FORM OF REGISTRATION RIGHTS AGREEMENT
BETWEEN
DIGITAL RIVER, INC.
AND
XXXXXXXXXXX, XXXXXXX VENTURES, L.P.
1. INCIDENTAL REGISTRATION. At any time, and from time to time, after
the Company has completed an initial public offering of its common stock
pursuant to a registration statement filed with the Securities and Exchange
Commission (the "Commission"), each time the Company shall determine to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for money of any
of its securities by it or any of its security holders, the Company will give
written notice of its determination to all record holders of Shares. Upon the
written request of a record holder of any Shares given within 15 days after
receipt of any such notice from the Company, the Company will, except as herein
provided, cause all such common stock issued or issuable upon conversion of the
Shares or exercise of warrants (the "Common Stock"), the record holders of which
have so requested registration thereof, to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Common Stock to be so registered;
provided, however, that nothing herein shall prevent the Company from, at any
time, abandoning or delaying any such registration initiated by it. If any
registration pursuant to this section shall be underwritten in whole or in part,
the Company may require that the Common Stock requested for inclusion pursuant
to this section be included in the underwriting on the same terms and conditions
as the securities otherwise being sold through the underwriters. In the event
that the aggregate number of shares of Common Stock requested for inclusion
pursuant to this section would constitute more than ten percent (10%) of the
total number of shares to be included in a proposed underwritten public
offering, and if in the good faith judgment of the managing underwriter of such
public offering the inclusion of all of the Common Stock originally covered by a
request for registration would reduce the number of shares to be offered by the
Company or interfere with the successful marketing of the shares of stock
offered by the Company, the number of shares of Common Stock otherwise to be
included in the underwritten public offering may be reduced pro rata among the
holders thereof requesting such registration pari passu with other holders with
similar rights under their purchase agreement; provided, however, that after any
such required reduction the Common Stock to be included in such offering shall
constitute at least ten percent (10%) of the total number of shares to be
included in such offering. Those shares of Common Stock which are thus excluded
from the underwritten public offering shall be withheld from the market by the
holders thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering.
2. REQUIRED REGISTRATION. At any time six months after the Company has
completed an initial public offering of its common stock pursuant to a
registration statement filed with the Commission, the record holder of Shares
may by written request demand one registration with respect to common stock
issued or issuable upon conversion of the Preferred Stock or exercise of
warrants in a total amount not to exceed 1,500,000 shares of common stock (the
"Common Stock") subject to these registration rights. Upon receipt of the
written request
the Company shall prepare and file a registration statement under the
Securities Act covering the Common Stock which is the subject of such request
and shall use its best efforts to cause such registration statement to become
effective. In addition, upon receipt of such request, the Company shall
promptly give written notice to all other holders of common stock who have
registration rights that such registration is to be effected. Upon the
written request of record holders of any shares of common stock subject to
registration rights given within 15 days after receipt of any such notice
from the Company, the Company will, except as herein provided, cause all such
shares, the record holders of which have so requested registration thereof,
to be included in such registration statement, all to the extent requisite to
permit the sale or other disposition by the prospective seller or sellers of
the shares to be so registered. In the event that the aggregate number of
shares requested for inclusion pursuant to this section is in the good faith
judgment of the Underwriter excessive in view of the ability of the market to
absorb them without adverse price reaction, then the number of shares to be
registered shall be reduced pari passu among the holders which shall include
the record holder hereunder as well as all existing holders who currently
have incidental registration rights by virtue of separate agreements with the
Company.
Not more than once a year holders of Preferred Stock shall also be entitled
to unlimited demand registrations on Form S-3 with respect to Common Stock,
subject to rights granted to existing stockholders of the Company. Upon
request, the Company shall file, and pay the expenses associated with, any
number of registration statements on Form S-3, if such form is then available
for use by the Company and such record holder or holders.
If, at the time any written request for registration is received by the
Company pursuant to this Section 2, the Company has determined to proceed with
the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any of
its securities by it or any of its security holders, such written request shall
be deemed to have been given pursuant to Section 1 hereof rather than this
Section 2, and the rights of the holders of Common Stock covered by such written
request shall be governed by Section 1, hereof.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 1 and 2 to effect the registration of any Common Stock
under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed three (3) months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such
securities, not to exceed three (3) months;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such
other documents as such security holders and underwriters may reasonably
request in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as such participating holders may reasonably
request within 20 days following the original filing of such registration
statement, except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the security holders participating in such registrations
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus
or for additional information; prepare and file with the Commission,
promptly upon the request of any such holders, any amendments or
supplements to such registration statement or prospectus which, in the
opinion of counsel for such holders (and concurred in by counsel for the
Company), is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Purchased Shares by
such holder;
(g) prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(h) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued;
(i) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements
of the Securities Act or the rules and regulations thereunder, after having
been furnished with a copy thereof at least five business days prior to the
filing thereof, unless in the opinion of counsel for the Company the filing
of such amendment or supplement is reasonably necessary to protect the
Company from any
liabilities under any applicable federal or state law and such filing will
not violate applicable law; and
(j) at the request of any such holder, furnish on the effective date
of the registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in the
underwriting agreement opinions, dated such respective dates, of the
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the holder or holders making
such request, covering such matters as such underwriters and holder or
holders may reasonably request, in which opinion such counsel shall state
(without limiting the generality of the foregoing) that (a) such
registration statement has become effective under the Securities Act; (b)
to the best of such counsel's knowledge no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities
Act; (c) the registration statement and each amendment or supplement
thereto comply as to form in all material respects with the requirements of
the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements contained therein); (d) to the best of the
knowledge of such counsel neither the registration statement nor any
amendment nor supplement thereto contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (except
that such counsel need express no opinion as to financial statements
contained therein); (e) the description in the registration statement or
any amendment or supplement thereto of legal and governmental proceedings
and contracts are accurate and fairly present the information required to
be shown; (f) such counsel does not know of any legal or governmental
proceedings pending or threatened, required to be described in the
registration statement or any amendment or supplement thereto which are not
described as required nor of any contracts or documents or instruments of
the character required to be described in the registration statement or
amendment or supplement thereto or to be filed as exhibits to the
registration statement, which are not described or filed as required; and
(g) letters, dated such respective dates, from the independent certified
public accountants of the Company addressed to the underwriters, if any,
and to the holder or holders making such request, covering such matters as
such underwriters and holder or holders may reasonably request, in which
letters such accountants shall state (without limiting the generality of
the foregoing) that they are independent certified public accountant within
the meaning of the Securities Act and that in the opinion of such
accountants the financial statements and other financial data of the
Company included in the registration statement or any amendment or
supplement thereto comply in all material respects with the applicable
accounting requirements of the Securities Act.
4. EXPENSE. With respect to any registration, including registrations
pursuant to Form S-3, the Company shall bear the following fees, costs and
expenses: all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and disbursements
of counsel for the underwriter or underwriters of such securities (if the
Company and/or selling security holders are required to bear such fees and
disbursements), all internal Company expenses, the premiums and other costs of
policies of insurance against liability arising out of the policies offering,
and all legal fees and
disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants
for the selling security holders, underwriting discounts and commissions and
transfer taxes for selling security holders and any other expenses incurred
by the selling security holders not expressly included above shall be borne
by the selling security holders.
5. INDEMNIFICATION. In the event that any Common Stock are included in a
registration statement:
(a) The Company will indemnify and hold harmless each holder of
Common Stock which are included in a registration statement and any
underwriter (as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter within the
meaning of the Securities Act, from and against any and all loss, damage,
liability, cost and expense to which such holder or any such underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses
are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading; provided however, that the Company will not be liable in
any such case to the extent that any such loss, damage, liability, cost or
expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such holder, such underwriter or such controlling
person.
(b) Each holder of Common Stock which is included in a registration
will indemnity and hold harmless the Company, any controlling person and
any underwriter from and against any and all loss, damage, liability, cost
or expense to which the Company or any controlling person and/or any
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused
by any untrue or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with information furnished by such
holder.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this section of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not
relieve it from any liability which it may have to any indemnified party
otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select
separate counsel to participate in the defense of such action on behalf of
such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said paragraph (a) or (b) for any legal
or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel
in accordance with the proviso of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to 'represent the indemnified party within a reasonable
time after the notice of the commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
6. REGISTRATION RIGHTS OF TRANSFER. The registration rights granted to
the holders of Purchased Shares pursuant to the provisions hereof shall also be
for the benefit of, and enforceable by, any subsequent holder of Purchased
Shares who is (i) a family member of any individual Investor, or (ii) a trust,
limited liability company or other entity formed for the benefit of any of
Investor's family members or descendants.
DIGITAL RIVER, INC.
By:
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Its: Secretary
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