Document:

exv10w1

Exhibit 10.1

Execution Version

$300,000,000

DIGITAL RIVER, INC.

2.00% CONVERTIBLE SENIOR NOTES DUE 2030

COMMON STOCK, PAR VALUE $0.01

PURCHASE AGREEMENT

October 26, 2010

 

 

October 26, 2010

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Morgan Stanley & Co. Incorporated

     As Representatives of the several Initial Purchasers named in Schedule I hereto

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

   One Bryant Park

    New York, NY 10036

c/o Morgan Stanley & Co. Incorporated

   1585 Broadway

   New York, NY 10036

Ladies and Gentlemen:

     Digital River, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the
several purchasers named in Schedule I hereto (the “Initial Purchasers”), for whom you are acting
as representatives (the “Representatives”), $300,000,000 principal amount of its 2.00% Convertible
Senior Notes due 2030 (the “Firm Securities”) to be issued pursuant to the provisions of an
Indenture dated as of the Closing Date (as defined in Section 4) (the “Indenture”) between the
Company and Wells Fargo Bank, National Association, as Trustee (the “Trustee”). The Company also
proposes to issue and sell to the Initial Purchasers not more than an additional $45,000,000
principal amount of its 2.00% Convertible Senior Notes due 2030 (the “Additional Securities”) if
and to the extent that you, as Representatives of the offering, shall have determined to exercise,
on behalf of the Initial Purchasers, the right to purchase such 2.00% Convertible Senior Notes due
2030 granted to the Initial Purchasers in Section 2 hereof. The Firm Securities and the Additional
Securities are hereinafter collectively referred to as the “Securities”. The Securities will be
convertible into shares of common stock, par value $0.01, of the Company (the “Underlying
Securities”).

     The Securities and the Underlying Securities will be offered without being registered under
the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in
compliance with the exemption from registration provided by Rule 144A under the Securities Act.

     In connection with the sale of the Securities, the Company has prepared a preliminary offering
memorandum (the “Preliminary Memorandum”) and will prepare a final offering memorandum (the “Final
Memorandum”) including or incorporating by reference a description of the terms of the Securities
and the

 

 

Underlying Securities, the terms of the offering and a description of the Company. For purposes of this Agreement, “Additional Written Offering
Communication” means any written communication (as defined in Rule 405 under the Securities
Act) that constitutes an offer to sell or a solicitation of an offer to buy the Securities other
than the Preliminary Memorandum or the Final Memorandum, and “Time of Sale Memorandum” means the
Preliminary Memorandum together with the Additional Written Offering Communications, if any, each
identified in Schedule III hereto. As used herein, the terms Preliminary Memorandum, Time of Sale
Memorandum and Final Memorandum shall include the documents, if any, incorporated by reference
therein. The terms “supplement”, “amendment” and “amend” as used herein with respect to the
Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum or any Additional Written
Offering Communication shall include all documents subsequently filed by the Company with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act of
1934, as amended (the “Exchange Act”), that are deemed to be incorporated by reference therein.

     1. Representations and Warranties. The Company represents and warrants to, and agrees with,
you that:

     (a) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Preliminary Memorandum, the Time of Sale Memorandum or
the Final Memorandum complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the Commission thereunder,
(ii) the Time of Sale Memorandum does not, and at the time of each sale of the Securities
in connection with the offering when the Final Memorandum is not yet available to
prospective purchasers and at the Closing Date (as defined in Section 4), the Time of
Sale Memorandum, as then amended or supplemented by the Company, if applicable, will not,
contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading, (iii) the Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Initial Purchasers to confirm sales and on the Closing
Date (as defined in Section 4), will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to statements or
omissions in the Preliminary Memorandum, the Time of Sale Memorandum or the Final
Memorandum based upon information relating

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to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through you expressly for use therein.

     (b) Except for the Additional Written Offering Communications, if any, identified in
Schedule III hereto, and electronic road shows, if any, furnished to you before first use,
the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use
or refer to, any Additional Written Offering Communication.

     (c) The Company has been duly incorporated, is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own its property and to conduct its business as described in the
Time of Sale Memorandum and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.

     (d) Each subsidiary of the Company listed on Schedule II hereto has been duly
incorporated, is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Time of Sale Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each subsidiary of the
Company listed on Schedule II hereto have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims. The subsidiaries listed on
Schedule II hereto are the only “significant subsidiaries” of the Company as that term is
defined in Rule 1-02 of Regulation S-X under the Exchange Act.

     (e) This Agreement has been duly authorized, executed and delivered by the Company.

     (f) The authorized capital stock of the Company conforms as to legal matters to the
description thereof contained in each of the Time of Sale Memorandum and the Final
Memorandum.

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     (g) The shares of the Company’s common stock outstanding prior to the issuance of the
Securities have been duly authorized and are validly issued, fully paid and
non-assessable.

     (h) The Securities have been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, will be valid and
binding obligations of the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and equitable principles of general applicability, and will be entitled to the benefits of
the Indenture pursuant to which such Securities are to be issued. The issuance of such
Securities will not be subject to any preemptive or similar rights.

     (i) The Underlying Securities issuable upon conversion of the Securities have been
duly authorized and reserved and, when issued upon conversion of the Securities in
accordance with the terms of the Securities, will be validly issued, fully paid and
non-assessable, and the issuance of the Underlying Securities will not be subject to any
preemptive or similar rights.

     (j) The Indenture has been duly authorized, and when executed and delivered by the
Company on the Closing Date, will be a valid and binding agreement of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and equitable principles of general
applicability.

     (k) The execution and delivery by the Company of, and the performance by the Company
of its obligations under, this Agreement , the Indenture and the Securities will not
contravene (i) in any material respect any provision of applicable law, (ii) any provision
of the certificate of incorporation or by laws of the Company, (iii) any agreement or
other instrument binding upon the Company or any of its subsidiaries that is material to
the Company and its subsidiaries, taken as a whole, or (iv) in any material respect any
judgment, order or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary. No consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement , the Indenture or the Securities, except
(1) such as may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities., (2) the notification to The NASDAQ

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Stock Market, Inc. (“NASDAQ”) for the listing of the Underlying Securities or (3) such as
have already been obtained.

     (l) There has not occurred any material adverse change, or any development reasonably
expected to have a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Time of Sale Memorandum provided to
prospective purchasers of the Securities.

     (m) The financial statements and the related notes thereto of the Company and its
consolidated subsidiaries included or incorporated by reference in the Time of Sale
Memorandum present fairly, in all material respects, the financial position of the Company
and its consolidated subsidiaries as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; such financial
statements have been prepared in conformity with U.S. generally accepted accounting
principles (“GAAP”) applied on a consistent basis throughout the periods covered thereby.

     (n) Other than proceedings accurately described in all material respects in the Time
of Sale Memorandum, there are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its subsidiaries is subject
that would have a material adverse effect on the Company and its subsidiaries, taken as a
whole, or on the power or ability of the Company to perform its obligations under this
Agreement, the Indenture or the Securities or to consummate the transactions contemplated
by the Time of Sale Memorandum.

     (o) The Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses as described in the Time of Sale Memorandum and (iii)
are in compliance with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or

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in the aggregate, have a material adverse effect, or prospective material adverse effect, on the Company and its
subsidiaries, taken as a whole.

     (p) There are no costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or approval
required of the Company or its subsidiaries under applicable Environmental Laws and any
potential liabilities to third parties) which would, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a whole.

     (q) The Company is not, and after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the Final Memorandum will not be, required to register as an “investment
company” as such term is defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”).

     (r) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D
under the Securities Act, an “Affiliate”) of the Company has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or will be integrated
with the sale of the Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) offered, solicited offers to buy or sold the
Securities by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act, except no
representation, warranty or agreement is made by the Company in this paragraph with
respect to the Initial Purchasers.

     (s) Assuming the representations of the Initial Purchasers set forth in Section 7 are
true and correct, it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers in the manner contemplated by this Agreement to
register the Securities under the Securities Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended.

     (t) The Securities satisfy the requirements set forth in Rule 144A(d)(3) under the
Securities Act.

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     (u) Neither the Company nor any of its subsidiaries, nor any director, officer or, to
the Company’s knowledge, any employee, agent, affiliate or representative of the Company
or of any of its subsidiaries or affiliates, has taken or will take any action in
furtherance of an offer, payment, promise to pay, or authorization or approval of the
payment or giving of money, property, gifts or anything else of value, directly or
indirectly, to any “government official” (including any officer or employee of a
government or government-owned or controlled entity or of a public international
organization, or any person acting in an official capacity for or on behalf of any of the
foregoing, or any political party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the Company and its
subsidiaries and, to the Company’s knowledge, its affiliates have conducted their
respective businesses as described in the Time of Sale Memorandum in compliance with
applicable anti-corruption laws and have instituted and maintain and will continue to
maintain policies and procedures designed to promote and achieve compliance with such laws
and with the representation and warranty contained herein.

     (v) The operations of the Company and its subsidiaries are and have been conducted at
all times in material compliance with all applicable financial recordkeeping and reporting
requirements, including those of the Bank Secrecy Act, as amended by Title III of the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering
statutes of jurisdictions where the Company and its subsidiaries conduct their respective
businesses as described in the Time of Sale Memorandum, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Anti-Money
Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.

     (w) (i) The Company represents that neither the Company nor any of its subsidiaries,
nor any director, officer or to the Company’s knowledge, any employee, agent, affiliate or
representative of the Company or any of its subsidiaries, is an individual or entity
(“Person”) that is, or is owned or controlled by a Person that is:

     (A) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”) (the,
“Sanctions”), nor

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     (B) located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria).

          (ii) The Company represents and covenants that it will not, directly or indirectly, use the
proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person:

     (A) to fund or facilitate any activities or business of or with any Person
or in any country or territory that, at the time of such funding or facilitation,
is the subject of Sanctions; or

     (B) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).

          (iii) The Company represents and covenants that for the past 5 years, it and its subsidiaries
have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any
dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is
or was the subject of Sanctions.

     (x) The Company and each of its subsidiaries have filed all federal, state, local and
foreign tax returns required to be filed through the date of this Agreement or have
requested extensions thereof (except where the failure to file would not, individually or
in the aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole) and have paid all taxes required to be paid thereon (except for cases in
which the failure to file or pay would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or, except as currently being contested in good
faith and for which reserves required by GAAP have been created in the financial
statements of the Company), and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the Company nor any of its
subsidiaries have any notice or knowledge of any tax deficiency which could reasonably be
expected to be determined adversely to the Company or its subsidiaries) and which could
reasonably be expected to have) a material adverse effect on the Company and its
subsidiaries, taken as a whole.

     (y) The Company and its subsidiaries have good and marketable title in fee simple to
all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its subsidiaries as described in the
Time of

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Sale Memorandum, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Time of Sale Memorandum or such as do not
materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, in each case except as
described in the Time of Sale Memorandum.

     (z) Except as disclosed in the Time of Sale Memorandum, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate rights to
trademarks, service marks, trade names, copyrights, know-how (including trade secrets and
confidential information, systems or procedures) and issued material patents (or pending
material patent applications of which the Company or its subsidiaries has knowledge)
(collectively, “Intellectual Property Rights”) necessary to conduct the business now
operated by the Company and its subsidiaries, and except as disclosed in the Time of Sale
Memorandum, neither the Company nor any of its subsidiaries has received any written
notice of infringement of or conflict with asserted rights of others with respect to
any of the foregoing Intellectual Property Rights that, if determined adversely to the
Company or any of its subsidiaries, singly or in the aggregate, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

     (aa) No material labor dispute with the employees of the Company or any of its
subsidiaries exists, except as described in the Time of Sale Memorandum, or, to the
knowledge of the Company, is threatened; and the Company is not aware of any existing or
threatened labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect on the Company and
its subsidiaries, taken as a whole.

     (bb) The Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; neither the Company nor any of
its subsidiaries has been refused any insurance coverage sought or applied for; and
neither the Company nor any of its subsidiaries has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as

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may be necessary to continue its business at a cost that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Time of Sale Memorandum.

     (cc) The Company and its subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses as described in the Time of Sale
Memorandum, except where the failure to possess the same would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a
whole, and neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, would have a material adverse
effect on the Company and its subsidiaries, taken as a whole, except as described in the
Time of Sale Memorandum.

     (dd) The Company and each of its subsidiaries maintain a system of “internal control
over financial reporting” (as defined in Rule 13a-15 of the Exchange Act)sufficient to
provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as
described in the Time of Sale Memorandum, since the end of the Company’s most recent
audited fiscal year, there has been (i) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (ii) no change in the
Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial
reporting.

     (ee) The Company has not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to (i) cause or result in stabilization
or manipulation of the price of the Securities or the Underlying Securities to facilitate
the sale or resale of the Securities (provided, however, that this paragraph shall not
apply to any stabilization activities conducted by the Initial Purchasers, who shall
remain solely responsible for such activities), or (ii) violate Regulation M under the
Exchange Act.

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     It is acknowledged by the parties that the Company is contemplating repurchasing shares of its
Common Stock as further described in the Time of Sale Memorandum.

     2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Initial
Purchasers, and each Initial Purchaser, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Company the respective principal amount of the Firm Securities set forth in
Schedule I hereto opposite its name at a purchase price of 97.25% of the principal amount thereof
(the “Purchase Price”)plus accrued interest, if any, to the Closing Date.

     On the basis of the representations and warranties contained in this Agreement, and subject to
its terms and conditions, the Company agrees to sell to the Initial Purchasers the Additional
Securities, and the Initial Purchasers shall have the right to purchase, severally and not jointly,
up to $45,000,000 principal amount of Additional Securities at the Purchase Price, plus accrued
interest, if any, to the date of payment and delivery. You may exercise this right on behalf of the
Initial Purchasers in whole or from time to time in part by giving written notice not later than 30
days after the date of this Agreement. Any exercise notice shall specify the principal amount of
Additional Securities to be purchased by the Initial Purchasers and the date on which such
Additional Securities are to be purchased. Each purchase date must be at least one business day
after the written notice is given and may not be earlier than the closing date for the Firm
Securities nor later than ten business days after the date of such notice. Additional Securities
may be purchased as provided in Section 4 solely for the purpose of covering over-allotments made
in connection with the offering of the Firm Securities. On each day, if any, that Additional Securities are to be purchased (an “Option
Closing Date”), each Initial Purchaser agrees, severally and not jointly, to purchase the principal
amount of Additional Securities (subject to such adjustments to eliminate fractional Securities as
you may determine) that bears the same proportion to the total principal amount of Additional
Securities to be purchased on such Option Closing Date as the principal amount of Firm Securities
set forth in Schedule I opposite the name of such Initial Purchaser bears to the total principal
amount of Firm Securities.

     3. Terms of Offering. You have advised the Company that the Initial Purchasers will make an
offering of the Securities purchased by the Initial Purchasers hereunder as soon as practicable
after this Agreement is entered into as in your judgment is advisable.

     4. Payment and Delivery. Payment for the Firm Securities shall be made to the Company in
Federal or other funds immediately available in New

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York City against delivery of such Firm Securities for the respective accounts of the several Initial Purchasers at 10:00 a.m., New York
City time, on November 1, 2010, or at such other time on the same or such other date, in any event
not later than November 2, 2010, as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the “Closing Date.”

     Payment for any Additional Securities shall be made to the Company in Federal or other funds
immediately available in New York City against delivery of such Additional Securities for the
respective accounts of the several Initial Purchasers at 10:00 a.m., New York City time, on the
date specified in the corresponding notice described in Section 2 or at such other time on the same
or on such other date, in any event not later than December 9, 2010, as shall be designated in
writing by you.

     The Securities shall be in definitive form or global form, as specified by you, and registered
in such names and in such denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the applicable Option Closing Date, as the case may be.
The Securities shall be delivered to you on the Closing Date or an Option Closing Date, as the case
may be, for the respective accounts of the several Initial Purchasers, with any transfer taxes
payable in connection with the transfer of the Securities to the Initial Purchasers duly paid,
against payment of the Purchase Price therefor plus accrued interest, if any, to the date of
payment and delivery.

     5. Conditions to the Initial Purchasers’ Obligations. The several obligations of the Initial
Purchasers to purchase and pay for the Firm Securities on the Closing Date are subject to the
following conditions:

     (a) Subsequent to the execution and delivery of this Agreement and prior to the
Closing Date:

     (i) there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded the Company or any of the securities of the Company or any
of its subsidiaries or in the rating outlook for the Company by any “nationally
recognized statistical rating organization,” as such term is defined in Rule
15c3-1(c)(2)(vi)(F) of the Exchange Act; and

     (ii) there shall not have occurred any change, or any development
reasonably expected to have a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a

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whole, from that set forth in the Time of Sale
Memorandum as of the date of this Agreement provided to the prospective
purchasers of the Securities that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the Securities on the
terms and in the manner contemplated in the Time of Sale Memorandum.

     (b) The Representatives shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the effect set
forth in Section 5(a)(i) and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the Closing Date and that
the Company has complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing Date.

     The officer signing and delivering such certificate may rely upon the best of his or
her knowledge as to proceedings threatened.

     (c) The Representatives shall have received on the Closing Date an opinion of Howard
Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation, outside special counsel
for the Company, dated the Closing Date, to the effect set forth in Exhibit A. Such
opinion shall be rendered to the Representatives at the request of the Company and shall
so state therein.

     (d) The Representatives shall have received on the Closing Date an opinion of Kevin
Crudden, Vice President and General Counsel of the Company, dated the Closing Date, to the
effect set forth in Exhibit B. Such opinion shall be rendered to the Representatives at
the request of the Company and shall so state therein.

     (e) The Representatives shall have received on the Closing Date an opinion of Davis
Polk & Wardwell LLP, counsel for the Initial Purchasers, dated the Closing Date, to the
effect set forth in Exhibit C.

     (f) The Representatives shall have received on each of the date hereof and the
Closing Date a letter, dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to the Representatives, from Ernst & Young LLP,
independent public accountants, containing statements and information of the type
ordinarily included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in or incorporated by
reference into the Time of Sale Memorandum and the

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Final Memorandum; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date
hereof.

     (g) The “lock-up” agreements, each substantially in the form of Exhibit D hereto,
between you and the officers and directors of the Company relating to sales and certain
other dispositions of shares of common stock or certain other securities, delivered to you
on or before the date hereof, shall be in full force and effect on the Closing Date.

     (h) At the time of execution of this Agreement, the Representatives shall have
received a certificate of Thomas M. Donnelly, Chief Financial Officer of the Company in
form and substance satisfactory to the Representatives.

     (i) At the Closing Time, the Representatives shall have received a certificate of
Thomas M. Donnelly, Chief Financial Officer of the Company in form and substance
satisfactory to the Representatives reaffirming the statements made in the letter
furnished pursuant to subsection (h) of this Section as of the date hereof.

     (j) A notification for the listing of the Underlying Securities shall have been
submitted to NASDAQ.

     The several obligations of the Initial Purchasers to purchase Additional Securities hereunder
are subject to the delivery to you on the applicable Option Closing Date of such documents as you
may reasonably request with respect to the good standing of the Company, the due authorization,
execution and authentication of the Additional Securities to be sold on such Option Closing Date
and other matters related to the execution and authentication of such Additional Securities.

     6. Covenants of the Company. The Company covenants with each Initial Purchaser as follows:

     (a) To furnish to you in New York City, without charge, prior to 10:00 a.m. New York
City time on the second business day succeeding the date of this Agreement and during the
period mentioned in Section 6(d) or (e), as many copies of the Time of Sale Memorandum,
the Final Memorandum, any documents incorporated by reference therein and any supplements
and amendments thereto as you may reasonably request.

     (b) Before amending or supplementing the Preliminary Memorandum, the Time of Sale
Memorandum or the Final Memorandum, to furnish to you a copy of each such proposed
amendment or supplement

14

 

and not to use any such proposed amendment or supplement to which you reasonably object.

     (c) To furnish to you a copy of each proposed Additional Written Offering
Communication to be prepared by or on behalf of, used by, or referred to by the Company
and not to use or refer to any proposed Additional Written Offering Communication to which
you reasonably object.

     (d) If the Time of Sale Memorandum is being used to solicit offers to buy the
Securities at a time when the Final Memorandum is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Time of Sale Memorandum in order to make the
statements therein, in the light of the circumstances, not misleading, or if, in the
opinion of counsel for the Initial Purchasers, it is necessary to amend or supplement the
Time of Sale Memorandum to comply with applicable law, forthwith to prepare and furnish,
at its own expense, to the Initial Purchasers and to any dealer upon request, either
amendments or supplements to the Time of Sale Memorandum so that the statements in the
Time of Sale Memorandum as so amended or supplemented will not, in the light of the
circumstances when delivered to a prospective purchaser, be misleading or so that the Time
of Sale Memorandum, as amended or supplemented, will comply with applicable law.

     (e) If, during such period after the date hereof and prior to the date on which all
of the Securities shall have been sold by the Initial Purchasers, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the circumstances when
the Final Memorandum is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Initial Purchasers, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and furnish to the Initial
Purchasers, at the Company’s expense for a period of six months following the Closing Date
and at the Initial Purchasers’ expense thereafter, either amendments or supplements to the
Final Memorandum so that the statements in the Final Memorandum as so amended or supplemented will not, in the light of the circumstances
when the Final Memorandum is delivered to a purchaser, be misleading or so that the Final
Memorandum, as amended or supplemented, will comply with applicable law.

     (f) To endeavor to qualify the Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions in the United

15

 

States and Canada as you shall reasonably request, provided that the Company will not be required to qualify as a foreign
corporation or to file a general consent of service of process in any jurisdiction in
which it is not otherwise so qualified or subject.

     (g) Whether or not the transactions contemplated in this Agreement are consummated or
this Agreement is terminated, to pay or cause to be paid all expenses incident to the
performance of the Company’s obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company’s counsel and the Company’s accountants in
connection with the issuance and sale of the Securities and all other fees or expenses in
connection with the preparation of the Preliminary Memorandum, the Time of Sale
Memorandum, the Final Memorandum, any Additional Written Offering Communication prepared
by or on behalf of, used by, or referred to by the Company and any amendments and
supplements to any of the foregoing, including all printing costs associated therewith,
and the delivering of copies thereof to the Initial Purchasers, in the quantities herein
above specified, (ii) all costs and expenses related to the transfer and delivery of the
Securities to the Initial Purchasers, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or legal investment
memorandum in connection with the offer and sale of the Securities under state securities
laws and all expenses in connection with the qualification of the Securities for offer and
sale under state securities laws as provided in Section 6(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Initial Purchasers in
connection with such qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by rating agencies for the rating of the Securities, (v)
the fees and expenses, if any, incurred in connection with the admission of the Securities
for trading on any appropriate market system, (vi) the costs and charges of the Trustee
and any transfer agent, registrar or depositary, (vii) the cost of the preparation,
issuance and delivery of the Securities, (viii) the costs and expenses of the Company
relating to investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Securities, including, without limitation, expenses
associated with the preparation or dissemination of any electronic road show, expenses
associated with production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the representatives
and officers of the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show, (ix) the document production charges and
expenses associated with printing this Agreement and (x) all other cost and expenses
incident to the performance

16

 

of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 8, and the last paragraph of Section 10, the Initial
Purchasers will pay all of their costs and expenses, including fees and disbursements of
their counsel, transfer taxes payable on resale of any of the Securities by them and any
advertising expenses connected with any offers they may make.

     (h) Neither the Company nor its Affiliate will sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the Securities
Act) which could be integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities.

     (i) Not to solicit any offer to buy or offer or sell the Securities or the Underlying
Securities by means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.

     (j) While any of the Securities or the Underlying Securities remain “restricted
securities” within the meaning of the Securities Act, to make available, upon request, to
any seller of such Securities the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.

     (k) During the period of two years after the Closing Date or any Option Closing Date,
if later, the Company will not be, nor will it become, an open-end investment company,
unit investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act.

     (l) None of the Company, its Affiliates or any person acting on its or their behalf
(other than the Initial Purchasers) will engage in any directed selling efforts (as that
term is defined in Regulation S) with respect to the Securities, and the Company and its
Affiliates and each person acting on its or their behalf (other than the Initial
Purchasers) will comply with the offering restrictions requirement of Regulation S.

     (m) During the period of six months after the Closing Date or any Option Closing
Date, if later, the Company will not, and will not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to resell any of the Securities or the Underlying Securities which constitute
“restricted securities” under Rule 144 that have been reacquired by any of them.

17

 

     (n) Not to take any action prohibited by Regulation M under the Exchange Act in
connection with the distribution of the Securities contemplated hereby.

     (o) The Company will reserve and keep available at all times, free of pre-emptive
rights, shares of common stock for the purpose of enabling the Company to satisfy all
obligations to issue the Underlying Securities upon conversion of the Securities. The
Company will use its reasonable efforts to cause the Underlying Securities to be listed on
NASDAQ.

     The Company also agrees that, without the prior written consent of Representatives on behalf
of the Initial Purchasers, it will not, during the period ending 90 days after the date of the
Final Memorandum, (1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or
any securities convertible into or exercisable or exchangeable for common stock or (2) enter into
any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the common stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of common stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of the Securities under this
Agreement, (b) grants of options, restricted stock, stock appreciation rights, performance shares,
restricted stock units or other rights to purchase shares of common stock pursuant to the terms of
an equity incentive plan or stock purchase plan of the Company in effect on the date hereof and the
issuances by the Company of any shares of common stock pursuant to the exercise of such options or
rights, (c) the issuance by the Company of any shares of common stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof, (d) the issuance
by the Company of any shares of common stock pursuant to its obligations with respect to the
employer stock funds included in the Company’s 401(k) Plan existing as of the date hereof, or (e)
the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer
of shares of common stock, provided that such plan does not provide for the transfer of common
stock during the 90-day restricted period and no public announcement or filing under the Exchange
Act regarding the establishment of such plan shall be required of or voluntarily made by or on
behalf of the Company.

     7. Offering of Securities; Restrictions on Transfer. (a) Each Initial Purchaser, severally
and not jointly, represents and warrants that such Initial Purchaser is a qualified institutional
buyer as defined in Rule 144A under the Securities Act (a “QIB”). Each Initial Purchaser, severally and not jointly, agrees

18

 

with the Company that (i) it will not solicit offers for, or offer or sell, such Securities by any form of
general solicitation or general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act and (ii) it will solicit offers for such Securities only from, and will offer
such Securities only to, persons that it reasonably believes to be QIBs that in purchasing such
Securities are deemed to have represented and agreed as provided in the Final Memorandum under the
caption “Notice to Investors”.

     (b) The Company agrees that the Initial Purchasers may provide copies of the
Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum and any other
agreements or documents relating thereto, including without limitation, the Indenture to
Xtract Research LLC (“Xtract”), following completion of the offering, for inclusion in an
online research service sponsored by Xtract, access to which shall be restricted by Xtract
to QIBs.

     8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each
Initial Purchaser, each person, if any, who controls any Initial Purchaser within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of
any Initial Purchaser within the meaning of Rule 405 under the Securities Act from and against any
and all losses, claims, damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Memorandum, the Time of Sale Memorandum, any Additional Written Offering
Communication prepared by or on behalf of, used by, or referred to by the Company, or the Final
Memorandum or any amendment or supplement thereto, or caused by any omission or alleged omission to
state therein a material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through you expressly for use therein.

          (b) Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, its officers and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to such Initial Purchaser, but only with
reference to information relating to such Initial Purchaser furnished to the Company in writing by
such Initial Purchaser through you expressly for use in the

19

 

Preliminary Memorandum, the Time of Sale Memorandum, any Additional Written Offering Communication prepared by or on behalf of, used by
or referred to by the Company, or the Final Memorandum or any amendment or supplement thereto.

          (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 Section 8(a) or 8(b),
such person (the “indemnified party”) shall promptly notify the person against whom such indemnity
may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and shall pay the reasonable 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, but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (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 conflicts of interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified parties and that all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in
writing by the Representatives, 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. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and

20

 

indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such proceeding and
does not include a statement as to or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.

          (d) To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to
an indemnified party or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also
the relative fault of the Company on the one hand and of the Initial Purchasers on the other hand
in connection with the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Initial Purchasers on the other hand in connection with the
offering of the Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses) received by the Company
and the total discounts and commissions received by the Initial Purchasers bear to the aggregate
offering price of the Securities. The relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand 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 or by the Initial
Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Initial Purchasers’ respective obligations to
contribute pursuant to this Section 8 are several in proportion to the respective principal amount
of Securities they have purchased hereunder, and not joint.

          (e) The Company and the Initial Purchasers agree that it would not be just or equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Initial
Purchasers were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by

21

 

such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section
8, no Initial Purchaser shall be required to contribute any amount in excess of the purchase
discount or commissions received by such Initial Purchasers in connection with the Securities
purchased by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified party at law or in
equity.

          (f) The indemnity and contribution provisions contained in this Section 8 and the
representations, warranties and other statements of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Initial Purchaser, any person controlling any
Initial Purchaser or any affiliate of any Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance of and payment for
any of the Securities.

     9. Termination. The Initial Purchasers may terminate this Agreement by notice given by you to
the Company, if after the execution and delivery of this Agreement and prior to the Closing Date
(i) trading generally shall have been suspended or materially limited on, or by, as the case may
be, any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade,
(ii) trading of any securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance
services in the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or (v) there shall
have occurred any outbreak or escalation of hostilities, or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse such that it, singly or together
with any other event specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Securities on the terms and in the
manner contemplated in the Time of Sale Memorandum or the Final Memorandum.

     10. Effectiveness; Defaulting Initial Purchasers. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.

     If, on the Closing Date, or an Option Closing Date, as the case may be, any one or more of the
Initial Purchasers shall fail or refuse to purchase Securities

22

 

that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of Securities to be purchased on such date,
the other Initial Purchasers shall be obligated severally in the proportions that the principal
amount of Firm Securities set forth opposite their respective names in Schedule I bears to the
aggregate principal amount of Firm Securities set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as you may specify, to purchase the Securities which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Initial Purchaser has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess
of one-ninth of such principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers shall fail or refuse
to purchase Firm Securities which it or they have agreed to purchase hereunder on such date and the
aggregate principal amount of Securities with respect to which such default occurs is more than
one-tenth of the aggregate principal amount of Firm Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Firm Securities are not
made within 36 hours after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Initial Purchaser or of the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Time of Sale Memorandum, the Final
Memorandum or in any other documents or arrangements may be effected. If, on an Option Closing
Date, any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase Additional
Securities and the aggregate principal amount of Additional Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of Additional Securities to
be purchased on such Option Closing Date, the non-defaulting Initial Purchasers shall have the
option to (a) terminate their obligation hereunder to purchase the Additional Securities to be sold
on such Option Closing Date or (b) purchase not less than the principal amount of Additional
Securities that such non-defaulting Initial Purchasers would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not relieve any defaulting
Initial Purchaser from liability in respect of any default of such Initial Purchaser under this
Agreement.

     If this Agreement shall be terminated by the Initial Purchasers, or any of them, because of
any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Initial Purchasers or such Initial
Purchasers as have

23

 

so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred
by such Initial Purchasers in connection with this Agreement or the offering contemplated
hereunder.

     11. Entire Agreement. (a) This Agreement represents the entire agreement between the Company
and the Initial Purchasers with respect to the preparation of the Preliminary Memorandum, the Time
of Sale Memorandum, the Final Memorandum, the conduct of the offering, and the purchase and sale of
the Securities.

     (b) The Company acknowledges that in connection with the offering of the Securities: (i) the
Initial Purchasers have acted at arms length, are not agents of, and owe no fiduciary duties to,
the Company or any other person, (ii) the Initial Purchasers owe the Company only those duties and
obligations set forth in this Agreement and prior written agreements (to the extent not superseded
by this Agreement) if any, and (iii) the Initial Purchasers may have interests that differ from
those of the Company. The Company waives to the full extent permitted by applicable law any claims
it may have against the Initial Purchasers arising from an alleged breach of fiduciary duty in
connection with the offering of the Securities.

     12. Counterparts. This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument.

     13. Applicable Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.

     14. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.

     15. Notices. All communications hereunder shall be in writing and effective only upon receipt
and if to the Initial Purchasers shall be delivered, mailed or sent to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, 1 Bryant Park, New York, New York 10036, Telecopy No.: 212-901-7881,
Attention: Legal and Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036,
and if to the Company shall be delivered, mailed or sent by facsimile to 9625 W. 76th Street, Suite
150, Eden Prairie, MN 55344, Attention: Chief Financial Officer, Fax: (952) 253-1234.

24

 

	 	 	 	 	 
	 	Very truly yours,

Digital River, Inc.

 	 
	 	By:  	/s/ Thomas M. Donnelly
 	 
	 	 	Name:  	Thomas M. Donnelly 	 
	 	 	Title:  	Chief Financial Officer 	 

[Purchase Agreement]

 

 

	 	 	 	 	 

Accepted as of the date hereof

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

Morgan Stanley & Co. Incorporated

	 	 	 	 	 
	

Acting severally on behalf of themselves and the

several Initial Purchasers named in 

Schedule I hereto.

 	 	 
	By:  	Merrill Lynch, Pierce, Fenner & Smith Incorporated
 	 	 
	 
	By:  	            /s/ Ric Spencer
 	 	 
	 	Name:  	Ric Spencer 	 	 
	 	Title:  	MD 	 	 
	 
	 	 	 
	By:  	            Morgan Stanley & Co. Incorporated
 	 	 
	 
	By:  	                              /s/ Robert Brass
 	 	 
	 	Name:  	Robert Brass 	 	 
	 	Title:  	Executive Director 	 	 

[Purchase Agreement]

 

 

	 	 	 	 	 

SCHEDULE I

	 	 	 	 	 
	 	 	Principal Amount of	 
	 	 	Firm Securities to be	 
	Initial Purchaser	 	Purchased	 
	Merrill Lynch, Pierce, Fenner & Smith
Incorporated
	 	$	150,000,000	 
	Morgan Stanley & Co. Incorporated
	 	$	120,000,000	 
	Piper Jaffray & Co.
	 	$	30,000,000	 
	Total:
	 	$	300,000,000	 
	 
	 	 	 

I-1

 

SCHEDULE II

Significant Subsidiaries

BlueHornet Networks, Inc.

Digital River GmbH

Digital River Technology Limited

Digital River Ireland Limited

II-1

 

SCHEDULE III

Time of Sale Memorandum

	1.	 	Preliminary Memorandum issued October 25, 2010
	 
	2.	 	Pricing Term Sheet dated October 26, 2010

III-1

 

EXHIBIT A

OPINION OF HOWARD RICE NEMEROVSKI CANADY FALK & 

RABKIN, A PROFESSIONAL CORPORATION, OUTSIDE SPECIAL

COUNSEL FOR THE COMPANY

November ___, 2010

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Morgan Stanley & Co. Incorporated

     As Representatives of the Initial Purchasers

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

One Bryant Park

New York, NY 10036

c/o Morgan Stanley & Co. Incorporated

1585 Broadway

New York, NY 10036

          Re: Digital River, Inc.

Ladies and Gentlemen:

     You have requested our opinion as special legal counsel to Digital River, Inc., a Delaware
corporation (the “Company”), with respect to certain matters in connection with the offering of up
to $300,000,000 aggregate principal amount of 2.00% Convertible Senior Notes due 2030 to Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and Piper Jaffray &
Co., as Representatives of the several Initial Purchasers (the “Initial Purchasers”), pursuant to
that certain Purchase Agreement, dated October 26, 2010, between the Company and the Initial
Purchasers (the “Agreement”). Except as otherwise specified, all capitalized terms used herein
have the same meanings given to them in the Agreement. We are rendering this opinion at the
request of the Company pursuant to Section 5(c) of the Agreement.

          In this connection, we have examined original or copies of the following documents, each of
which is dated the date hereof (unless otherwise specified):

          1. The Time of Sale Memorandum for the Firm Notes (as defined below) dated October 26, 2010
(the “Time of Sale Memorandum”);

A-1

 

          2. The Final Memorandum for the Firm Notes dated October [26], 2010 (the “Final Memorandum”);

          3. The Agreement;

          4. The Indenture dated as of November 1, 2010 between the Company and Wells Fargo Bank,
National Association, as trustee (the “Trustee”) (the “Indenture”);

          5. The 2.00% Convertible Senior Notes dated November 1, 2010, issued by the Company in favor
of the Initial Purchasers pursuant to the Agreement as of the date hereof (the “Firm Notes”);

          6. The Company’s Amended and Restated Certificate of Incorporation, filed with the Secretary
of State of Delaware on August 14, 1998, as amended by the Certificates of Amendment, filed on
September 20, 2000 and May 31, 2006 (the “Charter”);

          7. The Company’s Amended and Restated Bylaws as currently in effect (the “Bylaws”);

          8. Resolutions of the Board of Directors of the Company adopted on October 22, 2010 and the
resolutions of the Negotiating Committee of the Board of Directors adopted on October 26, 2010 (the
“Resolutions”);

          9. The Company’s Annual Report on Form 10-K filed with the Commission on February 23, 2010 as
amended by Form 10-K/A filed with the Commission on August 19, 2010 (collectively, the “Form 10-K”)
pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”);

          10. The Company’s Quarterly Reports on Form 10-Q (the “Form 10-Qs”) filed with the Commission
on May 4, 2010 and August 5, 2010;

          11. The Company’s Current Reports on Form 8-K and Form 8-K/A (the “Form 8-Ks”) filed with the
Commission from January 28, 2010 to the date hereof;

          12. The Company’s 2010 Proxy Statement filed with the Commission on March 30, 2010 (together
with the Form 10-K, the Form 10-Qs and the Form 8-Ks, the “Exchange Act Reports”);

          13. The minute books of the Company provided to us by one or more officers of the Company;

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          14. The contracts of the Company listed on Exhibit A attached to this letter (the
“Company Contracts”); and

          15. One or more certificates provided to us by one or more officers of the Company.

          The agreements and documents described in Items 3 through 5 above are referred to herein as
the “Transaction Agreements.”

          In rendering the opinions set forth below, we have assumed the legal capacity of individuals,
that the signatures on all documents not executed in our presence are genuine, that all documents
submitted to us as originals are authentic, that all documents submitted to us as reproduced or
certified copies conform to the original documents, that all corporate records of the Company
provided to us for review are accurate and complete, and that any reviews and searches of public
records obtained by us are accurate and complete. We have further assumed that each of the parties
to the Transaction Agreements (other than the Company) and each holder of the Firm Notes is duly
qualified to engage in the transactions contemplated by the Transaction Agreements and to hold the
Firm Notes; that the Transaction Agreements have been duly authorized, executed, and delivered by,
and constitute the valid and binding obligation of, the Initial Purchasers and, in the case of the
Indenture only, the Trustee, and is enforceable against the Initial Purchasers and, in the case of
the Indenture only, the Trustee, in accordance with their respective terms; that the parties to the
Transaction Agreements (other than the Company) and the holders of the Firm Notes have the
requisite power and authority to perform their respective obligations under the Transaction
Agreements; and that there are no documents, agreements or understandings among or between any
parties to the Transaction Agreements and the holders of the Firm Notes or other agreements that
would modify the respective rights and obligations of such parties as set forth in the Transaction
Agreements or that otherwise would have an effect on the opinions rendered below.

          As to matters of fact material to our opinions, we have relied solely upon our review of the
documents referred to in the second paragraph of this letter. We have assumed that the recitals of
fact and the representations and warranties of all parties as to factual matters set forth in the
documents referred to above are true, complete and correct on the date hereof. We have not
independently verified any factual matters or the validity of any assumptions made by us in this
letter.

          For purposes of rendering the opinions set forth in enumerated paragraphs 1 through 11 below,
we have considered only Applicable Laws (as defined herein). “Applicable Laws” means those laws,
statutes, rules and

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regulations of the State of California, the Delaware General Corporation Law
(the “DGCL”) and the federal laws of the United States of America as presently in effect that, in
our experience, are normally applicable to a securities offering of the type contemplated by the
Transaction Agreements, other than the Excluded Laws (as defined herein). “Excluded Laws” means any
laws, statutes, rules or regulations: (a) of any county, locality or municipality, (b) pertaining
to taxes (except to the limited extent set forth in paragraph 9); securities (except to the limited
extent set forth in paragraphs 6 and 7 below); labor, employee or management relations; money
laundering; privacy; environment; health and safety; trade regulation; franchising; antitrust or unfair competition, (c) relating to choice
of law or conflicts of law (except to the limited extent set forth in paragraph 11 below), and/or
(d) to which the transactions are or may be subject because of the legal or regulatory status of
any person other than the Company or because of any facts pertaining to any such person. We note
that if the Transaction Agreements are not valid, binding and enforceable under the laws of New
York, the Transaction Agreements may not be enforced by a California court under applicable
conflicts-of-law principles. We call your attention to the fact that Excluded Laws may apply to
the Transaction Agreements and express no opinion with respect to the effect of Excluded Laws on
the opinions set forth herein.

          Although the Transaction Agreements contain choice-of-law provisions specifying that they are
governed by the laws of the State of New York, you are aware that we are not admitted to practice
in the State of New York and you have asked us to provide you with the opinions set forth below on
the assumption (and we have therefore assumed) that the Transaction Agreements are governed by the
substantive laws of the State of California (without regard to conflicts-of-law and choice-of-law
principles), even though such assumption is or may be contrary to fact. In addition, and without
limiting the generality of the foregoing, you have asked us to provide you with this opinion on the
assumption that each of the Company Contracts is governed by the substantive laws of the State of
California (without regard to conflicts-of-law and choice-of-law principles), even though such
assumption is or may be contrary to fact.

          Whenever a statement or opinion herein is qualified by the phrase “known to us,” “to our
knowledge,” or any similar phrase, we intend to indicate that no information that gives current
actual knowledge of the inaccuracy of such statement or opinion has come to the attention of those
attorneys in this law firm who have rendered legal services in connection with the representation
of the Company. We have not undertaken or conducted any independent investigation to determine the
accuracy of statements or opinions herein qualified as described in the preceding sentence, and any
limited inquiry undertaken by us during the preparation of this opinion letter should not be
regarded as such an investigation; no inference as to our knowledge of any matters bearing on the
accuracy of any

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such statement or opinion should be drawn from the fact of our representation of
the Company.

          The opinions set forth below are subject to the following:

          (i) In rendering our opinion in clause (c) of paragraph 2 of this letter, we
express no opinion as to financial covenants or similar provisions in the Company Contracts
requiring financial calculations or determinations.

          (ii) In rendering our opinion in paragraph 6 of this letter, we have assumed,
without investigation, that the Initial Purchasers’ representations in the Agreement are correct.

          (iii) In rendering our opinion in paragraphs 5, 6 and 7 of this letter, we have
assumed that as of the date and time of the issuance of any shares of the Company’s Common Stock
resulting from a conversion of the Firm Notes pursuant to and as provided in the Firm Notes: (A)
all of the Firm Notes being surrendered upon such conversion will at that time be free and clear of
any liens and encumbrances; (B) all of the terms and conditions for such conversion set forth in
the Firm Notes will have been fully satisfied, waived or discharged; and (C) applicable law,
including its interpretation, will remain unchanged from the law in effect as of the date of this
letter. Subsequent dispositions, pledges or other transfers of the Firm Notes without registration
or qualification under the Securities Act may affect the availability of the exemptions from
registration referred to in paragraph 6 of this letter. We have further assumed, in rendering our
opinion in paragraphs 5 and 7 of this letter, that sufficient shares of the Company’s Common Stock
issuable upon conversion of the Firm Notes pursuant to and as provided in the Firm Notes will
remain duly authorized and available for issuance to satisfy the Company’s obligations upon such
conversion.

          (iv) In rendering our opinion in paragraph 8 of this letter, we have relied on a
certificate executed by one or more officers of the Company as to nature of the Company’s business
and investments as of the date hereof, and we have assumed that none of the net proceeds of the
offering will be invested in securities other than “Government securities” as such term is defined
in the Investment Company Act of 1940, as amended (the “1940 Act”).

          (v) In rendering our opinion in paragraph 11 of this letter, we have, with your
permission, assumed the following factual matters: (a) one or more of the Initial Purchasers has
its headquarters office or a principal place of business in the State of New York; (b) the Trustee
has a substantial corporate presence in the State of New York; (c) one or more senior executives of
the Trustee’s corporate trust business are located in the State of New York; (d) the Trustee has
negotiated the provisions of the Indenture with the material assistance of one or more agents of
the Trustee located in the State of New York; and (e) one or more agents of the

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Trustee located in
the State of New York are anticipated to be involved in the performance of the Trustee’s
obligations under the Indenture.

          On the basis of the foregoing, and subject to the assumptions, exceptions, limitations and
qualifications stated herein, we are of the opinion that:

          1. The execution, delivery and performance of the Transaction Agreements by the Company have
been duly authorized by all necessary corporate action on the part of the Company.

          2. The execution, delivery and performance by the Company on the date hereof of its
obligations under the Agreement, the Indenture and the Firm Notes do not (a) violate the Charter or
the Bylaws, (b) violate any judgment, writ, decree or order of any court listed on Exhibit B hereto
to which the Company is named as a party, (c) constitute a breach or default by the Company under
the Company Contracts, except where such breach or default would not have a material adverse
effect on the Company; or (d) violate any Applicable Law, except any violation that would not have
a material adverse effect on the Company, and subject to the exceptions stated in paragraphs 4(i)
through 4(xxiii) below.

          3. The statements relating to the terms of the Firm Notes and the Indenture in the Time of
Sale Memorandum and the Final Memorandum under the caption “Description of Notes,” insofar as such
statements constitute summaries of legal matters or documents referred to therein, fairly summarize
in all material respects such matters and documents. The Firm Notes, when executed and
authenticated in accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of the Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except as the validity,
binding nature or enforceability of the same may be limited by the exceptions stated in paragraphs
4(i) through 4(xxiii) below.

          4. The Agreement and the Indenture have been duly executed and delivered by the Company. The
Indenture constitutes a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the validity, binding nature or enforceability of
the same may be limited by:

          (i) applicable federal or state bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer or conveyance, and other laws or court
decisions relating to or affecting the rights of creditors;

A-6

 

          (ii) equitable principles of general applicability (including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing,
equitable subordination, and the possible unavailability of specific performance or
injunctive relief), regardless of whether considered in a proceeding in equity or at
law or whether codified by statute;

          (iii) California judicial decisions which have held that certain provisions,
including without limitation those providing for the acceleration of indebtedness upon
the occurrence of specified events, are unenforceable under circumstances where it
cannot be demonstrated that the enforcement of such provisions (a) is reasonably
necessary for the protection of the party seeking enforcement, (b) has been undertaken
in good faith under the circumstances then existing, and (c) is commercially
reasonable;

          (iv) the effect of Section 1670.5 of the California Civil Code, which provides
that a court may refuse to enforce a contract or
limit the application thereof or of any clause thereof which the court finds as a
matter of law to have been unconscionable at the time it was made;

          (v) the unenforceability, under certain circumstances, of provisions that contain
prospective waivers of (a) vaguely or broadly stated rights, (b) unknown future
rights, (c) the benefits of statutory, regulatory or constitutional rights, unless and
to the extent the statute, regulation or constitution explicitly permits such waiver,
(d) unknown future defenses and (e) rights to damages;

          (vi) the unenforceability of provisions prohibiting waivers that are not in
writing to the extent that Section 1698 of the California Civil Code (or similar
provisions of other applicable laws) permits oral modifications that have been
performed;

          (vii) the unenforceability, under certain circumstances, of provisions to the
effect that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or remedy, or
that the election of some particular remedy or remedies does not preclude recourse to
one or another remedy;

          (viii) the potential to vary the terms of the Indenture on the basis of parol
evidence;

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          (ix) limitations on the enforceability of indemnification, release, contribution,
exculpatory or nonliability provisions under federal or state securities laws, under
Sections 1542, 1543 and 2772-78 of the California Civil Code, and under any other
applicable statute or court decisions, including, without limitation, the effect of
California statutes and cases applying such statutes which have denied enforcement of
indemnification agreements against the indemnitee’s negligence, wrongdoing or
violation of law;

          (x) the effect of Section 1717, et seq. of the California Civil Code and judicial
decisions thereunder on provisions which purport to require the award of attorneys’
fees, expenses or costs;

          (xi) the unenforceability, under certain circumstances, of provisions which
directly or indirectly purport to effect a jury trial waiver;

          (xii) the unenforceability, under certain circumstances, of arbitration or other
alternative dispute resolution provisions;

          (xiii) the unenforceability, under certain circumstances, of provisions which
purport to govern forum selection, venue, personal jurisdiction or subject matter
jurisdiction;

          (xiv) the unenforceability, under certain circumstances, of provisions which
purport to appoint a party as attorney-in-fact or agent for an adverse party;

          (xv) the effect of Section 23301, et seq. of the California Revenue and Taxation
Code, which provides that a party to a contract may, under certain circumstances, void
the contract if the other party (irrespective of the jurisdiction of organization or
domicile of such other party) fails to file any required California tax returns and/or
pay any required California franchise or income taxes;

          (xvi) the effect of Section 564 of the California Code of Civil Procedure and
other provisions of California law which impose certain restrictions on the
enforceability of provisions that provide for the appointment of a receiver;

          (xvii) the unenforceability, under certain circumstances, of provisions which
purport to authorize a judicial referee to order injunctive or other provisional or
similar extraordinary relief;

A-8

 

          (xviii) the unenforceability of provisions concerning offsets, self-help or
summary remedies, to the extent that enforcement of such provisions is determined by a
court to be unreasonable under then existing circumstances;

          (xix) the unenforceability, under certain circumstances, of provisions which
provide for penalties, liquidated damages, acceleration of future amounts due (other
than principal) without appropriate discount to present value, prepayment charges,
late charges, additional interest in the event of a default or fees or costs related
to such charges;

          (xx) the effect of Sections 3275 and 3302 of the California Civil Code and other
provisions of California law which impose limitations on the enforceability of
time-is-of-the-essence clauses;

          (xxi) without limiting the generality of subparagraph (v) above, the effect of
Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968), and Cathay Bank v.
Lee, 14 Cal. App. 4th 1533 (1993) and their progeny, which impose certain
limitations upon the effectiveness of waivers;

          (xxii) the unenforceability, under certain circumstances, of provisions of
agreements purporting to establish evidentiary standards or to render determinations
by any party conclusive; and

          (xxiii) the effect of the restrictions in Article XV of the Constitution of the
State of California upon provisions relating to rates of interest on the loan of
money.

          5. The shares of Common Stock of the Company that are issuable pursuant to and upon conversion
of the Firm Notes as provided in the Indenture and the Firm Notes (the “Shares”) have been duly
authorized and reserved in accordance with the Resolutions, assuming such conversion takes place
immediately following the closing on the Closing Date. The Shares, when issued and delivered upon
conversion of the Firm Notes in accordance with the terms of such Firm Notes and the Indenture,
will be validly issued, fully paid and nonassessable. The stockholders of the Company have no
preemptive rights under the Charter, the Bylaws or the DGCL.

          6. The sale of the Firm Notes pursuant to the Agreement constitutes a transaction exempt from
the registration requirements under Section 5 of the Securities Act and does not require
qualification of an indenture in respect thereof under the Trust Indenture Act of 1939, as amended.

A-9

 

          7. No consent, approval or authorization of, or designation, declaration or filing with, any
California or federal governmental authority is required by the Company under any Applicable Law in
connection with the execution, delivery and performance by the Company of the Transaction
Agreements in accordance with their respective terms other than: (i) those that have already been
obtained and are in full force and effect; or (ii) as required by state securities or Blue Sky
laws, as to which we express no opinion.

          8. The Company is not, and will not become as a result of the consummation of the transactions
contemplated by the Agreement, an “investment company” as defined in the 1940 Act.

          9. The statements in the Time of Sale Memorandum and the Final Memorandum under the caption
“Material U.S. Federal Tax Considerations,” insofar as such statements purport to constitute a
summary of the consequences to certain holders under the United States federal tax laws referred to
therein, are accurate and fairly summarize such consequences in all material respects.

          10. The statements in the Time of Sale Memorandum and the Final Memorandum under the caption
“Description of Capital Stock,” insofar as such statements constitute summaries of the legal
matters or documents referred to therein, fairly summarize the matters referred to therein in all
material respects.

          11. Assuming a court of the State of California has jurisdiction, in a proceeding in a court
of the State of California for the enforcement of the Indenture, the court should, assuming that
Section 18.04 of the Indenture providing for the choice of New York law to govern the Indenture and
the Firm Notes is enforceable under the laws of New York, give effect to Section 18.04 of the
Indenture, except to the extent that (i) any provision of the Indenture is determined by the court
to be contrary to a fundamental policy of the state whose law would apply in the absence of that
Section, and (ii) that state has a materially greater interest in the determination of the
particular issue than does the state whose law is chosen.

          In connection with the preparation of the Time of Sale Memorandum and the Final Memorandum, we
have participated in conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company and representatives of the
Initial Purchasers, including its counsel, at which the contents of the Time of Sale Memorandum and
the Final Memorandum were discussed. Although we have not independently verified, are not passing
upon and do not assume responsibility for the accuracy, completeness or fairness of the statements
contained in the Time of Sale Memorandum or the Final Memorandum or any amendments or supplements
thereto, except as described above in the first sentence of paragraph 3 and in

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paragraphs 9 and 10,
on the basis of the foregoing, nothing has come to our attention that causes us to believe that:
(A) the Time of Sale Memorandum (other than financial statements, schedules and notes and other
financial information included or incorporated by reference therein or derived therefrom, as to
which we express no comment), as of its date or as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (B) the Final Memorandum (other than financial statements,
schedules and notes and other financial information included or incorporated by reference therein
or derived therefrom, as to which we express no comment), as of its date or as of the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.

          Our opinions pertain only to the Transaction Agreements themselves, and do not encompass,
cover or pertain to, or take into account the potential effect on the opinions rendered above of,
any agreement attached as a schedule or an exhibit to the Transaction Agreements, referred to in
the Transaction Agreements or executed contemporaneously with the Transaction Agreements.

          In rendering our opinions, we have assumed that the parties have acted and will act in
accordance with the express terms of the Transaction Agreements and the rights and obligations of
the parties thereunder, and we
express no opinion with respect to the effect of any party’s failure to so comply or act.

          Notwithstanding anything in this opinion letter to the contrary, the opinions set forth above
are given only as of the date hereof. We disclaim any obligation to update any of the opinions
rendered herein and express no opinion as to the effect of events occurring, circumstances arising,
or changes of law becoming effective or occurring, after the date hereof on the matters addressed
in this opinion letter, and we assume no responsibility to inform you of additional or changed
facts, or changes in law, of which we may become aware.

A-11

 

          The opinions set forth above are expressly limited to the matters stated. No opinion is
implied or may be inferred beyond what is explicitly stated in this letter. This letter is
rendered solely for your benefit in connection with the transactions contemplated by the
Transaction Agreements and may not be relied upon by any other party. Copies of this letter may
not be circulated or furnished to any other person or entity (except your attorneys and other
advisors) and this letter may not be referred to in any report or document furnished to any other
person or entity, without our prior written consent.

Very truly yours,

HOWARD RICE NEMEROVSKI CANADY

FALK & RABKIN

A Professional Corporation

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Julia Vax 	 	 
	 	 	 	 
	 

A-12

 

Exhibit A

Company Contracts

     1. Indenture dated as of June 1, 2004, between the Company and Wells Fargo Bank, N.A. as
trustee, including therein the form of the Note.

     2. Form of Indemnity Agreement between the Company and each of its directors and executive
officers.

     3. Consent to Assignment and Assumption of Lease dated April 22, 1998 between CSM Investors,
Inc., IntraNet Integration Group, Inc. and the Company.

     4. Assignment of Lease dated April 21, 1998 between Intranet Integration Group, Inc. and the
Company.

     5. Lease Agreement dated January 18, 2000 between Property Reserve, Inc. and the Company.

     6. First Amendment of Lease dated January 31, 2001 to that certain Lease dated April 24, 1996
between CSM Investors, Inc. and the Company (as assignee of Intranet Integration Group, Inc.).

     7. 1998 Stock Option Plan, as amended and superseded by 1998 Equity Incentive Plan.

     8. 1999 Stock Option Plan, formerly known as the 1999 Non-Officer Stock Option Plan, as
amended.

     9. 2000 Employee Stock Purchase Plan, as amended, and offering.

     10. Second Amendment of Lease dated April 22, 2002 to that certain Lease dated April 24, 1996
between CSM Investors, Inc. and the Company (as assignee of Intranet Integration Group, Inc.) as
amended.

     11. Second Amendment of Lease dated April 28, 2003 to that certain Lease dated January 18,
2000 between Property Reserve Inc. and the Company.

     12. Registration Rights Agreement dated as of June 1, 2004, between the Company and the
initial purchasers of Senior Convertible Notes due January 1, 2024.

A-13

 

     13. Second Amended and Restated Symantec Online Store Agreement, between Symantec Corporation,
Symantec Limited, the Company. and Digital River Ireland Limited effective April 1, 2006.

     14. 1998 Equity Incentive Plan (formerly known as 1998 Stock Option Plan) effective March 4,
2008.

     15. Amended and Restated Employment Agreement for Joel A. Ronning dated February 28, 2007.

     16. Change of Control and Severance Agreement for Thomas M. Donnelly effective March 4, 2008.

     17. Form of Amendment to Non-Qualified Stock Option Agreement.

     18. Inducement Equity Incentive Plan effective December 15, 2005. .

     19. 2007 Equity Incentive Plan.

     20. Change of Control and Severance Agreement for Kevin L. Crudden dated March 4, 2008.

     21. Microsoft Operations Digital Distribution Agreement, between the Company and Microsoft
Corporation effective September 1, 2006.

     22. Direct Reseller Addendum to the Microsoft Operations Digital Distribution Agreement,
between the Company and Microsoft Corporation effective September 1, 2006.

     23. Omnibus Amendment to the Microsoft Operations Digital Distribution Agreement, between the
Company and Microsoft Corporation effective October 4, 2007.

     24. Amendment to the Microsoft Operations Digital Distribution Agreement, between the Company.
and Microsoft Corporation effective December 2, 2008.

     25. Amendment to the Microsoft Operations Digital Distribution Agreement, between the Company
and Microsoft Corporation effective September 9, 2009.

     26. Second Omnibus Amendment to the Microsoft Operations Digital Distribution Agreement
between the Company and Microsoft Corporation effective August 20, 2010.

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EXHIBIT B

OPINION OF KEVIN CRUDDEN, VICE PRESIDENT AND

GENERAL COUNSEL OF THE COMPANY

[Digital River, Inc. Letterhead]

November ___, 2010

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Morgan Stanley & Co. Incorporated

     As Representatives of the Initial Purchasers

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

One Bryant Park

New York, NY 10036

c/o Morgan Stanley & Co. Incorporated

1585 Broadway

New York, NY 10036

     Re: Digital River, Inc.

Ladies and Gentlemen:

     I am Vice President and General Counsel of Digital River, Inc., a Delaware corporation (the
“Company”).

     This opinion is rendered to you at the request of the Company pursuant to Section 5(d) of the
Purchase Agreement dated October 26, 2010 (the “Agreement”), by and among you, as representatives
of the several Initial Purchasers named therein, and the Company regarding the offering of up to
$300,000,000 aggregate principal amount of 2.00% Convertible Senior Notes due 2030. Capitalized
terms used but not defined herein have the same meanings given them in the Agreement.

     In this connection, I have examined original or copies of the following documents, each of
which is dated the date hereof (unless otherwise specified):

          1. The Time of Sale Memorandum for the Firm Notes (as defined below) dated October 26, 2010
(the “Time of Sale Memorandum”);

B-1

 

          2. The Final Memorandum for the Firm Notes dated October [26], 2010 (the “Final Memorandum”);

          3. The Agreement;

          4. The Indenture dated November 1, 2010 between the Company and Wells Fargo Bank, N.A. as
trustee (the “Trustee”) (the “Indenture”);

          5. The 2.00% Convertible Senior Notes dated November 1, 2010, issued by the Company in favor
of the Initial Purchasers pursuant to the Agreement as of the date hereof (the “Firm Notes”);

          6. The Company’s Amended and Restated Certificate of Incorporation, filed with the Secretary
of State of Delaware on August 14, 1998, as amended by the Certificates of Amendment, filed on
September 20, 2000 and May 31, 2006 (the “Charter”);

          7. The Company’s Amended and Restated Bylaws as currently in effect (the “Bylaws”);

          8. The resolutions of the Board of Directors of the Company adopted on October 22, 2010 and
the resolutions of the Negotiating Committee of the Board of Directors adopted on October 26, 2010
(the “Resolutions”).

          9. Certificates, each dated as of a recent date, from the Secretaries of State of the States
of Delaware, California, Minnesota and Washington as to the good standing of the Company in such
states, and a certificate, dated as of a recent date, from the Secretary of State of the State of
California as to the good standing of BlueHornet Networks, Inc. in such state (collectively,
“Domestic Good Standings”);

          10. Certificates, each dated as of a recent date, from the Register of Companies of the
Companies Registration Office of Ireland, as to the status of Digital River Technology Limited and
the status of Digital River Ireland Limited in that country, and from Handelsregister B of the
Cologne District Office, as to the status of Digital River GmbH in that country (collectively, “Foreign Good Standings”);

          11. The Company’s Annual Report on Form 10-K (the “Form 10-K”) filed with the Commission for
the year ended December 31, 2009, as amended on August 19, 2010 pursuant to the Securities Exchange
Act of 1934 (the “Exchange Act”);

B-2

 

          12. The Company’s Quarterly Reports on Form 10-Q (the “Form 10-Qs”) filed with the Commission
for the quarters ended March 31, 2010 and June 30, 2010;

          13. The Company’s Current Reports on Form 8-K and Form 8-K/A (the “Form 8-Ks”) filed with the
Commission from January 28, 2010 to the date hereof;

          14. The Company’s 2010 Proxy Statement filed with the Commission on March 30, 2010 (together
with the Form 10-K, the Form 10-Qs, the Form 8-Ks, the “Exchange Act Reports”);

          15. The Company’s Registration Statement on Form 8-A, as filed on July 20, 1998;

          16. The minute books of the Company;

          17. The minute books of each of the Significant Subsidiaries (as defined below);

          18. Such corporate records, certificates and other documents (of which I am aware) and such
questions of law as I have considered necessary or appropriate for the purposes of rendering the
opinions that follow.

               The agreements and documents described in Items 3 through 5 above are referred to herein as
the “Transaction Agreements.”

               The opinions set forth below are subject to the following:

               (i) My opinion in paragraph 1 below is based solely on my review of a certified copy of the
Charter and copies of the Bylaws, the minute books of the Company, and the Domestic Good Standings.

               (ii) My opinion in paragraph 2 below is based solely on my review of the Foreign Good
Standings, and the minute books of each Significant Subsidiary (as defined below).

               (iii) My opinion in paragraph 5 below is based solely on my personal actual knowledge and the
docket or complaint searches in the following jurisdictions and databases: (a) Courtlink
(courtlink.lexisnexis.com) for the dockets of the Delaware Court of Chancery; (b) the U.S.
Party/Case Index (pacer.uspci.uscourts.gov) for the dockets of civil cases in federal district
courts in which the Company is named as a party; and (c) Westlaw (www.westlaw.com) for the dockets
of the Minnesota Supreme Court, Court of Appeals, District

B-3

 

Courts, Tax Court and Workers’ Compensation Court of Appeals in
which the Company is named as a party.

     In giving the opinions that follow I have relied as to matters of fact without investigation,
to the extent I deemed proper, upon certificates from officers of the Company and certain of its
affiliates, and one or more certificates, facsimiles, and other documents from, and oral
conversations with, public officials. I have assumed without investigation the authenticity of
each document submitted to me as an original, the conformity to the originals of each document
submitted to me as a copy, the authenticity of the originals of such latter documents, the
genuineness of all signatures, and the legal capacity of all natural persons.

     Based on and subject to the foregoing, it is my opinion that:

     1. The Company has been duly incorporated, is a validly existing corporation in good standing
under the laws of the State of Delaware, has the corporate power and authority to own its property
and conduct its business as described in the Time of Sale Memorandum, and is duly qualified to
transact business as a foreign corporation in the states of California, Minnesota and Washington.

     2. Each of BlueHornet Networks, Inc., Digital River GmbH, Digital River Technology Limited and
Digital River Ireland Limited (together, the “Significant Subsidaries”) is in good standing (or a
foreign country equivalent thereof) under the laws of the jurisdiction of its incorporation; all of
the issued shares of capital stock of each Significant Subsidiary are owned directly or indirectly
by the Company, free and clear of all liens, encumberances, equities or claims.

     3. The shares of Common Stock of the Company outstanding as of the Closing Date have been duly
authorized and validly issued, and are fully paid and non assessable.

     4. The statements (a) in “Item 3 — Legal Proceedings” of the Company’s Form 10-K for the year
ended December 31, 2009, (b) in “Item 1 — Legal Proceedings” of Part II of the Company’s quarterly
reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010 and (c) in “Item 8.01
— Other Events” in each current report on Form 8-K included or incorporated by reference in the
Time of Sale Memorandum and in the Final Memorandum, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to therein, as of the
respective filing dates thereof, fairly summarizesuch legal matters, documents and proceedings in
all material respects.

B-4

 

     5. Except as included or incorporated by reference in the Time of Sale Memorandum, I do not
know of any legal or governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or any of its
subsidiaries is subject that would reasonably be expected to result in a material adverse effect on
the Company and its subsidiaries, taken as a whole, or on the Company’s ability to perform its
obligations under the Transaction Agreements or to consummate the transactions contemplated by the
Time of Sale Memorandum.

     6. The Exchange Act Reports or portions thereof incorporated by reference in the Time of Sale
Memorandum or Final Memorandum comply as to form in all material respects with the requirements of
the Exchange Act and the applicable rules and regulations thereunder; provided, however, that I
express no view as to the financial statements, schedules and notes and other financial information
included therein or derived therefrom.

     The opinions expressed herein are given as of the date hereof only, and are not given as of
any later date. I have not undertaken any factual or legal investigation beyond the date hereof,
and I disclaim any obligation to notify you or any other person after the date hereof if any change
in fact and/or law should change my opinion with respect to any matters set forth herein.

     I am a member of the bar of the State of Minnesota. I express no opinion as to any laws of
any other jurisdiction other than the laws of the State of Delaware and federal laws of the United
States to the extent applicable to the scope of the opinions expressed above. Further, I express
no opinion regarding choice of law or conflicts of laws.

     This opinion is rendered to you as the Initial Purchasers under the Agreement and may not be
relied upon for any other purpose or by any other person without my express written consent.

	 	 	 	 	 
	 	Very truly yours,

Kevin L. Crudden

Vice President and General Counsel

 	 
	 	 	 
	 	 	 
	 	 	 

B-5

 

	 	 	 	 	 

EXHIBIT C

OPINION OF DAVIS POLK & WARDWELL LLP

     The opinion of Davis Polk & Wardwell LLP to be delivered pursuant to Section 5(d) of the
Purchase Agreement shall be to the effect that:

     A. The Purchase Agreement has been duly authorized, executed and delivered by the Company.

     B. The Securities have been duly authorized by the Company and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of the Purchase Agreement, will be valid and
binding obligations of the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts
of reasonableness and equitable principles of general applicability, and will be entitled to the
benefits of the Indenture pursuant to which such Securities are to be issued.

     C. The Underlying Securities issuable upon conversion of the Securities have been duly
authorized and reserved and, when issued upon conversion of the Securities in accordance with the
terms of the Securities, will be validly issued, fully paid and non-assessable, and the issuance of
the Underlying Securities will not be subject to any preemptive or similar rights.

     D. The Indenture has been duly authorized, executed and delivered by, and is a valid and
binding agreement of, the Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of
reasonableness and equitable principles of general applicability.

     E. The statements relating to legal matters, documents or proceedings included in (1) the Time
of Sale Memorandum and the Final Memorandum under the captions “Description of Securities”,
“Description of Capital Stock” and “Transfer Restrictions” and (2) in the Final Memorandum under
the caption “Plan of Distribution” in each case fairly summarize in all material respects such
matters, documents and proceedings.

     F. Nothing has come to the attention of such counsel to cause such counsel to believe that (i)
the Time of Sale Memorandum (except for the financial statements and financial schedules and other
financial data, as to which such counsel need not express any belief) as of the date of the
Purchase Agreement or as amended or supplemented, if applicable, as of the date such opinion is
delivered contained or contains any untrue statement of a material fact or omitted

C-1

 

or omits to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (ii) the Final Memorandum (except for
the financial statements and financial schedules and other financial and, as to which such counsel
need not express any belief) when issued contained, or as of the date such opinion is delivered,
contains, any untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

     With respect to the matters referred to in the paragraph above, Davis Polk & Wardwell LLP may
state that their beliefs are based upon their participation in the preparation of the Time of Sale
Memorandum and the Final Memorandum (and any amendments or supplements thereto) and review and
discussion of the contents thereof (including the review of, but not participation in the
preparation of, the incorporated documents), but are without independent check or verification
except as specified.

     G. Based upon the representations, warranties and agreements of the Company in Sections 1(r),
1(s), 1(u), 6(h), 6(i) and 6(l) of the Purchase Agreement and of the Initial Purchasers in Section
7 of the Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers under the Purchase Agreement or in connection with the
initial resale of such Securities by the Initial Purchasers in accordance with Section 7 of the
Purchase Agreement to register the Securities under the Securities Act of 1933 or to qualify the
Indenture under the Trust Indenture Act of 1939, it being understood that no opinion is expressed
as to any subsequent resale of any Security or Underlying Security.

C-2

 

EXHIBIT D

[FORM OF LOCK-UP LETTER]

_____________, 20___

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Morgan Stanley & Co. Incorporated

     As Representatives of the several Initial Purchasers named in Schedule I to the Purchase
Agreement referred to below

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

     One Bryant Park

     New York, NY 10036

c/o Morgan Stanley & Co. Incorporated

     1585 Broadway

     New York, NY 10036

Ladies and Gentlemen:

     The undersigned understands that you, as Representatives of the several Initial Purchasers
(the “Initial Purchasers”) propose to enter into a Purchase Agreement (the “Purchase Agreement”)
with Digital River, Inc., a Delaware corporation (the “Company”), providing for the offering (the
“Offering”) by the Company to the several Initial Purchasers of approximately $250,000,000
principal amount of Convertible Senior Notes due 2030 (the “Securities”). The Securities will be
convertible into shares of common stock, par value $0.01, of the Company (the “Common Stock”).

     To induce the Initial Purchasers that may participate in the Offering to continue their
efforts in connection with the Offering, the undersigned hereby agrees that, without the prior
written consent of the Representatives on behalf of the Initial Purchasers, the undersigned will
not, during the period commencing on the date hereof and ending 90 days after the date of the final
offering memorandum relating to the Offering (the “Final Memorandum”), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly
or indirectly, any shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of
the Securities

D-1

 

Exchange Act of 1934, as amended (the “Exchange Act”)), by the undersigned or any other
securities so owned convertible into or exercisable or exchangeable for Common Stock or (2) enter
into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the completion of the
Offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or
shall be voluntarily made in connection with subsequent sales of Common Stock or other securities
acquired in such open market transactions, (b) transactions relating to shares of Common Stock at
any time if the number of shares involved in such transactions, together with all shares of Common
Stock involved in such transactions by all other officers and directors; of the Company who are
subject to a letter similar to this letter does not in the aggregate exceed 400,000 shares of
Common Stock of the Company, (c) transfers of shares of Common Stock or any security convertible
into Common Stock (i) to the immediate family or trust of the undersigned or (ii) during the
lifetime or upon death of the undersigned, by bona fide gift, will or intestacy provided that in
the case of any transfer or distribution pursuant to clause (c)(i) or (ii), each donee or
distributee shall sign and deliver a lock up letter substantially in the form of this letter, (d)
the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer
of shares of Common Stock, provided that such plan does not provide for the transfer of Common
Stock during the 90-day restricted period and no public announcement or filing under the Exchange
Act regarding the establishment of such plan shall be required of or voluntarily made by or on
behalf of the undersigned or the Company, (e) the exercise of any options to acquire shares of
Common Stock pursuant to an equity incentive plan of the Company existing as of the date hereof,
provided that any shares of Common Stock received upon such exercise will be subject to the
provisions and restrictions herein or (f) in the case of any restricted stock or performance shares
held by the undersigned that vest or are forfeited during the 90-day restricted period, the
disposition of shares of such restricted stock or performance shares to the Company to pay
withholding tax obligations incurred by the undersigned upon such vesting (but only to such extent)
or to deliver forfeited shares, provided that any required filing under Section 16(a) of the
Exchange Act in connection with such disposition clearly indicates such purpose.1 In
addition, the undersigned agrees that, without the prior

 

			
	1	 	The lock-up agreement for Joel Ronning, CEO, will also contain the following carve-out:
	 
	 	 	“(e) the offer, sale, contract to sell, pledge dispositions or exercises
by the undersigned of that certain call option, consisting of the right to
purchase Common Stock, obtained by the undersigned on November 9, 2009 and
expiring on January 22, 2011.”

D-2

 

written consent of the Representatives on behalf of the Initial Purchasers, it will not,
during the period commencing on the date hereof and ending 90 days after the date of the Final
Memorandum, make any demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The undersigned also agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of the undersigned’s shares of Common
Stock except in compliance with the foregoing restrictions.

     The undersigned understands that the Company and the Initial Purchasers are relying upon this
agreement in proceeding toward consummation of the Offering. The undersigned further understands
that this agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns. This Agreement shall lapse and become null and void if the
Offering has not been consummated on or before November 30, 2010.

     Whether or not the Offering actually occurs depends on a number of factors, including market
conditions. Any Offering will only be made pursuant to a Purchase Agreement, the terms of which
are subject to negotiation between the Company and the Initial Purchasers.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	
 	 
	 	(Name) 	 
	 	 	 
	 
	 	 	 
	 	
 	 
	 	(Address) 	 
	 	 	 
	 

D-3Exhibit 10-1

Exhibit 10.1

Gannett Co., Inc.

Key Executive Life Insurance Plan

I  —  Purpose

The purpose of this 2010 Key Executive Life Insurance Plan is to provide annual
payments to pay premiums on life insurance contracts provided for certain key management or
highly compensated employees of Gannett Co., Inc. and its affiliates. The life insurance
contract will be owned by the executive. Each executive will apply for the life insurance
contract, and if issued, will have full ownership rights to the life insurance contract and will
be able to exercise all ownership rights without involvement by the Employer other than those
rights specifically agreed to by the parties as described in this Plan. Contributions to pay
premiums on the life insurance contract will be taxable income to the executive at the time the
contributions are made. It is intended that this Plan will either be exempt from the application
of Section 409A of the Code, or will comply with the requirements of Section 409A of the Code but
only to the extent that this Plan provides for deferred compensation.

II  —  Definitions

For the purposes of this Plan and the Participation Agreement, the following terms will have the
meanings indicated unless the context clearly indicates otherwise:

Board. “Board” means the Board of Directors of Gannett Co., Inc.

Code. “Code” means the Internal Revenue Code of 1986, as may be amended from time to
time, and the regulations and guidance issued thereunder.

Committee. “Committee” means the Benefit Plans Committee.

Employer. “Employer” means Gannett Co., Inc., and its affiliates.

Insurance Carrier. “Insurance Carrier” means one or more life insurance companies chosen
by the Employer to provide life insurance coverage through specific life insurance policies.

Life Insurance Product. “Life Insurance Product” means the life insurance product(s)
issued by an Insurance Carrier on the life of a Participant, to which the Employer will make
annual premium payments on behalf of the Participant (“Annual Employer Contributions”). In
addition, “Life Insurance Product” shall include any annuity product or series of annuity
products issued by an Insurance Carrier on the life of a Participant, to which the Employer will
make annual payments on behalf of the Participant as set forth in the Plan.

 

 

 

Participant. “Participant” means any employee who is eligible, under section III, below,
to participate in this Plan and satisfies all requirements to commence participation in this
Plan.

Participation Agreement. “Participation Agreement” means the agreement filed by a
Participant and approved by the Committee pursuant to section III, below, or other writing
determined by the Committee in its discretion.

Termination. “Termination”, “terminates employment” or any other similar such phrase
means a Participant’s “separation from service” (from the employer who employed the Participant
at the time the contributions were made and any other employer treated as the same employer
pursuant to Treas. Reg. §1.409A-1(h)(3) and other applicable guidance), for any reason, within
the meaning of Section 409A, and Treas. Reg. §1.409A-1(h) and other applicable guidance.

Targeted Death Benefit. “Targeted Death Benefit” is an amount of death benefits to be or
which could be provided under a Life Insurance Product as described in the Participation
Agreement, on which Annual Employer Contributions under this Plan are to be estimated. The
Participation Agreement may provide for different Targeted Death Benefits prior to termination of
employment and after.

III  —  Participation

Eligibility. The Committee will select those key employees of the Employer, in their
sole discretion, who will be eligible to participate.

Participation. An employee’s participation in this Plan will only be effective when the
Life Insurance Product becomes effective and in force. Participation in this Plan will continue
until such time as the Participant terminates employment (unless otherwise specified in the
Participant’s Participation Agreement), until such time as Annual Employer Contributions are no
longer provided for by the terms of this Plan or until the Participant is no longer permitted to
participate in this Plan.

Requirement of Cooperation. As a condition for Participation in this Plan, the
Participant shall be required to comply with all normal and reasonable requests deemed necessary
to apply for and obtain the Life Insurance Product.

Change in Employment Status. Unless otherwise specified in the Participant’s
Participation Agreement, if the Chief Executive Officer or the Board determines that a
Participant’s employment performance no longer merits participation in this Plan prior to the
Participant’s termination of employment, but does not terminate the Participant’s employment with
Employer, participation herein and eligibility to receive future contributions under this Plan
will cease at that time.

 

2

 

IV  —  Targeted Death Benefit

Basic Formula. The contribution, as set forth in Section V, below, will be made by the
Employer, based on the amount of Targeted Death Benefit for each Participant as set forth in the
Participation Agreement. The Targeted Death Benefit shall provide for a different Targeted Death
Benefit during employment and after employment. Unless otherwise provided in the Participation
Agreement, the terms shall have the following meaning:

	 	•	 	Pre-Termination Death Benefit — the level of death benefit under the Life Insurance
Product intended to be provided prior to termination of employment, but not beyond the
Participant’s sixty-fifth (65th) birthday.

	 	•	 	Post-Termination Death Benefit — the level of death benefit under the Life Insurance
Product intended to be provided after termination of employment.

V  —  Contributions

Employer Contributions. Unless otherwise provided in the Participation Agreement, the
Employer will make a contribution on behalf of the Participant to the Life Insurance Product or
will make a payment in cash to the Participant. The amount of such Annual Employer Contributions
or payment will be determined using the following rules, unless otherwise specified in the
Participant’s Participation Agreement:

	 	•	 	During Employment —  The Employer will make Annual Employer Contributions until
the Participant’s sixty-second (62nd) birthday; provided that no less than five
(5) Annual Employer Contributions will be made; and provided further that the Participant
has not terminated employment and is eligible to receive benefits under this Plan.

	 	•	 	After Termination — Unless otherwise provided in the Participation Agreement,
the Employer will make no further Annual Employer Contributions after termination of
employment.

	 	•	 	Method of Calculation —  Each Annual Employer Contribution will be calculated as
the annual premium necessary to provide the Targeted Death Benefit using the illustration
system maintained by the Insurance Carrier, and utilizing the assumptions fixed and set
forth in Exhibit A, assuming that level premium payments are made until the Participant’s
sixty-second (62nd) birthday, provided no less than five (5) Annual Employer
Contributions are made. The determination shall be based on the underwriting determination
for the Participant made by the Insurance Carrier as reflected in the Life Insurance
Product issued to the Participant.

	 	•	 	Recalculation of the Annual Employer Contribution — Except as provided below and
the Participation Agreement, the Annual Employer Contribution shall be re-determined
annually and such re-calculation shall be made as of the anniversary of the Life Insurance
Product. Such re-determination shall utilize the assumptions fixed and set forth in
Exhibit A.

 

3

 

	 	•	 	Section 7702 Limitations — To the extent that any Annual Employer Contribution
scheduled to be made into a Life Insurance Product other than an annuity product would
exceed the limit permitted by section 7702 of the Code, such excess will be paid in cash to
the Participant at the same time as the Annual Employer Contribution is made to the Life
Insurance Product.

	 	•	 	Use of an Annuity Product —  In the event that the Annual Employer Contribution
is made into an annuity product or series of annuity products issued by an Insurance
Carrier on the life of a Participant, the Annual Employer Contribution shall be fixed as of
the date of the initial Annual Employer Contribution and shall not be resolved to
accommodate changes in the assumptions set forth in Exhibit A.

Cessation of Employer Contributions. Unless otherwise provided in the Participation
Agreement, Annual Employer Contributions will cease upon the earlier of:

	 	•	 	Death

	 	•	 	Participant’s termination of employment;

	 	•	 	Participant partially or completely surrenders, attempts to take a loan from, or
withdraw cash value from the Life Insurance Product, or adjusts the face amount of the
Life Insurance Product prior to the completion of Annual Employer Contributions as set
forth above;

	 	•	 	Participant makes a contribution to the Life Insurance Product prior to the
completion of Annual Employer Contributions as set forth above; or

	 	•	 	Participant suffers a Change in Employment Status as described above.

Unless otherwise specified in the Participant’s Participation Agreement, nothing contained herein
shall limit the Employer’s ability to terminate Annual Employer Contributions for any
Participant, or for all Participants upon the termination or amendment of this Plan in the sole
discretion of the Employer.

Timing of Employer Contributions. Annual Employer Contributions to the Life Insurance
Product will be made on an annual mode with premiums being paid on or about the policy
anniversary, except that in no event will an Annual Employer Contribution be made in a calendar
year other than the calendar year in which the Annual Employer Contribution is due.

Participant Contributions. A Participant may not make additional contributions directly
into the Life Insurance Product prior to the completion of Annual Employer Contributions as set
forth above.

Withholding; Payroll Taxes. The amount of the Annual Employer Contributions and
additional Annual Employer Contributions, if any, will be treated as current compensation, and as
such, Employer shall withhold any taxes required to be withheld with respect to such amount under
local, state or federal law. Such withholding will be made to the greatest extent possible from
other compensation paid to the Participant, and to the extent other compensation is insufficient
to cover the required withholding, the Participant shall reimburse the Employer the amount
necessary to meet its withholding obligation.

 

4

 

VI  —  Benefits

Employer Contributions. The sole benefit to be provided by the Employer under this Plan
is the Annual Employer Contributions described in Section V above, as determined by the Committee
based on the Targeted Death Benefit, which shall be made by the Employer to the Life Insurance
Product, as determined by the Employer, on behalf of the Participant. In the event such Annual
Employer Contribution cannot be made to such Product due to limitations contained herein or in
the Product, such excess shall be distributed to the Participant in cash to the Participant no
later than the close of the calendar year in which the Annual Employer Contribution would have
been made to the Product if such limitations had not existed.

Ownership Of Life Insurance Product. Each Participant shall be named as the owner of the
Life Insurance Product as applicable, and shall have all rights, privileges and duties of an
owner as set forth in the Product. Such rights may include, without limitation, the right to
name a beneficiary to receive any death benefits due under the terms of the Product, the right to
request and make withdrawals from the product, including a complete surrender of the Product.
All rights as owner of the Life Insurance Product will be exercisable without the consent or
involvement of the Employer, except as may be limited in this plan document.

Death. This Plan does not promise any particular level of death benefit, but only an
annual contribution, as described herein, which may be based on the costs of providing certain
levels of death benefit under a particular Life Insurance Product. The Employer does not
guarantee any level of death benefits or that payment will be made by the Insurance Carrier. The
Participant’s rights to any benefits under a Product, if any, shall solely be as the owner of
such Product described herein.

VII  —  Administration

Committee; Duties. The Plan will be administered by the Committee. The primary duty of
the Committee with respect to this Plan will be to calculate and make Annual Employer
Contributions into the Life Insurance Product on behalf of the Participants. The Committee, or
its delegate(s), will have the full discretionary authority to make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of the Plan and decide or
resolve any and all questions, including interpretations of the Plan, as may arise in such
administration. The Employer will not have any responsibility regarding the operation of the
Life Insurance Product or the exercise of any ownership rights of the Life Insurance Product,
which are exercisable solely by the Participant without any involvement from the Employer, except
as may be specifically agreed upon.

Binding Effect of Decisions. The decision or action of the Committee with respect to any
question arising out of or in connection with the administration, interpretation and application
of this Plan will be final, conclusive and binding upon all persons having any interest in this
Plan.

 

5

 

Indemnity of Committee. The Employer will indemnify and hold harmless the members of the
Committee against any and all claims, loss, damage, expense or liability arising from any action
or failure to act with respect to this Plan on account of such member’s service on the Committee,
except in the case of gross negligence or willful misconduct.

Section 409A. The Plan is intended to comply with the requirements of Section 409A to
the extent such rules apply to the Plan, and the Plan shall be interpreted and administered in
accordance with that intent. If any provision of the Plan would otherwise conflict with or
frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the
conflict. For purposes of Code Section 409A, each Annual Employer Contribution will be treated
as a separate payment.

VIII  —  Termination, Suspension or Amendment

Termination, Suspension or Amendment of Plan. The Board expressly reserves the right, in
its sole discretion, to cease or suspend Annual Employer Contributions under this Plan at any
time, in whole or in part, unless otherwise specified in the Participant’s Participation
Agreement. The Board expressly reserves the right, in its sole discretion, to amend this Plan at
any time. Any amendment may provide different amounts of Annual Employer Contributions from
those herein set forth. No amendment will be valid if it would have the effect of causing a
violation of Code Section 409A.

IX  —  Claims Procedure

Claim. Any person or entity claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under this Plan (hereinafter referred to as “Claimant”)
shall present the request in writing to the Committee, which shall respond in writing as soon as
practicable.

Denial of Claim. If the claim or request is denied, the written notice of denial shall
state:

	 	a)	 	The reason for denial, with specific reference to this Plan provisions on which
the denial is based;

	 	b)	 	A description of any additional material or information required and an
explanation of why it is necessary; and

	 	c)	 	An explanation of this Plan’s claims review procedure.

Review of Claim. Any Claimant whose claim or request is denied or who has not received a
response within sixty (60) days may request a review by notice given in writing to the Committee.
Such request must be made within sixty (60) days after receipt by the Claimant of the written
notice of denial, or in the event Claimant has not received a response sixty (60) days after
receipt by the Committee of Claimant’s claim or request. The claim or request shall be reviewed
by the Committee which may, but shall not be required to, grant the Claimant a hearing. On
review, the Claimant may have representation, examine pertinent documents, and submit issues and
comments in writing.

 

6

 

Final Decision. The decision on review shall normally be made within sixty (60) days
after the Committee’s receipt of Claimant’s claim or request. If an extension of time is
required for a hearing or other special circumstances, the Claimant shall be notified and the
time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall
state the reason and the relevant Plan provisions. All Committee decisions on review shall be
final and bind all parties concerned.

X  —  Miscellaneous

Not a Contract of Employment. This Plan will not constitute a contract of employment
between Employer and the Participant. Nothing in this Plan will give a Participant the right to
be retained in the service of Employer or to interfere with the right of Employer to discipline
or discharge a Participant at any time.

Protective Provisions. A Participant will cooperate with Employer by furnishing any and
all information requested by Employer in order to facilitate the Employer Contributions as
provided for in this Plan, and by taking such physical examinations as Employer may deem
necessary and by taking such other action as may be requested by Employer.

Governing Law. The provisions of this plan document shall be construed and interpreted
according to the laws of the Commonwealth of Virginia, except as may be preempted by federal law.

Validity. If any provision of this plan document will be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts hereof, but this plan
document shall be construed and enforced as if such illegal and invalid provision had never been
inserted herein.

Notice. Any notice or filing required or permitted under this Plan will be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such notice will be
deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification. Mailed notice to the Committee
will be directed to the Employer’s address. Mailed notice to a Participant will be directed to
the individual’s last known address in Employer’s records.

Successors. The provisions of this Plan shall bind and inure to the benefit of Employer
and its successors and assigns. The term successors as used herein includes any corporate or
other business entity which shall, whether by merger, consolidation, purchase or otherwise
acquire all or substantially all of the business and assets of Employer, and successors of any
such corporation or other business entity.

 

7

 

Gannett Co., Inc.

	 	 	 	 	 	 	 
	By:	 	/s/ Roxanne V. Horning	 	 
	 	 	 	 	 
	 

	 	NAME:
	 	Roxanne V. Horning	 	 
	 

	 	TITLE:
	 	Senior Vice President/Human Resources	 	 

DATE: October
29, 2010

 

8

 

Exhibit A

Gannett Co., Inc.

Key Executive Life Insurance Plan

	 	 	 
	Cash Value Target

	 	Projected level premiums solved at then current
rates to provide enough cash value immediately
after assumed termination of employment at age
65 to endow the Targeted Death Benefit at age
121.
If employment extends past age 65, the Targeted
Death Benefit is assumed to change to the
Post-Termination Targeted Death Benefit level at
age 65
	 
	 	 
	Death Benefit:

	 	Targeted Death Benefit as provided by this Plan
	 
	 	 
	Cost of Insurance Charges

	 	Actual COI charges up to date of
redetermination; thereafter, insurance carrier’s
current COI rates for the product as of the date
of resolve.
	 
	 	 
	Interest Crediting Rate:

	 	Actual policy crediting rates up to date of
resolve; thereafter, insurance carrier’s current
general account crediting rate for the product
as of the date of resolve.
	 
	 	 
	Premium Duration:

	 	Payable annually prior to the Participant’s
62nd birthday but no less than 5
years.
	 
	 	 
	Employer Contributions

	 	Initial Annual Employer Contributions under this
Plan determined at the outset of participation
shall equal the expected amount of annual
premiums needed to provide the Targeted Death
Benefits, assuming a $500,000 Post Termination
Death Benefit based on an underwriting
classification of no greater than “standard”.
Subsequent redeterminations shall be based on
the Targeted Death Benefit set forth in the
Participation Agreement and the actual
underwriting classification in force at such
time.

 

9

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