidiaries has infringed any trademark, trade name, patent, patent right, mask
work, copyright, license, trade secret or other similar right of others, and,
except as disclosed in the Prospectus, no claim has been made against the
Company or any of the Subsidiaries regarding trademark, trade name, patent, mask
work, copyright, license, trade secret or other infringement which could have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company and its Subsidiaries taken as
a whole. The Company knows of no material infringement by others of any
trademark, trade name, patent, patent right, mask work, copyright, license,
trade secret or other similar right owned by or licensed to the Company.
(xv) Neither the Company, nor to the Company's best knowledge,
any of its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Shares on the Nasdaq Stock Market in
accordance with Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(xvi) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xviii) The Company and each of its Subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of their respective
properties.
(xix) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(xx) To the Company's knowledge, there are not affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater security holders, except as set forth in the
Registration Statement.
(xxi) Neither the Agreement and Plan of Exchange dated as of
December 5, 1997 between the Company and Digital River, Inc., a Minnesota
corporation nor the exchange of shares consummated in connection therewith
contravened, conflicted with or resulted in a material violation or breach of,
or resulted in a default under, any provisions of any agreement or contract of
the Company or its predecessor Minnesota corporation, except for (i) any
contravention, conflict, violation, breach or default which could not reasonably
be expected to result in a material adverse effect on the Company and its
Subsidiaries taken as a whole; (ii) gave any person the right to (a) declare a
default or exercise any remedy under any such agreement or contract, except
where any such default or exercise of a remedy could not reasonably be expected
to result in a material adverse effect on the Company and its Subsidiaries taken
as a whole, (b) accelerate the maturity or performance of any such agreement or
contract, expect where such acceleration could not reasonably be expected to
result in a material adverse effect on the Company and its Subsidiaries taken as
a whole, or (c) cancel, terminate or modify any such contract, except where any
such cancellation, termination or modification could not reasonably be expected
to result in a material adverse effect on the Company and its Subsidiaries taken
as a whole; or (iii) result in the imposition or creation of any encumbrance
upon or with respect to any of the shares of capital stock or the assets of the
Company and its Subsidiaries, except where such encumbrance would not result in
a
material adverse effect on the Company and its Subsidiaries taken as a whole.
(xxii) The Company has duly filed on a timely basis with the
Commission all reports, registration statements and other documents required by
the Act, the Exchange Act, or the rules and regulations of the Commission
promulgated pursuant to the Act or the Exchange Act. All of such reports,
registration statements and other documents, when they were filed with the
Commission, conformed in all material respects to the requirements of the Act,
the Exchange Act or the rules and regulations of the Commission promulgated
pursuant to the Act or the Exchange Act, as appropriate. None of such reports,
registration statements or other documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
(xxiii) The Company's Common Stock is duly and validly
registered pursuant to the requirements of the Exchange Act and the rules and
regulations promulgated thereunder. The Company has received written notice
from the Nasdaq National Market stating that the Shares have been approved for
additional listing thereon.
(b) Each of the Selling Stockholders severally represents and
warrants as follows:
(i) Such Selling Stockholder now has and at the Closing Date
and the Option Closing Date, as the case may be (as such dates are hereinafter
defined), will have good and marketable title to the Firm Shares and the Option
Shares, if any, to be sold by such Selling Stockholder, free and clear of any
liens, encumbrances, equities and claims, and full right, power and authority to
effect the sale and delivery of such Firm Shares and Option Shares; and upon the
delivery of, against payment for, such Firm Shares and Option Shares pursuant to
this Agreement, the Underwriters will acquire good and marketable title thereto,
free and clear of any liens, encumbrances, equities and claims.
(ii) Such Selling Stockholder has full right, legal capacity,
power and authority to execute and deliver this Agreement, the Power of
Attorney, and the Custodian Agreement referred to below and to perform its
obligations under such Agreements. Such Selling Stockholder has executed and
delivered a Power of Attorney and caused to be executed and delivered on his or
its behalf the Custodian Agreement referred to below and in connection herewith
such Selling Stockholder further represents, warrants and agrees that such
Selling Stockholder has deposited in custody, under the Custodian Agreement,
with the agent named therein as Custodian, certificates in negotiable form for
the Firm Shares and any Option Shares to be sold hereunder by such Selling
Stockholder, for the purpose of further delivery pursuant to this Agreement. The
execution and delivery of this Agreement on behalf of each Selling Stockholder
and the consummation by such Selling Stockholder of the transactions herein
contemplated and the fulfillment by such Selling Stockholder of the terms hereof
will not require any consent, approval, authorization, or other order of any
court, regulatory body, administrative agency
or other governmental body (except as may be required under the Act, state
securities laws or Blue Sky laws) and will not result in a breach of any of
the terms and provisions of, or constitute a default under, any
organizational documents of such Selling Stockholder, if not an individual,
or any indenture, mortgage, deed of trust or other agreement or instrument to
which such Selling Stockholder is a party, or of any order, rule or
regulation applicable to such Selling Stockholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction. This Agreement and the Custodian Agreement have been duly
executed and delivered by or on behalf of such Selling Stockholder and a copy
of such duly executed Custodian Agreement has been delivered to you.
(iii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company and, other than as
permitted by the Act, the Selling Stockholder will not distribute any prospectus
or other offering material in connection with the offering of the Shares.
(iv) The information pertaining to such Selling Stockholder
under the caption "Selling Stockholders" in the Prospectus is complete and
accurate in all material respects.
(v) Without having undertaken to determine independently, for
the purposes of the offering of the Shares, the accuracy or completeness of the
representations and warranties of the Company contained herein, such Selling
Stockholder has no knowledge of any material fact, condition or information not
disclosed in the Registration Statement which has adversely affected or may
adversely affect the business of the Company and its Subsidiaries, taken as a
whole; and the sale of the Firm Shares and any Option Shares by such Selling
Stockholder pursuant hereto is not prompted by any material information
concerning the Company or any of the Subsidiaries which is not set forth in the
Registration Statement or the documents incorporated by reference therein.
(vi) Each Selling Stockholder who is (i) an executive officer
or director of the Company or (ii) an investment entity of which any person who
is (or within the past twelve months was) a director, executive officer, general
partner, principal or member of such entity is (or within the past twelve months
was) an executive officer or director of the Company (any of the foregoing being
referred to hereafter as a "Principal Stockholder") hereby severally, and not
jointly, represents, warrants and agrees that (A) such Principal Stockholder
does not have any reason to believe that the representations and warranties of
the Company contained in this Section 1 are not true and correct and (B) such
Principal Stockholder has reviewed the Registration Statement and Prospectus and
during the course of such review, no facts have come to such Principal
Stockholder's attention which leads such Principal Stockholder to believe that
the Registration Statement, at the time it became effective, contained any
untrue statement of a material fact or omitted to state any 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, or that the Prospectus, as of the date of the Prospectus,
contains any untrue statement of a material fact or omits to state a material
fact required be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Sellers
agree to sell to the Underwriters and each Underwriter agrees, severally and not
jointly, to purchase, at a price of $______ per share, the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 9 hereof.
(b) Certificates in negotiable form for the total number of Shares to
be sold hereunder by the Selling Stockholders have been placed in custody with
Norwest Bank Minnesota, N.A. as custodian (the "Custodian") pursuant to the
Custodian Agreement executed by each Selling Stockholder for delivery of all
Firm Shares and any Option Shares to be sold hereunder by the Selling
Stockholders. Each of the Selling Stockholders specifically agrees that the
Firm Shares and any Option Shares represented by the certificates held in
custody for the Selling Stockholders under the Custodian Agreement are subject
to the interests of the Underwriters hereunder, that the arrangements made by
the Selling Stockholders for such custody are to that extent irrevocable, and
that the obligations of the Selling Stockholders hereunder shall not be
terminable by any act or deed of the Selling Stockholders (or by any other
person, firm, or corporation including the Company, the Custodian or the
Underwriters) or by operation of law (including the death of an individual
Selling Stockholder or the dissolution of a corporate Selling Stockholder) or by
the occurrence of any other event or events, except as set forth in the
Custodian Agreement. If any such event should occur prior to the delivery of
the Underwriters of the Firm Shares or the Option Shares hereunder, certificates
for the Firm Shares or the Option Shares, as the case may be, shall be delivered
by the Custodian in accordance with the terms and conditions of this Agreement
as if such event has not occurred. The Custodian is authorized to receive and
acknowledge receipt of the proceeds of sale of the Shares held by it against
delivery of such Shares.
(c) Payment for the Firm Shares to be sold hereunder is to be made in
same day funds by wire transfer to an account designated by the Company for the
shares to be sold by it and to the Custodian for the shares to be sold by the
Selling Stockholders, in each case against delivery of certificates therefor to
the Representatives for the several accounts of the Underwriters. Such payment
and delivery are to be made at the offices of BT Alex. ▇▇▇▇▇ Incorporated, ▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at 10:00 a.m., Baltimore time, on the third
business day after the date of this Agreement in accordance with rule 15c6(1)
under the Exchange Act or at such other time and date not later than five
business days thereafter as you and Company shall agree upon, such time and date
being herein referred to as the "Closing Date." (As used herein, "business day"
means a day on
which the New York Stock Exchange is open for trading and on which banks in
New York are open for business and are not permitted by law or executive
order to be closed.) The certificates for the Firm Shares will be delivered
in such denominations and in such registrations as the Representatives
request in writing not later than the second full business day prior to the
Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date.
(d) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions hereto set forth, the
Company [and certain of the Selling Stockholders listed on Schedule II hereto]
hereby grant[s] an option to the several Underwriters to purchase the Option
Shares at the price per share as set forth in the first paragraph of this
Section 2. [The maximum number of Option Shares to be sold by the Company and
such Selling Stockholders is set forth opposite their respective names on
Schedule II hereto.] The option granted hereby may be exercised in whole or in
part by giving written notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of this Agreement, by
you, as Representatives of the several Underwriters, to the Company, the
Attorney-in-fact, and the Custodian setting forth the number of Option Shares as
to which the Option Shares are to be registered and the time and date at which
such certificates are to be delivered. If the option granted hereby is
exercised in part, the respective number of Option Shares to be sold by the
Company and each of the Selling Stockholders listed Schedule II hereto shall be
determined on a pro rata basis in accordance with the percentages set forth
opposite their names on Schedule II hereto, adjusted by you in such a manner as
to avoid fractional shares. The time and date at which certificates for Option
Shares are to be delivered shall be determined by the Representatives but shall
not be earlier than three nor later than 10 full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
notice of exercise of the option is three or more days before the Closing Date,
the notice of exercise shall set the Closing Date as the Option Closing Date.
The number of Option Shares to be purchased by each Underwriter shall be in the
same proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to the total
number of Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted hereunder may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters. You, as Representatives of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of such
cancellation to the Company and the Attorney-in-fact. To the extent, if any,
that the option is exercised, payment for the Option Shares will be made on the
Option Closing Date in same day funds by wire transfer to the order of the
Company for the Option Shares to be sold by it and to the order of the Custodian
for the Option Shares to be sold by the Selling Stockholders against delivery of
certificates therefor at the offices of BT Alex. ▇▇▇▇▇ Incorporated, ▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus.. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations, (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company will, from time to time,
prepare and file such statements, reports, and other documents, as are or may
be required to continue such qualifications in effect for so long a period as
the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or
before the Closing Date, four signed copies of the Registration Statement and
all amendments thereto including all exhibits filed therewith, and will deliver
to the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (the "Exchange Act"), and
the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and the Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
the Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(vii) The Company will, for a period of five years from the
Closing
Date, deliver to the Representatives copies of annual reports and copies of
all other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or
the Securities Exchange Act of 1934, as amended. The Company will deliver to
the Representatives similar reports with respect to significant subsidiaries,
as that term is defined in the Rules and Regulations, which are not
consolidated in the Company's financial statements.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of 90 days after the
date of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of BT Alex. ▇▇▇▇▇ Incorporated
except for sales of shares pursuant to the exercise of outstanding stock options
under the Company's employee benefit plans, as such employee benefit plans are
described in Prospectus.
(ix) The Company has caused each officer and director, and
certain security holders of the Company to furnish to you, on or prior to the
date of this agreement, a letter or letters, in form and substance satisfactory
to the Underwriters, pursuant to which each such person shall agree not to,
directly or indirectly, offer, sell, pledge, contract to sell, grant any option
to purchase, grant a security interest in, hypothecate or otherwise sell or
dispose of any shares of Common Stock of the Company (including, without
limitation, shares of Common Stock that may be deemed to be beneficially owned
by such person in accordance with the rules and regulations of the Commission
and shares of Common Stock that may be issued upon the exercise of a stock
option or warrant) or any securities convertible into, derivative of or
exchangeable or exercisable for Common Stock of the Company, owned directly by
such person or as to which such person has the power of disposition, in any such
case whether owned as of the date of such letter or acquired thereafter (other
than Common Stock purchased in the open market and not otherwise in breach of
such letter) during the period commencing on the date of such letter and ending
on the close of business on the ninetieth (90th) day after the date of the
Prospectus, except with the prior written consent of BT Alex. ▇▇▇▇▇ Incorporated
("Lockup Agreements").
(x) The Company shall apply the net proceeds of its sale of
the Shares as set forth in the Prospectus and shall file such reports with
the Commission with respect to the sale of the Shares and the application of
the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(xi) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act").
(xii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xiii) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
(b) Each of the Selling Stockholders covenants and agrees with the
several Underwriters that:
(i) Such Selling Stockholder will not, directly or
indirectly, offer, sell, pledge, contract to sell, grant any option to purchase,
grant a security interest in, hypothecate or otherwise sell or dispose of any
shares of Common Stock of the Company (including, without limitation, shares of
Common Stock that may be deemed to be beneficially owned by such Selling
Stockholder in accordance with the rules and regulations of the Commission and
shares of Common Stock that may be issued upon the exercise of a stock option or
warrant) or any securities convertible into, derivative of or exchangeable or
exercisable for Common Stock of the Company, owned directly by such Selling
Stockholder or as to which such Selling Stockholder has the power of
disposition, in any such case whether owned as of the date hereof or acquired
hereafter (other than Common Stock purchased in the open market and not
otherwise in breach of such letter) during the period commencing on the date of
this Agreement and ending on the close of business on the ninetieth (90th) day
after the date of the Prospectus, except with the prior written consent of BT
Alex. ▇▇▇▇▇ Incorporated.
(ii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-8 or Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(iii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting
fees of the Company; the fees and disbursements of counsel for the Company and
the Selling Stockholders; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the
Underwriters' Selling Memorandum, the Underwriters' Invitation Letter, the
Listing Application, the Blue Sky Survey and any supplements or amendments
thereto; the filing fees of the Commission; the filing fees incident to
securing any required review by the National Association of Securities
Dealers, Inc. (the "NASD") of the terms of the sale of the Shares; the
Listing Fee of the Nasdaq National Market; and the expenses, including the
fees and disbursements of counsel for the Underwriters, incurred in
connection with the qualification of the Shares under state securities or
Blue Sky laws; PROVIDED, that (i) to the extent, if at all, that any of the
Selling Stockholders engage special legal counsel to represent them in
connection with this offering, the fees and expenses of such counsel shall be
borne by such Selling Stockholder, and (ii) any transfer taxes imposed on the
sale of the Shares to the several Underwriters will be paid by the Sellers
pro rata. The Company agrees to pay all costs and expenses of the
Underwriters, including the fees and disbursements of counsel for the
Underwriters, incident to the offer and sale of directed shares of the Common
Stock by the Underwriters to employees and persons having business
relationships with the Company and its Subsidiaries. The Sellers shall not,
however, be required to pay for any of the Underwriters expenses (other than
those related to qualification under State securities or Blue Sky laws)
except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied, or because this Agreement
is terminated by the Representatives pursuant to Section 11 hereof, or by
reason of any failure, refusal or inability on the part of the Company or the
Selling Stockholders to perform any undertaking or satisfy any condition of
this Agreement or to comply with any of the terms hereof on their part to be
performed, unless such failure to satisfy said condition or to comply with
said terms be due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares
or in contemplation of performing their obligations hereunder; but the
Company and the Selling Stockholders shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Selling Stockholders contained herein, and to the performance by the
Company and the Selling Stockholders of their covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall
have been disclosed to the Representatives and complied with to their
reasonable satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued
and no proceedings for that purpose shall have been taken or, to the
knowledge of the Company or the Selling Stockholders, shall be contemplated
by the Commission and no injunction, restraining order, or order of any
nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the legal opinions from ▇▇▇▇▇▇
Godward LLP and from ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, each as counsel for the Company, dated
the Closing Date or the Option Closing Date, as the case may be, addressed to
the Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) which collectively shall opine to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; each of its
Subsidiaries has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; the Company and each of its
Subsidiaries are duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such qualification, or in which the
failure to qualify would have a materially adverse effect upon the business of
the Company and its Subsidiaries taken as a whole; the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable and are owned by the Company or a
Subsidiary; and, to the best of such counsel's knowledge, the outstanding shares
of capital stock of each of its Subsidiaries are owned free and clear of all
liens, encumbrances and equities and claims, and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligations into any shares of capital stock or of ownership
interests in the Subsidiaries are outstanding.
(ii) The authorized and outstanding capital stock is as set
forth under the caption "Capitalization" in the Prospectus as of the date stated
therein; the authorized shares of the Company's Common Stock have been duly
authorized; the outstanding shares of the Company's Common Stock, including the
Shares to be sold by the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; all of the Shares conform
to the description thereof contained in the Prospectus under the caption
"Description of Capital Stock"; the certificates for the Common Stock, in the
form filed with the Commission, are in due and proper form; the shares of
Common Stock, including the Option Shares, if any, to be sold by the Company
pursuant to this Agreement (i) have been duly authorized and (ii) will be
validly issued, fully paid and non-assessable when issued and paid for as
contemplated by this Agreement;
and no preemptive rights of stockholders or other rights to subscribe for or
purchase securities under the Delaware General Corporation Law, the Minnesota
Business Corporation Act, the Company's Certificate of Incorporation or
Bylaws or any agreement or contract known to such counsel exist with respect
to any of the Shares or the issue or sale thereof.
(iii) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel (i) there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and (ii) there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and (iii) no holder of any securities
of the Company or any other person has the right which has not been satisfied or
effectively waived, to cause the Company to sell or otherwise issue to them any
of the Shares or the right to have any Common Stock or other securities of the
Company included in the Registration Statement or the right, as a result of the
filing of the Registration Statement, to require registration under the Act of
any shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened under the
Act.
(v) At the time it became effective and at the Closing Date
or Option Closing Date (as the case may be) the Registration Statement and the
Prospectus comply or will have complied (as the case may be) as to form in all
material respects with the requirements of the Act and the applicable rules and
regulations thereunder (except that such counsel need express no opinion as to
the financial statements, including supporting schedules, or other financial
information and statistical information derived therefrom).
(vi) The statements under the captions "Management--Employment
Agreements," "Certain Transactions" and "Description of Capital Stock" in the
Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law have been reviewed and are correct in all
material respects and present the information called for with respect thereto
under the Act and the Rules and Regulations.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and the contracts or documents described therein are summarized to
the extent required by the Act and the Rules and Regulations.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
required under the Act and the Rules and Regulations to be described in the
Prospectus except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Certificate of Incorporation or Bylaws of the
Company, or any agreement or instrument known to such counsel to which the
Company or is a party or by which the Company or any of the Subsidiaries may be
bound, except where such conflict, breach or default would not have a material
adverse effect on the earnings, business, management, properties, assets,
rights, operations or financial condition of the Company and its Subsidiaries
taken as a whole.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by State securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made under the Act and the Exchange Act.
(xii) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiii) The Company's Common Stock is duly and validly registered
pursuant to the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. The Shares have been approved for additional listing on
the Nasdaq National Market.
(xiv) This Agreement has been duly authorized, executed and
delivered on behalf of the Selling Stockholders.
(xv) Each Selling Stockholder has full legal right, power and
attorney, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the portion of the Shares to be sold by
such Selling Stockholder.
(xvi) The Custodian Agreement, the Power of Attorney and this
Agreement have been duly executed and delivered by or duly on behalf of each
Selling
Stockholder and each such instrument constitutes the valid and binding
agreement of such Selling Stockholder.
(xvii) Assuming the Underwriters purchase the Shares to be sold
by each Selling Stockholder for value, in good faith and without notice of any
adverse claim within the meaning of Article VIII of the Uniform Commercial Code,
upon delivery and payment for the Shares to be sold by each Selling Stockholder
pursuant to this Agreement, the Underwriters will receive good and valid title
to such Shares, free and clear of all security interests, liens, equities,
claims and other encumbrances.
In rendering such opinion, ▇▇▇▇▇▇ Godward LLP and
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may rely as to matters governed by the laws of states other
than California, Delaware, Minnesota or Federal laws on local counsel in such
jurisdictions, provided that in each case, ▇▇▇▇▇▇ Godward LLP or ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, at the time it became effective under the
Act (but after giving effect to any modifications incorporated therein pursuant
to Rule 430A under the Act) and as of the Closing Date or the Option Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Prospectus, or any
supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, including supporting
schedules, or other financial information and statistical information derived
therefrom). With respect to such statement, ▇▇▇▇▇▇ Godward LLP may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(c) The Underwriters shall have received on the Closing Date or the
Option Closing Date, as the case may be, legal opinions from Merchant & ▇▇▇▇▇
and Larkin, Hoffman, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd. dated the Closing Date or the Option
Closing Date, as the case may be, with respect to certain intellectual property
matters, which collectively shall opine to the effect that:
(i) To the best of such counsel's knowledge, the
Company owns all patents, trademarks, trademark registrations,
service marks, service ▇▇▇▇ registrations and rights described in
the Prospectus as being owned by it or necessary for the conduct of
its business, and such counsel is not aware of any claim to the
contrary or any challenge by any other person or organization to
the rights of the Company with respect to the foregoing other than
those expressly identified in the Registration Statement.
(ii) To the best of such counsel's knowledge, there are no
legal actions, claims or proceedings pending or threatened against
the Company alleging that the Company is infringing or otherwise
violating any patents or trade secrets owned by others other than
those identified in the Registration Statement.
(iii) To the best of such counsel's knowledge, to the extent
they constitute matters of law or legal conclusions, the
descriptions of patents and patent applications under the captions
"Risk Factors--Intellectual Property" and "Business--Intellectual
Property" in the Registration Statement are accurate and fairly and
completely present the patent situation of the Company.
(iv) To the best of such counsel's knowledge, the
descriptions of patents and patent applications under the captions
"Risk Factors--Intellectual Property" and "Business--Intellectual
Property" in the Registration Statement do not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, including
without limitation, any undisclosed material issue with respect to
the subsequent validity or enforceability of such patent or patent
issuing from any such pending patent application.
(d) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, substantially to
the effect specified in subparagraphs (iv) and (v) of Paragraph (b) of this
Section 6, and that the Company is a duly organized and validly existing
corporation under the laws of the State of Delaware. In rendering such opinion
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. may rely as to all matters governed other
than by the laws of the State of California, the State of Delaware or Federal
laws on the opinion of counsel referred to in Paragraph (b) of this Section 6.
In addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact, necessary in
order to make the statements, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as to
financial statements, related notes, schedules and other financial information
therein). With respect to such statement, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
P.C. may state that their belief is based upon the procedures set forth therein,
but is without independent check and verification.
(e) The Representatives shall have received at or prior to the
Closing Date from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., a memorandum or
summary, in form and substance satisfactory to the Representatives, with respect
to the qualification for offering and sale by the Underwriters of the Shares
under the State securities or Blue Sky laws of such jurisdictions as the
Representatives may reasonably have designated to the Company.
(f) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, as the case may be, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to you, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP confirming that they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(g) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for such purpose have been taken or are, to
his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration Statement and
the Prospectus and, in his opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration Statement were true and
correct, and such Registration Statement and Prospectus did not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should
have been set forth in a supplement to or an amendment of the Prospectus
which has not been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business.
(h) The Representatives shall have received a certificate, dated as
of the Closing Date or Option Closing Date, as the case may be, signed by or on
behalf of each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder in this Agreement are
true and correct, as if made at and as of such Closing Date, and such Selling
Stockholder has complied with all the agreements and satisfied all the
conditions on his or its part to be performed or satisfied prior to such Closing
Date.
(i) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(j) The Firm Shares and Option Shares, if any, have been approved for
additional listing upon notice of issuance on the Nasdaq National Market.
(k) The Lockup Agreements described in Section 4(a)(ix) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) (i) The Company and each of the Selling Stockholders jointly
and severally agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (A) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (B) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Shares, whether or not such Underwriter or
controlling person is a party to any action or proceeding; provided, however,
that the Company and the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof and that the
indemnity agreement contained in this Section 8 (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the shares which is the subject thereof (or to the benefit of
any person, controlling such Underwriter) if at or prior to the written
confirmation of the sale of such shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented). Notwithstanding anything herein to the contrary, the
Underwriters agree that they shall not seek indemnification hereunder from the
Selling Stockholders unless the Underwriters shall first have sought indemnity
from the Company and the Company has not satisfied such request for
indemnification in full within 60 days; PROVIDED, HOWEVER, that the Underwriters
shall not be required to effect such initial demand upon the Company and wait
such 60-day period if it would prejudice their right to indemnification from the
Selling Stockholders
hereunder. This indemnity agreement will be in addition to any liability
which the Company or any Selling Stockholder may otherwise have.
(ii) Notwithstanding anything else herein, each Selling
Stockholder who is not a Principal Stockholder shall only be liable under this
Section 8(a) with respect to (A) information pertaining to such Selling
Stockholder furnished by or on behalf of such Selling Stockholder expressly for
use in the Registration Statement or the Prospectus, or any amendments or
supplements thereto, or (B) facts that would constitute a breach of any
representation or warranty of such Selling Stockholder set forth in Section 1(b)
of this Agreement. In addition, in no event, shall the liability of any Selling
Stockholder (including any Principal Stockholder) for indemnification under this
Section 8(a) exceed the proceeds received by such Selling Stockholder from the
Underwriters in the offering.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders and each person, if
any, who controls the Company or the Selling Stockholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling Stockholder, or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, Selling Stockholder, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may
have to the indemnified party for contribution or otherwise than on account
of the provisions of Section 8(a) or (b). In case any such proceeding shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and
employ counsel acceptable to the indemnified party within a reasonable period
of time after notice of commencement of the action. It is understood that
the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one separate firm for all such indemnified
parties. Such firm shall be designated in writing by you in the case of
parties indemnified pursuant to Section 8(a) and by the Company in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding of which indemnification may be sought
hereunder (whether or not any indemnified party is an actual or potential
party to such claim, action or proceeding) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from
all liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities, (or actions or proceedings in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company and the Selling Stockholders bear to the total underwriting
discounts received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Selling Stockholders on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
8(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to above in this Section 8(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation and (iii) no Selling Stockholder
shall be required to contribute any amount in excess of the proceeds received by
such Selling Stockholder from the Underwriters in the Offering. The
Underwriters' obligations in this Section 8(d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be
paid by the indemnifying party to the indemnified party as such losses,
claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section 8 and the representations
and warranties of the Company set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any investigation
made by or on behalf of any Underwriter or any person controlling any
Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or the
Selling Stockholders), you, as Representatives of the Underwriters, shall use
your reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Selling
Stockholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Stockholders, on the one hand, or you on the other as the
Representatives of the Underwriters, will have the right, by written notice
given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
parties except to the extent provided in Section 8 hereof. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 9, the
Closing Date or Option Closing Date, as the case may be, may be postponed for
such period, not exceeding seven days, as you, as Representatives, may determine
in order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to BT Alex. ▇▇▇▇▇
Incorporated, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇
▇▇▇▇▇▇▇▇; with a copy to BT Alex. ▇▇▇▇▇ Incorporated, One Bankers Trust Plaza,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; if to
the Company, to
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
Digital River, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and, if to the Selling Stockholders, to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer
Digital River, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company and
the Selling Stockholders as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company,
whether or not arising in the ordinary course of business, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency or other
national or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration, emergency,
calamity, crisis or change on the financial markets of the United States would,
in your reasonable judgment, make it impracticable to market the Shares or to
enforce contracts for the sale of the Shares, or (iii) suspension of trading in
securities generally on the New York Stock
Exchange or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such Exchange, (iv) the enactment, publication, decree or other promulgation
of any statute, regulation, rule or order of any court or other governmental
authority which in your opinion materially and adversely affects or may
materially and adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by United States or New York State
authorities, (vi) the suspension of trading of the Company's Common Stock on
the Nasdaq National Market or (viii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs
which in your reasonable opinion has a material adverse effect on the
securities markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. FAILURE OF THE SELLING STOCKHOLDERS TO SELL AND DELIVER.
If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Shares to be sold and delivered by such Selling
Stockholders at the Closing Date or Option Closing Date under the terms of this
Agreement, then the Underwriters may at their option, by written notice from you
to the Company and the Selling Stockholders, purchase the Shares which the other
Selling Stockholders have agreed to sell and deliver in accordance with the
terms hereof. In the event of a failure by one or more of the Selling
Stockholders to sell and deliver as referred to in this Section 12, either you
or the Company shall have the right to postpone the Closing Date or the Option
Closing Date, as the case may be, for a period not exceeding seven business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected.
13. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
14. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholders and the Underwriters acknowledge
and agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the Registration
Statement consists of the information set forth in the last paragraph on the
front cover page (insofar as such information relates to the Underwriters),
legends required by Item 502(d) of Regulation S-K under the Act and the
information under the caption "Underwriting" in the Prospectus.
15. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
DIGITAL RIVER, INC.
By
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
SELLING STOCKHOLDERS
By
------------------------------------------
Attorney-in-fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. ▇▇▇▇▇ INCORPORATED
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
As Representatives of the several
Underwriters listed on Schedule I
By: BT Alex. ▇▇▇▇▇ Incorporated
By:
-----------------------------------
Authorized Officer
[**Signature Page to Underwriting Agreement**]
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Underwriter Number of Firm
Shares to be
Purchased
----------- ----------------
BT Alex. ▇▇▇▇▇ Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Total
SCHEDULE II
SCHEDULE OF SELLING STOCKHOLDERS
--------------------------------------------------------------------------------------------
MAXIMUM NUMBER
MAXIMUM NUMBER OF OPTION PERCENTAGE OF
OF FIRM SHARES SHARES TO BE TOTAL NUMBER OF
TO BE SOLD SOLD OPTION SHARES
NAME OF SELLER
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
TOTAL SELLING STOCKHOLDER SHARES
--------------------------------------------------------------------------------------------
TOTAL COMPANY SHARES
--------------------------------------------------------------------------------------------
TOTAL SHARES
--------------------------------------------------------------------------------------------
EXHIBIT A
LIST OF SUBSIDIARIES
1. Digital River, Inc., a Minnesota corporation
2. Digital River Limited