**EXHIBIT10.2**

 

**DIGITALRIVER, INC.**

**1999 STOCK OPTION PLAN**

**(FORMERLY KNOWN AS THE 1999 NON-OFFICER STOCK OPTION PLAN)**

 

**ADOPTED AUGUST 10, 1999**

**AMENDED FEBRUARY 7, 2000**

**FURTHER AMENDED FEBRUARY 7, 2001**

**FURTHER AMENDED AUGUST 1, 2002**

 

**1.****                            PURPOSES**.  The principal purposes of the Digital River,Inc. (the “Corporation”) 1999 Stock Option Plan (formerly known as the 1999Non-Officer Stock Option Plan) (the “Plan”) Plan are: (a) to improve individualperformance by providing long-term incentives and rewards to Employees,Directors and Consultants of the Corporation; (b) to assist the Corporation inattracting, retaining and motivating Employees, Directors and Consultants withexperience and ability; and (c) to associate the interests of such persons withthose of the Corporation’s stockholders.

 

Options granted under this Plan may be Non-QualifiedStock Options.

 

**2.****                            DEFINITIONS**.  For purposes of this Plan, the followingterms 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 Sections424(e) and (f), respectively, of the Code.

 

**(b)****                       **“*Board*”shall mean the Board of Directors of the Corporation.

 

**(c)****                       **“*CapitalStock*” shall mean any of the Corporation’s authorized but unissuedshares 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 appointedby the Board in accordance with Section 4 of the Plan.

 

**(f)****                         **“*Consultant*”shall mean any person, including an advisor or other form of independentcontractor, engaged by the Corporation or an Affiliate to render consultingservices and who is compensated for such services (provided that such servicesare not in connection with the offer or sale of securities in a capital-raisingtransaction, and do not directly or indirectly promote or maintain a market forthe Corporation’s securities), provided that the term “Consultant” shall notinclude Employees or Directors.

 

**(g)****                      **“*ContinuousService*” shall mean the Optionee’s service with the Corporation oran Affiliate, whether as an Employee, Director or Consultant, is notinterrupted or terminated. The Optionee’s Continuous Service shall not bedeemed to have terminated merely because of a

 

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change in the capacity in which the Optionee renders service to theCorporation or an Affiliate as an Employee, Consultant or Director or a changein the entity for which the Optionee renders such service, provided that thereis no interruption or termination of the Optionee’s Continuous Service. Forexample, a change in status from an Employee of the Corporation to a Consultantof an Affiliate or a Director of the Corporation will not constitute aninterruption of Continuous Service. The Board or the chief executive officer ofthe Corporation, in that party’s sole discretion, may determine whetherContinuous Service shall be considered interrupted in the case of any leave ofabsence approved by that party, including sick leave, military leave or anyother personal leave.

 

**(h)****                      **“*Corporation*”shall mean Digital River, Inc., a Delaware corporation and any of itsAffiliates.

 

**(i)****                         **“*Director*”shall mean a member of the Board.

 

**(j)****                         **“*Employee*”shall mean any person employed by the Corporation or by any Affiliate. Mereservices as a Director or payment of a director’s fee by the Corporation or anAffiliate shall not be sufficient to constitute “employment” by the Corporationor an Affiliate.

 

**(k)****                     **“*Exchange Act*”shall mean the Securities Exchange Act of 1934, as amended.

 

**(l)****                         **“*Fair MarketValue*” shall mean the price per share determined as follows: (a) ifthe security is listed for trading on one or more national securities exchanges(including the NASDAQ National Market System), the reported last sales price onsuch principal exchange on the date in question, or if such security shall nothave been traded on such principal exchange on such date, the reported lastsales price on such principal exchange on the first day prior thereto on whichsuch security was so traded; or (b) if the security is not listed for tradingon a national securities exchange (including the NASDAQ National Market System)but is traded in the over-the-counter market, the mean of the highest andlowest bid prices for such security on the date in question, or if there are nosuch bid prices for such security on such date, the mean of the highest andlowest 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 andreasonable by the Committee (as defined below) which determination shall befinal and binding on all parties.

 

**(m)****                   **“*Non-QualifiedStock Option*” shall mean an Option, not intended to qualify as an“incentive stock option” as defined in Section 422 of the Code, to purchaseCapital Stock of the Corporation.

 

**(n)****                      **“*Officer*”shall mean a person who possesses the authority of an “officer” as that term isused in Rule 4460(i)(1)(A) of the Rules of the National Association ofSecurities Dealers, Inc. For purposes of the Plan, a person in the position of“Vice President” or higher shall be classified as an “Officer” unless the Boardor the Committee expressly finds that such person does not possess theauthority of an “officer” as that term is used in Rule 4460(i)(1)(A) of theRules of the National Association of Securities Dealers, Inc.

 

**(o)****                       **“*Option*”shall mean a Non-Qualified Stock Option granted pursuant to the Plan.

 

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**(p)****                       **“*OptionAgreement*” shall mean a written agreement pursuant to which theCorporation grants an Option to an Optionee and sets the terms and conditionsof the Option. Each Option Agreement shall be subject to the terms andconditions of the Plan.

 

**(q)****                       **“*Option Date*”shall mean the date upon which an Option Agreement for an Option grantedpursuant 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 forOptions pursuant to this Plan, or any other class of stock of the Corporationwhich may be substituted therefor by exchange, stock split or otherwise.

 

**(s)****                       **“*Optionee*”shall mean an Employee, Director or Consultant of the Corporation or one of itsAffiliates to whom an Option has been granted under the Plan or, if applicable,such other person who holds an outstanding Option.

 

**(t)****                         **“*Plan*”shall mean this 1999 Stock Option Plan (formerly known as the 1999 Non-OfficerStock Option Plan), as amended hereafter from time to time.

 

**(u)****                      **“*SecuritiesAct*” shall mean the Securities Act of 1933, as amended.

 

**3.****                            OPTIONSAVAILABLE UNDER PLAN**.  TheCorporation’s authorized Capital Stock in an amount equal to Eight Million FourHundred Fifty Thousand (8,450,000) shares is hereby made available, and shallbe reserved for issuance under this Plan. The aggregate number of sharesavailable under this Plan shall be subject to adjustment on the occurrence ofany of the events and in the manner set forth in Section 7. Except as providedin Section 7, in no event shall the number of shares reserved be reduced belowthe number of shares issuable upon exercise of outstanding Options. If anOption shall expire or terminate for any reason without having been exercisedin full, the unpurchased shares shall (unless the Plan shall have beenterminated) become available for other Options under the Plan.

 

**4.****                            ADMINISTRATION**.  The Plan shall be administered by theCommittee. The Corporation shall grant Options pursuant to the Plan upondeterminations of the Committee as to which of the eligible persons shall begranted Options, the number of shares to be optioned and the term during whichany such Options may be exercised. The Committee may from time to time adoptrules and regulations for carrying out the Plan and shall have authority anddiscretion to interpret and construe any provision of the Plan. Eachdetermination, interpretation or other action made or taken by the Committeepursuant to the provisions of the Plan shall be final and conclusive. No memberof the Committee will be liable for any action or determination made in goodfaith with respect to the Plan or any Option granted under the Plan.

 

**5.****                            ELIGIBILITYFOR NON-QUALIFIED STOCK OPTIONS.**

 

**(a)****                        EligiblePersons.**  Non-Qualified StockOptions may be granted to Employees, Directors and Consultants.

 

**(b)****                        Restrictionson Eligibility.**  Notwithstanding theforegoing, the aggregate number of shares issued pursuant to Options granted toOfficers and Directors cannot exceed forty percent

 

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(40%) of the number of shares reserved for issuance under the Plan asdetermined at the time of each such issuance to an Officer or Director, exceptthat there shall be excluded from this calculation shares issued to Officersnot previously employed by the Corporation pursuant to Options granted as aninducement essential to such individuals entering into employment contractswith the Corporation.

 

**(c)****                        Consultants.**

 

**(i)****                        **AConsultant shall not be eligible for the grant of an Option if, at the time ofgrant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”)is not available to register either the offer or the sale of the Corporation’ssecurities to such Consultant because of the nature of the services that theConsultant is providing to the Corporation, or because the Consultant is not anatural person, or as otherwise provided by the rules governing the use of FormS-8, unless the Corporation determines both (i) that such grant (A) shall beregistered in another manner under the Securities Act (E.G., on a Form S-3Registration Statement) or (B) does not require registration under theSecurities Act in order to comply with the requirements of the Securities Act,if applicable, and (ii) that such grant complies with the securities laws ofall other relevant jurisdictions.

 

**(ii)****                    **Form S-8generally is available to consultants and advisors only if (i) they are naturalpersons; (ii) they provide bona fide services to the issuer, its parents, itsmajority-owned subsidiaries or majority-owned subsidiaries of the issuer’sparent; and (iii) the services are not in connection with the offer or sale ofsecurities in a capital-raising transaction, and do not directly or indirectlypromote or maintain a market for the issuer’s securities.

 

**6.****                            TERMSAND CONDITIONS OF OPTIONS**.  Wheneverthe Committee shall designate an Optionee, it shall communicate to theSecretary of the Corporation the name of the Optionee, the number of shares tobe optioned and such other terms and conditions as it shall determine, notinconsistent with the provisions of this Plan. The chief executive officer orother officer of the Corporation shall then enter into an Option Agreement withthe Optionee, complying with and subject to the following terms and conditionsand setting forth such other terms and conditions of the Option as determinedby the Committee:

 

**(a)****                        Number ofShares and Option Price.**  The OptionAgreement shall state the total number of shares to which it pertains. Theprice of Option Stock for a Non-Qualified Stock Option shall be determined bythe 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 7hereof.

 

**(b)****                        Time andManner of Exercise of Option.** Options granted hereunder shall be exercisable as determined by the Committeeat the time of the grant of such Options. Notwithstanding the foregoing, noOption may be exercised after ten (10) years from the date on which the Optionwas granted.

 

**(c)****                        Terminationof Continuous Service, Except Death or Disability.**  In the event that the continuous service ofan Optionee shall cease for any reason other than his or her death, disabilityor “for cause,” unless otherwise specified in the Option Agreement, any vested,outstanding Options shall terminate ninety (90) days after the termination ofthe employee or at

 

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the time specified in the Option Agreement.  If an alternate period other than ninety (90) days is included inthe Option Agreement, any vested Options not exercised within the periodspecified in the Option Agreement shall terminate at the expiration of suchperiod.  In the event that Optioneeshall be terminated “for cause” including, but not limited to: (i) willfulbreach of any agreement entered into with the Corporation; (ii)misappropriation of the Corporation’s property, fraud, embezzlement, breach offiduciary duty, other acts of dishonesty against the Corporation; or (iii)conviction of any felony or crime involving moral turpitude, the Option shallterminate seven (7) days after termination of the employee.

 

**(d)****                        Death orDisability of Optionee.**  If theOptionee 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 theOptionee shall die within the period after the termination of his or herContinuous Service with the Corporation or any Affiliate as provided inparagraph (c) of this Section, and in either case shall not have fullyexercised his or her vested Options, any vested Options granted pursuant to thePlan which were exercisable at the date of termination of Continuous Serviceshall terminate at the time specified in the Option Agreement; provided,however, that such vested Options shall not be exercisable for a period greaterthan one (1) year following his or her death or date of disability. If no suchperiods are specified in the Option Agreement, then any vested outstandingOptions shall be exercisable only within: (i) six (6) months following theOptionee’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 underthe Option shall pass by the Optionee’s will or by the laws of descent anddistribution, and only to the extent that such Options were exercisable at thetime of death.

 

**(e)****                        Transferof Option.**  Each Option grantedhereunder shall, by its terms, not be transferable by the Optionee other thanby will or by the laws of descent and distribution, and shall be, during theOptionee’s lifetime, exercisable only by the Optionee or Optionee’s guardian orlegal representative. Except as permitted by the preceding sentence, eachOption granted under the Plan and the rights and privileges thereby conferredshall not be transferred, assigned or pledged in any way (whether by operationof law or otherwise) and shall not be subject to execution, attachment orsimilar process. Upon any attempt to so transfer, assign, pledge, or otherwisedispose of the Option, or of any right or privilege conferred thereby, contraryto the provisions of the Option or the Plan, or upon levy of any attachment orsimilar process upon such rights and privileges, the Option, and such rightsand privileges, shall immediately become null and void.

 

**(f)****                          Mannerof Exercise of Options.**  An Optionmay be exercised, in whole or in part, at such time or times and with suchrights with respect to such shares, which have accrued and are in effect. SuchOption shall be exercisable only by: (i) written notice to the Corporation ofintent to exercise the Option with respect to a specified number of shares ofstock; (ii) tendering the original Option Agreement to the Corporation; and(iii) payment to the Corporation of the amount of the Option purchase price forthe number of shares of stock with respect to which the Option is thenexercised. Payment of the Option purchase price shall be made in the manner setforth in the Option Agreement, which may be in: (i) cash, check or equivalentform; (ii) by delivery of shares of common stock of the Corporation which havebeen owned for no less than six (6) months, with a Fair Market Value equal tothe Option purchase price; (iii) by a

 

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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 orperson exercising the Option. When all shares of optioned stock covered by theOption Agreement have been issued to the Optionee, or the Option shall expire,the Option Agreement shall be canceled.

 

**(g)****                       OptionCertificate.**  The Board of Directorsshall have discretion to issue a certificate representing an Option grantedpursuant to this Plan. Such certificate shall be surrendered to the Corporationupon exercise of the Option.

 

**(h)****                       Delivery ofCertificate.**  Except where sharesare held for unpaid withholding taxes, between fifteen (15) and thirty (30)days after receipt of the written notice and payment specified above, theCorporation shall deliver to the Optionee certificates for the number of shareswith respect to which the Option has been exercised, issued in the Optionee’sname; provided, however, that such delivery shall be deemed effected for allpurposes when the Corporation, or the stock transfer agent for the Corporation,shall have deposited such certificates in the United States mail, postageprepaid, addressed to the Optionee and the address specified in the writtennotice of exercise.

 

**(i)****                          OtherProvisions.** The Option Agreementsunder this Section shall contain such other provisions as the Committee shalldeem advisable.

 

**7.****                            ADJUSTMENTS.**

 

**(a)****                        CapitalizationAdjustments.**  If any change is madein the Capital Stock subject to the Plan, or subject to any Option, without thereceipt of consideration by the Corporation (through merger, consolidation,reorganization, recapitalization, reincorporation, stock dividend, dividend inproperty other than cash, stock split, liquidating dividend, combination ofshares, exchange of shares, change in corporate structure or other transactionnot involving the receipt of consideration by the Corporation), the Plan willbe appropriately adjusted in the class(es) and maximum number of shares subjectto the Plan pursuant to Section 3 and the maximum number of shares subject toaward to any person pursuant to Sections 5 and 6, and the outstanding Optionswill be appropriately adjusted in the class(es) and number of shares and priceper share of stock subject to such outstanding Options. Such adjustments shallbe made by the Board of Directors of the Corporation, the determination ofwhich shall be final, binding and conclusive. (The conversion of anyconvertible securities of the Corporation shall not be treated as a transaction“without receipt of consideration” by the Corporation.)

 

**(b)****                        Change InControl - Asset Sale, Merger, Consolidation Or Reverse Merger.**  In the event of (1) a sale of substantiallyall of the assets of the Corporation, (2) a merger or consolidation in whichthe Corporation is not the surviving corporation or (3) a reverse merger inwhich the Corporation is the surviving corporation but the shares of CapitalStock outstanding immediately preceding the merger are converted by virtue ofthe merger into other property, whether in the form of securities, cash orotherwise, then any surviving corporation or acquiring corporation shall assumeany Options outstanding under the Plan or shall substitute similar Options(including an award to acquire the same consideration paid to the stockholdersin the

 

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transaction described in this Section 7, paragraph (b)) for thoseoutstanding under the Plan. In the event any surviving corporation or acquiringcorporation refuses to assume such Options or to substitute similar Options forthose outstanding under the Plan but subject to the restrictions in thisSection 7, paragraph (d), then with respect to Options held by Optionees whoseContinuous Service has not terminated, the vesting shall be accelerated infull, and the Options shall terminate if not exercised at or prior to suchevent. With respect to any other Options outstanding under the Plan, suchOptions shall terminate if not exercised prior to such event.

 

**(c)****                        Change InControl - Securities Acquisition.** In the event of an acquisition by any person, entity or group within themeaning of Section 13(d) or 14(d) of the Exchange Act, or any comparablesuccessor provisions (excluding any employee benefit plan, or related trust,sponsored or maintained by the Corporation or an Affiliate) of the beneficialownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,or comparable successor rule) of securities of the Corporation representing atleast fifty percent (50%) of the combined voting power entitled to vote in theelection of directors (other than an acquisition pursuant to Section 7,paragraph (b) above), then with respect to Options held by Optionees whoseContinuous Service has not terminated and subject to the restrictions inSection 7, paragraph (d), the vesting of such Options shall be accelerated infull.

 

**(d)****                        Pooling ofInterests.**  If the Corporation andthe other party to the transaction constituting a “change in control” asdescribed in this Section 7 agree that such transaction is to be treated as a“pooling of interests” for financial reporting purposes, and if suchtransaction in fact is so treated, then the accelerated vesting of Optionsdescribed in this Section 7 shall not occur to the extent that theCorporation’s independent public accountants and such other party’s independentpublic accountants separately determine in good faith that such accelerationwould preclude the use of “pooling of interests” accounting.

 

**8.****                            NORIGHTS AS STOCKHOLDER**.  An Optioneeshall not, by reason of any Option granted hereunder, have any right of astockholder of the Corporation with respect to the shares covered by his Optionuntil such shares shall have been issued to the Optionee.

 

**9.****                            NOOBLIGATION TO EXERCISE OPTION**.  Thegranting of an Option shall impose no obligation upon the Optionee to exercisesuch Option. Neither shall the Plan confer upon the Optionee any rightsrespecting continued Continuous Service nor limit the Optionee’s rights or theCorporation’s rights to terminate such Continuous Service.

 

**10.****                     WITHHOLDINGTAXES**.  Whenever under the Planshares of Option Stock are to be issued upon exercise of the Options grantedhereunder, and prior to the delivery of any certificate or certificates forsaid shares by the Corporation, the Corporation shall have the right to requirethe Optionee to remit to the Corporation an amount sufficient to satisfy anyfederal and state withholding or other employment taxes resulting from suchexercise. In the event that withholding taxes are not paid within five daysafter the date of exercise, to the extent permitted by law the Corporationshall have the right, but not the obligation, to cause such withholding taxesto be satisfied by reducing the number of shares of stock deliverable or byoffsetting such withholding taxes against amounts otherwise due from theCorporation to the Optionee; provided, however, that no shares are withheldwith a value exceeding the minimum amount of tax required to be withheld bylaw. If withholding taxes are paid by reduction of the number of

 

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shares deliverable to Optionee, such shares shall be valued at the FairMarket Value as of the fifth business day following the date of exercise.

 

**11.****                     MODIFICATIONOF OUTSTANDING OPTIONS**.  TheCommittee may accelerate the exercisability of an outstanding Option and mayauthorize modification of any outstanding Option with the consent of theOptionee when and subject to such conditions as are deemed to be in the bestinterests of the Corporation and in accordance with the purposes of the Plan.

 

**12.****                     FOREIGNEMPLOYEES**.  Without amending thePlan, the Committee may grant Options to eligible Employees, Directors andConsultants who are foreign nationals on such terms and conditions differentfrom those specified in this Plan as may in the judgment of the Committee benecessary or desirable to foster and promote achievement of the purposes of thePlan, and, in furtherance of such purposes the Committee may make suchmodification, amendments, procedures, subplans and the like as may be necessaryor advisable to comply with provisions of laws in other countries in which theCorporation operates or has Employees, Directors and Consultants.

 

**13.****                     LIQUIDATION**.  Upon the complete liquidation of theCorporation, any unexercised Options theretofore granted under this Plan shallbe deemed canceled, except as otherwise provided in Section 7 in connectionwith a merger, consolidation or reorganization of the Corporation.

 

**14.****                     CONDITIONSUPON ISSUANCE OF SHARES**.  TheCorporation may require the Optionee (or any person to whom an Option istransferred under Section 6 paragraph (e)) to execute such documents and toprovide such representations, written assurances or information which theCorporation shall determine is necessary, desirable or appropriate to complywith applicable securities and other laws as a condition of granting an Optionto such Optionee or permitting the Optionee (or any person to whom an Option istransferred under Section 6 paragraph (e)) to exercise such Option. The Corporationmay, upon advice of counsel to the Corporation, place legends on stockcertificates issued under the Plan as such counsel deems necessary orappropriate in order to comply with applicable securities and other laws,including, but not limited to, legends restricting the transfer of the OptionStock.

 

**15.****                     TERMINATIONAND AMENDMENT OF THE PLAN**.  ThisPlan shall terminate when all reserved Option Stock has been issued and cannotreturn to the reserve or at such earlier time as the Board of Directors shalldetermine. Any termination shall not affect any Options then outstanding underthe Plan.

 

The Board or the Committee at any time, and from timeto time, may amend the Plan.

 

**16.****                     INDEMNIFICATION**.  In addition to such other rights ofindemnification as they may have and subject to limitations of applicable law,the members of the Committee shall be indemnified by the Corporation againstall costs and expenses reasonably incurred by them in connection with anyaction, suit or proceeding to which they or any of them may be a party byreason of any action taken or failure to act under or in connection with thePlan or any rights granted thereunder and against all amounts paid to them insettlement thereof or paid by them in satisfaction of a judgment of any suchaction, suit or proceeding. The Committee member or

 

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members shall notify the Corporation in writing, giving the Corporationan opportunity at its own cost to defend the same before such Committee memberor members undertake to defend the same on their own behalf.

 

**17.****                     GENERALPROVISIONS**.  If any day on or beforewhich action under the Plan must be taken falls on a Saturday, Sunday, or legalholiday, 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 otherwisecontrol, the Plan and all determinations made and actions taken pursuant heretoshall 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 Stock Option Plan |
|                |   | (formerly known as the 1999 Non-Officer Stock Option  Plan) |

 

Ladies and Gentlemen:

 

Pursuant to the terms of that certain Stock Option Agreement under theDigital River, Inc. 1999 Stock Option Plan (formerly known as the 1999Non-Officer Stock Option Plan), this Letter is to notify you that I herebyexercise 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):

 

o     (i)   a check in the amount of$                  made payable to Digital River, Inc.;

 

o      (ii)  another form of considerationacceptable 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. 1999Stock Option Plan (formerly known as the 1999 Non-Officer Stock Option Plan). Iunderstand that I may suffer adverse tax consequences as the result of mypurchase of Shares. I represent that I have consulted with any tax consultantsI deem advisable in connection with the purchase or disposition of the Sharesand that I am not relying on Digital River, Inc. for any tax advice.

 
|   | Very Truly Yours, |
|--------|-------------------|
|   |              |
|   |              |
|   |              |   |
|   |              |   |
|   | Signature         |   |   |
|   |              |   |
|   | Print Name        |   |   |
|   |              |   |
|   | Date:             |   |   |
|        |                   |  |  |  |  |

 

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**DIGITAL RIVER, INC.**

**NON-QUALIFIED STOCK OPTION AGREEMENT**

**UNDER THE 1999 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.****                            OPTIONGRANT**.  The Company hereby grants tothe Optionee an option (the “Option”) to purchase the number of shares of theCompany’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 forthherein and in the Company’s 1999 Stock Option Plan (the “1999 Plan”), a copy ofwhich is attached hereto and incorporated herein by reference. The Option grantedhereunder 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 Codeof 1986, as amended.

 

**2.****                            STOCKHOLDERRIGHTS**.  No rights or privileges ofa stockholder in the Company are conferred by reason of the granting of theOption. Optionee will not become a stockholder in the Company with respect tothe Shares unless and until the Option has been properly exercised and theOption Price fully paid as to the portion of the Option exercised.

 

**3.****                            TERMINATION**.  Subject to earlier termination as providedin the 1999 Plan, this Option will expire, unless previously exercised in full,on the date ten (10) years from the Grant Date.

 

**4.****                            TERMSOF THE 1999 PLAN**.  The Optioneeunderstands that the 1999 Plan includes important terms and conditions thatapply to this Option. Those terms include (without limitation): importantconditions on the right of the Optionee to exercise the Option; importantrestrictions on the ability of the Optionee to transfer the Option or totransfer Shares received upon exercise of the Option; and early termination ofthe Option following the occurrence of certain events, including the Optioneeno longer being an employee, director or consultant to or of the Company or itssubsidiaries. The Optionee acknowledges that he or she has read the 1999 Plan,agrees to be bound by its terms, and makes each of the representations requiredto be made by the Optionee under it.

 

**5.****                            MISCELLANEOUS**.  This Agreement (together with the 1999 Plan)sets forth the complete agreement of the parties concerning the subject matterhereof; superseding all prior agreements, negotiations and understandings. ThisAgreement will be governed by the laws of the State of Minnesota irrespectiveof 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 setforth above.

 
|   | DIGITAL RIVER, INC.               |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               |   |   |
|   | Title:   President |
|   |                              |
|   |                              |
|   | “OPTIONEE”              |
|   |                              |
|   |                              |   |

 
| Attachments: |   | (1) 1999 Stock Option Plan |
|--------------|--------|----------------------------|
|         |   | (2) Notice of Exercise     |

 

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