<PAGE>
As filed with the Securities and Exchange Commission on May 10, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
DIGITAL RIVER, INC.
(Exact name of registrant as specified in its charter)
---------------------
DELAWARE 41-1901640
(State of Incorporation) (I.R.S. Employer Identification No.)
9625 WEST 76TH STREET, SUITE 150
EDEN PRAIRIE, MINNESOTA 55344
(952) 253-1234
(Address of principal executive offices)
1999 NON-OFFICER STOCK OPTION PLAN
(Full title of the plan)
JOEL A. RONNING
CHIEF EXECUTIVE OFFICER
9625 WEST 76TH STREET, SUITE 150
EDEN PRAIRIE, MINNESOTA 55344
(952) 253-1234
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------------------
Copies to:
MICHAEL J. SULLIVAN, ESQ.
COOLEY GODWARD LLP
ONE MARITIME PLAZA, 20TH FLOOR
SAN FRANCISCO, CA 94111
(415) 693-2000
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
========================== ====================== ========================= ========================== =========================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING PRICE AMOUNT OF REGISTRATION
BE REGISTERED REGISTERED SHARE (1) (1) FEE
- -------------------------- ---------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Stock Options and Common
Stock (par value $.01) 2,150,000 shares $16.094 - $21.76 $43,301,665.50 $11,431.64
========================== ====================== ========================= ========================== =========================
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) under the Securities Act of
1933, as amended. The offering price per share and aggregate offering
price are based upon (a) the weighted average exercise price for shares
subject to outstanding options granted pursuant to Digital River,
Inc.'s (the "Company") 1999 Non-Officer Stock Option Plan and (b) the
average of the high and low prices of Registrant's Common Stock on May
4, 2000 as reported on the Nasdaq National Market.
<PAGE>
The chart below details the calculations of the registration fee:
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------- ----------------------- --------------------
OFFERING PRICE PER AGGREGATE OFFERING
SECURITIES NUMBER OF SHARES SHARE PRICE
- ---------------------------------------- -------------------------------- ----------------------- --------------------
<S> <C> <C> <C>
Shares issuable pursuant to
outstanding options under the 1999
Non-Officer Stock Option Plan 1,535,398 $21.76 (1) $33,410,261
- ---------------------------------------- -------------------------------- ----------------------- --------------------
Shares issuable pursuant to future
option grants under the 1999
Non-Officer Stock Option Plan 614,602 $16.094 (1) $9,891,404.50
- ---------------------------------------- -------------------------------- ----------------------- --------------------
Proposed Maximum Offering Price $43,301,665.50
- ---------------------------------------- -------------------------------- ----------------------- --------------------
Registration Fee $11,431.64
- ---------------------------------------- -------------------------------- ----------------------- --------------------
</TABLE>
1.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Digital River, Inc. (the "Company")
with the Securities and Exchange Commission are incorporated by reference into
this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
(b) The Company's quarterly reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1999;
(c) The Company's Current Reports on Form 8-K dated April 16, 1999 and
July 16, 1999; and
(d) The description of the Company's Common Stock which is contained
in the Registration Statement on Form 8-A filed July 20, 1998,
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including any amendment or report filed for the
purpose of updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.
DESCRIPTION OF SECURITIES
Not Applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law the Company
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act. The Company's By-laws require the Company to indemnify its directors and
executive officers, and permit the Company to indemnify its other officers,
employees and other agents, to the extent permitted by Delaware law. Under the
Company's By-laws, indemnified parties are entitled to indemnification for
negligence, gross negligence and otherwise to the fullest extent permitted by
law. The By-laws also require the Company to advance litigation expenses in the
case of stockholder derivative actions or other actions, against an undertaking
by the indemnified party to repay such advances if it is ultimately determined
that the indemnified party is not entitled to indemnification.
The Company has entered into indemnity agreements with each of its
directors and executive officers. Such indemnity agreements contain provisions
which are in some respects broader than the specific indemnification provisions
contained in Delaware law. The Company also maintains an insurance policy for
its directors and executive officers insuring against certain liabilities
arising in their capacities as such.
EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
2.
<PAGE>
EXHIBITS
EXHIBIT
NUMBER
4.1* Amended and Restated Certificate of Incorporation of the
Company.
4.2* Amended and Restated Bylaws of the Company.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1 1999 Non-Officer Stock Option Plan.
99.2 Form of Non-Qualified Stock Option Agreement under the 1999
Non-Officer Stock Option Plan.
- -------------
* Documents incorporated by reference from the Company's Registration Statement
on Form S-1, as amended (333-56787), filed with the SEC on June 12, 1998.
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement, and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the issuer pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
3.
<PAGE>
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
4.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Eden Prairie, State of Minnesota, on May 9, 2000.
DIGITAL RIVER, INC.
By /s/ Joel A. Ronning
--------------------------------------------------
Joel A. Ronning
Title: Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Joel A. Ronning and Robert E. Strawman
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Joel A. Ronning Chief Executive Officer and Director May 9, 2000
- -------------------------------------------- (Principal Executive Officer)
Joel A. Ronning
/s/ Robert E. Strawman Chief Financial Officer and Treasurer May 9, 2000
- -------------------------------------------- (Principal Financial Officer and
Robert E. Strawman Accounting Officer)
Director
- --------------------------------------------
Timothy C. Choate
Director
- --------------------------------------------
William Lansing
5.
<PAGE>
/s/ Thomas F. Madison Director May 9, 2000
- --------------------------------------------
Thomas F. Madison
/s/ Christopher J. Sharples Director May 9, 2000
- --------------------------------------------
Christopher J. Sharples
/s/ Perry W. Steiner Director May 9, 2000
- --------------------------------------------
Perry W. Steiner
/s/ J. Paul Thorin Director May 9, 2000
- --------------------------------------------
J. Paul Thorin
</TABLE>
6.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
<S> <C>
4.1* Amended and Restated Certificate of Incorporation of the Company.
4.2* Amended and Restated Bylaws of the Company.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1 1999 Non-Officer Stock Option Plan.
99.2 Form of Non-Qualified Stock Option Agreement under the 1999 Non-Officer Stock Option Plan.
</TABLE>
- -------------
* Documents incorporated by reference from the Company's Registration Statement
on Form S-1, as amended (333-56787), filed with the SEC on June 12, 1998.
7.
<PAGE>
May 10, 2000 Exhibit 5.1
Digital River, Inc.
9625 West 76th Street, Suite 150
Eden Prairie, Minnesota 55344
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Digital River, Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 2,150,000 shares of the
Company's Common Stock, $.01 par value (the "Shares"), issuable pursuant to its
1999 Non-Officer Stock Option Plan (the "Plan").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Company's Amended and Restated Certificate of
Incorporation and By-laws, and such other documents, records, certificates,
memoranda and other instruments as we deem necessary as a basis for this
opinion. We have assumed the genuineness and authenticity of all documents
submitted to us as originals, the conformity to originals of all documents
submitted to us as copies thereof, and the due execution and delivery of all
documents, where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain deferred
payment arrangements, which will be fully paid and nonassessable when such
deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Michael J. Sullivan
--------------------------------------------------
Michael J. Sullivan
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
January 26, 2000 included in Digital River Inc.'s Form 10-K for the year ended
December 31, 1999 and to all references to our Firm included in this
Registration Statement.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
May 9, 2000
<PAGE>
Exhibit 99.1
DIGITAL RIVER, INC.
1999 NON-OFFICER STOCK OPTION PLAN
ADOPTED AUGUST 10, 1999
AMENDED FEBRUARY 7, 2000
1. PURPOSES. The principal purposes of the Digital River, Inc. (the
"Corporation") 1999 Non-Officer Stock Option Plan (the "Plan") Plan are: (a) to
improve individual performance by providing long-term incentives and rewards to
Employees and Consultants who are not Officers or members of the Board of
Directors of the Corporation; (b) to assist the Corporation in attracting,
retaining and motivating Employees and Consultants with experience and ability;
and (c) to associate the interests of such persons with those of the
Corporation's stockholders.
Options granted under this Plan may be Non-Qualified Options.
2. DEFINITIONS. For purposes of this Plan, the following terms shall have the
meanings indicated below:
(a) "AFFILIATE" shall mean any parent corporation or subsidiary
corporation of the Corporation, whether now or hereafter existing, as those
terms are defined in Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" shall mean the Board of Directors of the Corporation.
(c) "CAPITAL STOCK" shall mean any of the Corporation's authorized but
unissued shares of voting common stock, par value of One Cent ($.01) per share.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "COMMITTEE" shall mean a committee comprised of one or more members
of the Board appointed by the Board in accordance with Section 4 of the Plan.
(f) "CONSULTANT" shall mean any person, including an advisor or other
form of independent contractor, engaged by the Corporation or an Affiliate to
render consulting services and who is compensated for such services (provided
that such services are not in connection with the offer or sale of securities in
a capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the Corporation's securities), provided that the term
"Consultant" shall not include Employees, Officers, Directors, or stockholders
beneficially owning ten percent (10%) or more of the Corporation's Capital
Stock.
(g) "CONTINUOUS SERVICE" shall mean the Optionee's service with the
Corporation or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. The Optionee's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionee renders service to the Corporation or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionee renders
such service, provided that there is no interruption or termination of the
Optionee's Continuous Service. For example, a change in status from an Employee
of the Corporation to a Consultant of an Affiliate or a Director of the
Corporation will not constitute an interruption of Continuous Service. The Board
or the chief executive officer of the Corporation, in that party's sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave.
(h) "CORPORATION" shall mean Digital River, Inc., a Delaware
corporation and any of its Affiliates.
(i) "DIRECTOR" shall mean a member of the Board.
(j) "EMPLOYEE" shall mean any person employed by the Corporation or by
any Affiliate, excluding Officers and Directors of the Corporation (and of any
Affiliate which controls the Corporation) and excluding stockholders
beneficially owning ten percent (10%) or more of the Corporation's Capital
Stock.
1
<PAGE>
(k) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "FAIR MARKET VALUE" shall mean the price per share determined as
follows: (a) if the security is listed for trading on one or more national
securities exchanges (including the NASDAQ National Market System), the reported
last sales price on such principal exchange on the date in question, or if such
security shall not have been traded on such principal exchange on such date, the
reported last sales price on such principal exchange on the first day prior
thereto on which such security was so traded; or (b) if the security is not
listed for trading on a national securities exchange (including the NASDAQ
National Market System) but is traded in the over-the-counter market, the mean
of the highest and lowest bid prices for such security on the date in question,
or if there are no such bid prices for such security on such date, the mean of
the highest and lowest bid prices on the first day prior thereto on which such
prices existed; or (c) if neither (a) nor (b) is applicable, by any means deemed
fair and reasonable by the Committee (as defined below) which determination
shall be final and binding on all parties.
(m) "NON-QUALIFIED STOCK OPTION" shall mean an Option, not intended to
qualify as an incentive stock option as defined in Section 422 of the Code, to
purchase Capital Stock of the Corporation.
(n) "OFFICER" shall mean a person who is an officer of the Corporation,
including any corporate officer with the title of vice president and above and
any other Employee of the Corporation whom the Board or the Committee classifies
as an "Officer".
(o) "OPTION" shall mean a Non-Qualified Stock Option granted pursuant
to the Plan.
(p) "OPTION AGREEMENT" shall mean a written agreement pursuant to which
the Corporation grants an option to an Optionee and sets the terms and
conditions of the Option.
(q) "OPTION DATE" shall mean the date upon which an option Agreement
for an Option granted pursuant to the Plan is duly executed by or on behalf of
the Corporation.
(r) "OPTION STOCK" shall mean the voting common stock of the
Corporation, par value of One Cent ($.01) per share (subject to adjustment as
described in Section 7) reserved for Options pursuant to this Plan, or any other
class of stock of the Corporation which may be substituted therefor by exchange,
stock split or otherwise.
(s) "OPTIONEE" shall mean an Employee or Consultant of the Corporation
or one of its Affiliates to whom an Option has been granted under the Plan.
(t) "PLAN" shall mean this 1999 Non-Officer Stock Option Plan, as
amended hereafter from time to time.
(u) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
3. OPTIONS AVAILABLE UNDER PLAN. The Corporation's authorized Capital Stock in
an amount equal to Two Million Two Hundred Fifty Thousand (2,250,000) shares is
hereby made available, and shall be reserved for issuance under this Plan. The
aggregate number of shares available under this Plan shall be subject to
adjustment on the occurrence of any of the events and in the manner set forth in
Section 7. Except as provided in Section 7, in no event shall the number of
shares reserved be reduced below the number of shares issuable upon exercise of
outstanding Options. If an option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares, shall (unless the
Plan shall have been terminated) become available for other Options under the
Plan.
4. ADMINISTRATION. The Plan shall be administered by the Committee. The
Corporation shall grant Options pursuant to the Plan upon determinations of the
Committee as to which of the eligible persons shall be granted Options, the
number of shares to be optioned and the term during which any such Options may
be exercised. The Committee may from time to time adopt rules and regulations
for carrying out the Plan and shall have authority and discretion to interpret
and construe any provision of the Plan. Each determination, interpretation or
other action made or taken by the Committee pursuant to the provisions of the
Plan shall be final and conclusive. No member of the Committee will be liable
for any action or determination made in good faith with respect to the Plan or
any Option granted under the Plan.
2
<PAGE>
5. ELIGIBILITY FOR NON-QUALIFIED OPTIONS. Non-Qualified Options may be granted
only to an Employee or Consultant of the Corporation or an Affiliate.
Notwithstanding the foregoing, no Employee who is an Officer of the Corporation
(or of any Affiliate which controls the Corporation) or who is a Director shall
be eligible to receive the grant of an Option under the Plan. No further
restrictions are placed on the Committee in determining eligibility for granting
Non-Qualified Options.
6. TERMS AND CONDITIONS OF OPTIONS. Whenever the Committee shall designate an
Optionee, it shall communicate to the Secretary of the Corporation the name of
the Optionee, the number of shares to be optioned and such other terms and
conditions as it shall determine, not inconsistent with the provisions of this
Plan. The chief executive officer or other officer of the Corporation shall then
enter into an Option Agreement with the Optionee, complying with and subject to
the following terms and conditions and setting forth such other terms and
conditions of the Option as determined by the Committee:
(a) NUMBER OF SHARES AND OPTION PRICE. The Option Agreement shall state
the total number of shares to which it pertains. The price of Option Stock for a
Non-Qualified Stock Option shall be determined by the Committee and may be less
than the Fair Market Value at the Option Date. The Option price shall be subject
to adjustment as provided in Section 7 hereof.
(b) TIME AND MANNER OF EXERCISE OF OPTION. Options granted hereunder
shall be exercisable as determined by the Committee at the time of the grant of
such Options. Notwithstanding the foregoing, no Option may be exercised after
ten (10) years from the date on which the option was granted.
(c) TERMINATION OF CONTINUOUS SERVICE, EXCEPT DEATH OR DISABILITY. In
the event that the continuous service of an Optionee shall cease for any reason
other than his or her death, disability or "for cause," any vested outstanding
Options shall terminate at the time specified in the Option Agreement; provided,
however, that such vested outstanding Options shall not be exercisable for a
period greater than three (3) months after the termination of Continuous
Service. Any vested Options not exercised within the period specified in the
Option Agreement shall terminate at the expiration of such period. If no such
period is specified in the Option Agreement, then any vested outstanding Options
shall terminate at the time of the Optionee's termination of continuous service.
In the event that Optionee shall be terminated "for cause" including but not
limited to: (i) willful breach of any agreement entered into with the
Corporation; (ii) misappropriation of the Corporation's property, fraud,
embezzlement, breach of fiduciary duty, other acts of dishonesty against the
Corporation; or (iii) conviction of any felony or crime involving moral
turpitude, the Option shall terminate as of the date of the Optionee's
termination of continuous service.
(d) DEATH OR DISABILITY OF OPTIONEE. If the Optionee shall die or
become disabled within the definition of Section 22(e)(3) of the Code while in
the employ of the Corporation or any Affiliate or if the Optionee shall die
within the period after the termination of his or her continuous service with
the Corporation or any Affiliate as provided in paragraph (c) of this section,
and in either case shall not have fully exercised his or her vested Options, any
vested Options granted pursuant to the Plan which were exercisable at the date
of termination of continuous service shall terminate at the time specified in
the option Agreement; provided, however, that such vested Options shall not be
exercisable for a period greater than one (1) year following his or her death or
date of disability. If no such periods are specified in the Option Agreement,
then any vested outstanding Options shall be exercisable only within: (i) six
(6) months following the optionee's death and (ii) thirty (30) days following
the Optionee's disability. In the case of death, such Option shall be exercised
pursuant to paragraph (e) of this Section by the person or persons to whom the
optionee's rights under the Option shall pass by the Optionee's will or by the
laws of descent and distribution, and only to the extent that such Options were
exercisable at the time of death.
(e) TRANSFER OF OPTION. Each Option granted hereunder shall, by its
terms, not be transferable by the Optionee other than by will or by the laws of
descent and distribution, and shall be, during the Optionee's lifetime,
exercisable only by the Optionee or Optionee's guardian or legal representative.
Except as permitted by the preceding sentence, each Option granted under the
Plan and the rights and privileges thereby conferred shall not be transferred,
assigned or pledged in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon any
attempt to so transfer, assign, pledge, or otherwise dispose of the option, or
of any right or privilege conferred thereby, contrary to the provisions of the
Option or the Plan, or upon levy of any attachment or similar process upon such
rights and privileges, the Option, and such rights and privileges, shall
immediately become null and void.
3
<PAGE>
(f) MANNER OF EXERCISE OF OPTIONS. An Option may be exercised, in whole
or in part, at such time or times and with such rights with respect to such
shares which have accrued and are in effect. Such Option shall be exercisable
only by: (i) written notice to the Corporation of intent to exercise the Option
with respect to a specified number of shares of stock; (ii) tendering the
original Option Agreement to the Corporation; and (iii) payment to the
Corporation of the amount of the Option purchase price for the number of shares
of stock with respect to which the Option is then exercised. Payment of the
Option purchase price shall be made in the manner set forth in the Option
Agreement, which may be in: (i) cash, check or equivalent form; (ii) by delivery
of shares of common stock of the Corporation which have been owned for no less
than six (6) months, with a Fair Market Value equal to the Option purchase
price; (iii) by a combination of cash and shares of common stock of the
Corporation, which valued together shall equal the Option purchase price;
provided, however, that there shall be no such exercise at any time as to fewer
than one hundred (100) shares or all of the remaining shares then purchasable by
the Optionee or person exercising the Option. When all shares of Optioned stock
covered by the Option Agreement have been issued to the Optionee, or the Option
shall expire, the Option Agreement shall be canceled.
(g) OPTION CERTIFICATE. The Board of Directors shall have discretion to
issue a certificate representing an Option granted pursuant to this Plan. Such
certificate shall be surrendered to the Corporation upon exercise of the Option.
(h) DELIVERY OF CERTIFICATE. Except where shares are held for unpaid
withholding taxes, between fifteen (15) and thirty (30) days after receipt of
the written notice and payment specified above, the Corporation shall deliver to
the Optionee certificates for the number of shares with respect to which the
Option has been exercised, issued in the Optionee's name; provided, however,
that such delivery shall be deemed effected for all purposes when the
Corporation, or the stock transfer agent for the Corporation, shall have
deposited such certificates in the United States mail, postage prepaid,
addressed to the Optionee and the address specified in the written notice of
exercise.
(i) OTHER PROVISIONS. The Option Agreements under this Section shall
contain such other provisions as the Committee shall deem advisable.
7. ADJUSTMENTS.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Capital
Stock subject to the Plan, or subject to any Option, without the receipt of
consideration by the Corporation (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Corporation), the Plan will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan
pursuant to Section 3 and the maximum number of shares subject to award to any
person pursuant to Sections 5 and 6, and the outstanding Options will be
appropriately adjusted in the class(es) and number of shares and price per share
of stock subject to such outstanding Options. Such adjustments shall be made by
the Board of Directors of the Corporation, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Corporation shall not be treated as a transaction "without receipt of
consideration" by the Corporation.)
(b) CHANGE IN CONTROL-ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (1) a sale of substantially all of the assets of the
Corporation, (2) a merger or consolidation in which the Corporation is not the
surviving corporation or (3) a reverse merger in which the Corporation is the
surviving corporation but the shares of Capital Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation shall assume any Options outstanding under
the Plan or shall substitute similar Options (including an award to acquire the
same consideration paid to the stockholders in the transaction described in this
Section 7, paragraph (b)) for those outstanding under the Plan. In the event any
surviving corporation or acquiring corporation refuses to assume such Options or
to substitute similar Options for those outstanding under the Plan but subject
to the restrictions in this Section 7, paragraph (d), then with respect to
Options held by Optionees whose Continuous Service has not terminated, the
vesting shall be accelerated in full, and the Options shall terminate if not
exercised at or prior to such event. With respect to any other Options
outstanding under the Plan, such Options shall terminate if not exercised prior
to such event.
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(c) CHANGE IN CONTROL-SECURITIES ACQUISITION. In the event of an
acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Exchange Act, or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Corporation or an Affiliate) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Corporation representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors (other than
an acquisition pursuant to Section 7, paragraph (b) above), then with respect to
Options held by Optionees whose Continuous Service has not terminated and
subject to the restrictions in Section 7, paragraph (d), the vesting of such
Options shall be accelerated in full.
(d) POOLING OF INTERESTS. If the Corporation and the other party to the
transaction constituting a "change in control" as described in this Section 7
agree that such transaction is to be treated as a "pooling of interests" for
financial reporting purposes, and if such transaction in fact is so treated,
then the accelerated vesting of options described in this Section 7 shall not
occur to the extent that the Corporation's independent public accountants and
such other party's independent public accountants separately determine in good
faith that such acceleration would preclude the use of "pooling of interests"
accounting.
8. NO RIGHTS AS STOCKHOLDER. An Optionee shall not, by reason of any option
granted hereunder, have any right of a stockholder of the Corporation with
respect to the shares covered by his Option until such shares shall have been
issued to the Optionee.
9. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall impose no
obligation upon the Optionee to exercise such option. Neither shall the Plan
confer upon the Optionee any rights respecting continued continuous service nor
limit the Optionee's rights or the Corporation's rights to terminate such
continuous service.
10. WITHHOLDING TAXES. Whenever under the Plan shares of Option Stock are to be
issued upon exercise of the Options granted hereunder, and prior to the delivery
of any certificate or certificates for said shares by the Corporation, the
Corporation shall have the right to require the Optionee to remit to the
Corporation an amount sufficient to satisfy any federal and state withholding or
other employment taxes resulting from such exercise. In the event that
withholding taxes are not paid within five days after the date of exercise, to
the extent permitted by law the Corporation shall have the right, but not the
obligation, to cause such withholding taxes to be satisfied by reducing the
number of shares of stock deliverable or by offsetting such withholding taxes
against amounts otherwise due from the Corporation to the Optionee; provided,
however, that no shares are withheld with a value exceeding the minimum amount
of tax required to be withheld by law. If withholding taxes are paid by
reduction of the number of shares deliverable to Optionee, such shares shall be
valued at the Fair Market Value as of the fifth business day following the date
of exercise.
11. MODIFICATION OF OUTSTANDING OPTIONS. The Committee may accelerate the
exercisability of an outstanding Option and may authorize modification of any
outstanding Option with the consent of the participant when and subject to such
conditions as are deemed to be in the best interests of the Corporation and in
accordance with the purposes of the Plan.
12. FOREIGN EMPLOYEES. Without amending the Plan, the Committee may grant
Options to eligible employees who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote achievement of the
purposes of the Plan, and, in furtherance of such purposes the Committee may
make such modification, amendments, procedures, subplans and the like as may be
necessary or advisable to comply with provisions of laws in other countries in
which the Corporation operates or has employees.
13. LIQUIDATION. Upon the complete liquidation of the Corporation, any
unexercised Options theretofore granted under this Plan shall be deemed
canceled, except as otherwise provided in Section 7 in connection with a merger,
consolidation or reorganization of the Corporation.
CONDITIONS UPON ISSUANCE OF SHARES. The Corporation may
require the Optionee (or any person to whom an Option is transferred under
Section 6 paragraph (e)) to execute such documents and to provide such
representations, written assurances or information which the Corporation shall
determine is necessary, desirable or appropriate to comply with applicable
securities and other laws as a condition of granting an Option to such Optionee
or permitting the Optionee (or any person to whom an Option is transferred under
Section 6
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paragraph (e)) to exercise such Option. The Corporation may, upon advice of
counsel to the Corporation, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to comply with
applicable securities and other laws, including, but not limited to, legends
restricting the transfer of the Option Stock.
14. TERMINATION AND AMENDMENT OF THE PLAN. This Plan shall terminate when all
reserved Option Stock has been issued and cannot return to the reserve or at
such earlier time as the Board of Directors shall determine. Any termination
shall not affect any Options then outstanding under the Plan.
The Board or the Committee at any time, and from time to time, may
amend the Plan.
15. INDEMNIFICATION. In addition to such other rights of indemnification as they
may have and subject to limitations of applicable law, the members of the
Committee shall be indemnified by the Corporation against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any rights granted
thereunder and against all amounts paid to them in settlement thereof or paid by
them in satisfaction of a judgment of any such action, suit or proceeding. The
Committee member or members shall notify the Corporation in writing, giving the
Corporation an opportunity at its own cost to defend the same before such
Committee member or members undertake to defend the same on their own behalf.
16. GENERAL PROVISIONS. If any day on or before which action under the Plan
must be taken falls on a Saturday, Sunday, or legal holiday, such action may be
taken on the next succeeding day not a Saturday, Sunday or legal holiday. To the
extent that federal laws do not otherwise control, the Plan and all
determinations made and actions taken pursuant hereto shall be governed by and
construed under the laws of the State of Delaware.
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DIGITAL RIVER, INC.
NOTICE OF EXERCISE
Digital River, Inc.
Re: Exercise of Stock Options
1999 Non-Officer Stock Option Plan
Ladies and Gentlemen:
Pursuant to the terms of that certain Stock Option Agreement under the Digital
River, Inc. 1999 Non-Officer Stock Option Plan, this Letter is to notify you
that I hereby exercise my outstanding stock options to purchase_______________
shares of common stock (the "Shares") of Digital River, Inc. Attached is
(indicate by placing an "X" in the appropriate box):
/ / (i) a check in the amount of $__________ made payable to Digital River,
Inc.;
/ / (ii) another form of consideration acceptable to Digital River, Inc.
(explain below):
___________________________________________________________________ in payment
of the exercise price of $_________ per share.
I acknowledge prior receipt of a copy of the Digital River, Inc. 1999
Non-Officer Stock Option Plan. I understand that I may suffer adverse tax
consequences as the result of my purchase of Shares. I represent that I have
consulted with any tax consultants I deem advisable in connection with the
purchase or disposition of the Shares and that I am not relying on Digital
River, Inc. for any tax advice.
Very Truly Yours,
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Signature
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Print Name
Date:
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Exhibit 99.2
DIGITAL RIVER, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE 1999 NON-OFFICER STOCK OPTION PLAN
THIS AGREEMENT is made as of _________________, between DIGITAL RIVER,
INC., a Delaware corporation (the "Company'), and ___________________________
(the "Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. OPTION GRANT. The Company hereby grants to the Optionee an option
(the "Option") to purchase the number of shares of the Company's voting common
stock (the "Shares"), for an exercise price per share (the "Option Price") and
based upon a Grant Date, all as set forth below:
Shares Under Option: ____________
Option Price Per Share: ____________
Grant Date: ____________
Vesting Commencement Date: ____________
Vesting Schedule (Cumulative): ____________
The Option will be subject to all of the terms and conditions set forth
herein and in the Company's 1999 Non-Officer Stock Option Plan (the "Non-Officer
Plan"), a copy of which is attached hereto and incorporated herein by reference.
The Option granted hereunder will be a Non-Qualified Stock Option, NOT intended
to qualify as an incentive stock option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended.
2. STOCKHOLDER RIGHTS. No rights or privileges of a stockholder in the
Company are conferred by reason of the granting of the Option. Optionee will not
become a stockholder in the Company with respect to the Shares unless and until
the Option has been properly exercised and the Option Price fully paid as to the
portion of the Option exercised.
3. TERMINATION. Subject to earlier termination as provided in the
Non-Officer Plan, this Option will expire, unless previously exercised in full,
on the date ten (10) years from the Grant Date.
4. TERMS OF THE NON-OFFICER PLAN. The Optionee understands that the
Non-Officer Plan includes important terms and conditions that apply to this
Option. Those terms include (without limitation): important conditions on the
right of the Optionee to exercise the Option; important restrictions on the
ability of the Optionee to transfer the Option or to transfer Shares received
upon exercise of the Option; and early termination of the Option following the
occurrence of certain events, including the Optionee no longer being an
employee, director or consultant to or of the Company or its subsidiaries. The
Optionee acknowledges that he or she has read the Non-Officer Plan, agrees to be
bound by its terms, and makes each of the representations required to be made by
the Optionee under it.
5. MISCELLANEOUS. This Agreement (together with the Non-Officer Plan)
sets forth the complete agreement of the parties concerning the subject matter
hereof; superseding all prior agreements, negotiations and understandings. This
Agreement will be governed by the laws of the State of Minnesota irrespective of
such state's choice of law provisions, and may be executed in counterparts.
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The parties hereby have entered into this Agreement as of the date set
forth above.
DIGITAL RIVER, INC.
By:
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Title: President
"OPTIONEE"
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Attachments: (1) 1999 Non-Officer Stock Option Plan
(2) Notice of Exercise
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