STOCK SUBSCRIPTION WARRANT
FOR
SHARES OF COMMON STOCK
OF
DIGITAL RIVER, INC.
For value received, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual resident of London,
England, or his successors or assigns ("Holder"), is entitled to subscribe for
and purchase from Digital River, Inc., a Delaware corporation (the "Company"),
up to 150,000 fully paid and nonassessable shares of the Company's common stock,
or such greater or lesser number of such shares as may be determined by
application of the anti-dilution provisions of this Warrant, at the price of Two
Dollars ($2.00) per share, subject to adjustments as noted below (the "Warrant
Exercise Price").
This Warrant may be exercised by Holder at any time or from time to time on
or prior to February 26, 2003.
This Warrant is subject to the following provisions, terms and conditions:
1. The rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part, by written notice of exercise delivered to the
Company at least twenty (20) days prior to the intended date of exercise and by
the surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and upon payment to it by cash, certified check or bank
draft of the purchase price for such shares. The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
Warrant has been exercised by payment to the Company of the Warrant Exercise
Price. Certificates for the shares of stock so purchased, bearing the
restrictive legend set forth at the end of this Warrant, shall be delivered to
the holder within fifteen (15) days after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
warrant representing the number of shares, if any, with respect to which this
Warrant has not been exercised shall also be delivered to the holder hereof
within such time. No fractional shares shall be issued upon the exercise of
this Warrant.
2. The Company covenants and agrees that all shares that may be issued
upon the exercise of the rights represented by this Warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number exercise of the subscription rights evidenced by this Warrant, a
sufficient number of shares of its common stock to provide for the exercise of
the rights represented by this Warrant.
3. The Warrant Exercise Price shall be subject to adjustment from time to
time as hereinafter provided in this section 3.
(a) If the Company at any time divides the outstanding shares of its
common stock into a greater number of shares (whether pursuant to a stock split,
stock dividend or otherwise), and conversely, if the outstanding shares of its
common stock are combined into a
smaller number of shares, the Warrant Exercise Price in effect immediately
prior to such division or combination shall be proportionately adjusted to
reflect the reduction or increase in the value of each such common share.
(b) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of the Company's common
stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such common shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the holder of
this Warrant shall have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
shares of the common stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock, other securities or assets as would have been issued or delivered to
the holder of this Warrant if it had exercised this Warrant and had received
such shares of common stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed to the registered holder of this
Warrant at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
(c) Until such time as the Company has completed an initial public
offering of its common stock pursuant to a registration statement filed with the
Securities and Exchange Commission under Section 5 of the Securities Act of
1933, as amended, if and whenever the Company shall (1) issue or sell any shares
of its common stock for a consideration per share less than $1.80 (as adjusted
to give effect to any subdivision or combination of its common stock after the
date hereof), (2) issue or sell any warrants, options or other rights to acquire
shares of its common stock at a purchase price less than $1.80 (as adjusted to
give effect to any subdivision or combination of its common stock after the date
hereof), or (3) issue or sell any other securities that are convertible into
shares of its common stock for a purchase or exchange price less than $1.80 per
share (as adjusted to give effect to any subdivision or combination of its
common stock after the date hereof), and such purchase or exchange price is less
than the Warrant Exercise Price then in effect, then, upon such issuance or
sale, the Warrant Exercise Price shall be reduced to the price at which such
shares of common stock are being issued or sold by the Company or the price at
which such other securities are exercisable or convertible into shares of the
Company's Common Stock. Any adjustment in the Warrant Exercise Price shall
apply only to any exercise of this Warrant made subsequent to such adjustment.
(d) If the Company takes any other action, or if any other event
occurs, which does not come within the scope of the provisions of section 3(a),
3(b) or 3(c), but which should result in an adjustment in the Warrant Exercise
Price and/or the number of shares subject to this Warrant in order to fairly
protect the purchase rights of the holder of this Warrant, an appropriate
adjustment in such purchase rights shall be made by the Company.
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(e) Upon any adjustment of the Warrant Exercise Price to a price
equal to $1.50 or less (as adjusted to give effect to any subdivision or
combination of its common stock after the date hereof), the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, an additional 50,000 fully paid and
nonassessable shares of the Company's common stock, so that the aggregate number
of shares into which this Warrant is exercisable equals 200,000 shares.
(f) Upon any adjustment of the Warrant Exercise Price, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this Warrant at the address of such holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4. This Warrant shall not entitle the holder hereof to party voting
rights or other rights as a shareholder of the Company.
5. The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this Warrant or transferring
any shares of the Company's common stock issuable or issued upon the exercise of
this Warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this Warrant or such holder's intention as to the
shares of common stock issuable upon the exercise hereof or the intended
disposition to be made of shares of common stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If in the opinion of such counsel, the proposed
transfer of this Warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this Warrant
or the shares of common stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this Warrant, or to exercise
this Warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of common stock received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this Warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
Warrant or the certificates for such shares.
6. Subject to the provisions of section 5, this Warrant and all rights
hereunder are transferable, in whole or in part, only to (i) any family member
of the Holder, and (ii) any trust, limited liability company or other entity
formed for the benefit of Holder or any family member of the Holder. Any such
transfer shall be made in person or by duly authorized attorney, upon surrender
of this Warrant properly endorsed to any person or entity who represents in
writing that he/it is acquiring the warrant for investment and without any view
to the sale or other distribution thereof. Each holder of this Warrant, by
taking or holding the same, consents and agrees that the bearer of this Warrant,
when endorsed, may be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant, or to the transfer
hereof on the
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books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered owner
hereof as the owner for all purposes.
7. In the event that the Company determines to proceed with the
preparation and filing of a registration statement under the Securities Act of
1935 in connection with the proposed offer and sale for money of any shares of
its common stock, Holder shall be entitled to "piggyback" on such registration
statement as set forth in Annex I of the Securities Purchase Agreement, dated
February 28, 1998, among the Company, Holder and certain other investors
identified therein, the terms of which are incorporated herein by reference.
8. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
delivered by a duly authorized officer as of the 26th day of February 1998.
DIGITAL RIVER, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
President
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the Securities
Act of 1933 or any state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise distributed for value unless there is an
effective registration statement under such act or laws covering such security
or the Company receives an opinion of counsel for the holder of this security
(concurred in by counsel for the Company) stating that such sale, transfer,
assignment, pledge or distribution is exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 and all
applicable state securities laws.