**Exhibit10.1**

 

**EMPLOYMENT AGREEMENT**

 

ThisEmployment Agreement (“Agreement”), the Release attached as Schedule Ahereto (“the Release”), the Nonsolicitation Agreement attached hereto asSchedule B (the “Nonsolicitation Agreement”) and the Noncompetition Agreementattached as Schedule C hereto (the “Noncompetition Agreement”) are madeand entered into as of the date indicated below between Digital River, Inc.,including its agents, facilities, affiliates, associated entities, jointventures, subsidiaries, predecessors, successors, officers, directors, assigns,employees, stockholders, delegates, benefit plans and plan administrators,attorneys and insurers (collectively “Digital River”), and Jay Kerutis(“Mr. Kerutis”).  Notwithstandingany other provision of this Agreement, this Agreement shall not be effective orhave any effect until the Release has become effective and enforceable.Mr. Kerutis and Digital River are sometimes referenced collectively as the“Parties” to this Agreement.

 

DigitalRiver and Mr. Kerutis wish to provide for the modification of theiremployment and other contractual relationships in connection withMr. Kerutis’ resignation as an Officer of Digital River, Inc., as follows:

 

**I.****                               MR. KERUTIS’EMPLOYMENT**.

 

Theparties agree that Mr. Kerutis will report to the Chief Executive Officeron strategic sales matters, effective October 1, 2003 (the “TransferDate”), until January 2, 2005 (the “Strategic Planning Period”).  The parties agree that Mr. Kerutis’employment with Digital River will terminate on January 2, 2005, or soonerif Mr. Kerutis accepts other employment (excluding board memberships andpart-time consulting arrangements) (such date, the “Separation Date”) ormaterially breaches this Agreement, including the Schedules thereto.  The parties agree that Mr. Kerutisshall remain an employee of Digital River during the Strategic Planning Period,except as specifically provided herein. The parties agree that Mr. Kerutis shall not be an Officer ofDigital River after the Transfer Date. The parties agree that Mr. Kerutis shall be paid $2,000, lessapplicable withholdings, at the end of each month during the Strategic PlanningPeriod.

 

Duringthe Strategic Planning Period Mr. Kerutis shall assist Digital River insuch projects and work as Digital River may assign to Mr. Kerutis.  Digital River may assign work toMr. Kerutis at its sole discretion during the Strategic PlanningPeriod.  Mr. Kerutis may work atsuch location as he deems appropriate, subject to the reasonable requirementsof Digital River.  .  Mr. Kerutis agrees during the StrategicPlanning Period that he will faithfully, industriously, and to the best of hisability, experience, and talents, perform all of the duties that may berequired by Digital River.

 

Theparties agree that Digital River shall pay Mr. Kerutis for all accrued andused vacation as soon as is practicable after the Transfer Date.  The parties agree that Mr. Kerutisshall no longer accrue vacation after the Transfer Date.

 

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**II.****                           CONSIDERATION**.

 

Inexchange for the covenants and promises contained in this Agreement and itsattachments, and subject to this Agreement, Digital River agrees to provideMr. Kerutis with the following compensation and benefits (the“Consideration”):

 

**A.****         Payment**.  Digital River will continue to make paymentsto Mr. Kerutis through January 2, 2005 as discussed inParagraph I above. Mr. Kerutis also will remain eligible to receive a bonus payment onDecember 31, 2003, pursuant to his 2003 bonus plan, if the objectives setforth in that plan are met.  DigitalRiver further agrees to pay on Mr. Kerutis’ behalf “Cobra Payments” formedical and dental insurance for 24 months following employment with DigitalRiver, unless Mr. Kerutis accepts other employment or violates the termsof this agreement.

 

**B.****         Stock Option. **Digital River agrees that, in the eventof the closing of a Change of Control of Digital River before the SeparationDate, any and all outstanding and unvested stock options of Mr. Kerutis thatwould have vested by the Separation Date will automatically and immediatelyvest and be fully exercisable.  Forpurposes of this Agreement, a “Change of Control” shall mean (i) the sale byDigital River of all or substantially all of its assets, or (ii) the merger orconsolidation of Digital River with another entity, after which thestockholders of Digital River do not hold a majority of the outstanding votingpower of the surviving entity.   Mr.Kerutis understands that if his stock options have terminated because of aSeparation Date that occurs prior to January 2, 2005, the acceleration benefitsprovided by this paragraph (B) will have no force or effect.  Further, and notwithstanding any otherprovision of this paragraph (B), in the event that any third party approval isrequired (except for an acquirer in a change in control) for the accelerationprovided herein, then this paragraph (B) shall be of no force or effect.

 

**C.****         Withholding**.  Digital River will withhold from thecompensation and benefits payable to Mr. Kerutis under this Agreement andthe attached Release all appropriate deductions for life insurance, short termdisability, health insurance and dental insurance, as applicable.

 

**D.****         Acknowledgment**.  The parties acknowledge that theconsideration provided in this Agreement is valuable consideration for thisAgreement (including its attachments) and its covenants, and includes paymentsand benefits to which Employee is not otherwise entitled.

 

**III.****                       COVENANTSOF MR. KERUTIS**.

 

**Confidentiality**.  The Parties understand that this agreement willbe filed with the Securities and Exchange Commission at such time as requiredby the rules of the Securities and Exchange Commission.  Until such time this contract is so filed,the parties agree that this agreement shall remain confidential.  Until such filing, Mr. Kerutis warrantsthat he has not disclosed, and agrees he will not in the future disclose, theterms of this Agreement, or the existence or terms of consideration to be paidby Digital River to Mr. Kerutis, as part of this Agreement and/or thesettlement of his claims, to any person, other than to Mr. Kerutis’attorneys, spouse and tax advisors (“Confidential Persons”). Mr. Kerutisagrees these Confidential Persons shall be bound by the same prohibitionsagainst disclosure as he is, and Mr. Kerutis shall be responsible foradvising these individuals of this confidentiality provision and obtainingtheir commitment to maintain such confidentiality.

 

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**A.****         Return of Property**.  No later than the Separation Date, except asmutually agreed otherwise, Mr. Kerutis will return to Digital River allcompany property, including but not limited to all identification cards, files,computer hardware, software, equipment and disks, keys, credit cards and records.  The property to be returned includes allinformation or data regarding clients, prospective clients and vendors ofDigital River, whether in original or duplicate form.

 

**B.****         Cooperation**.  Mr. Kerutis agrees to cooperate fullywith Digital River, including its attorneys or accountants, in connection withany potential or actual litigation, or other real or potential disputes, whichdirectly or indirectly involve Digital River. Mr. Kerutis agrees to appear as a witness and be available toattend depositions, consultations or meetings regarding litigation or potentiallitigation as requested by Digital River.

 

**C.****         ConfidentialInformation**.  Mr. Kerutisacknowledges that he has had access to confidential business information(including, but not limited to, future business plans and personnelinformation) concerning the business, strategic plans, finances and assets ofDigital River (“Confidential Information”). This Confidential Information is not generally known outside of DigitalRiver.  Mr. Kerutis agrees that hewill not, without the prior written authorization of Digital River, directly orindirectly use, divulge, furnish or make accessible to any person anyConfidential Information, but instead shall keep all Confidential Informationstrictly and absolutely confidential. Mr. Kerutis will take reasonable care to safeguard and prevent theunauthorized use or disclosure of Confidential Information.

 

Mr. Kerutis expressly acknowledges that heunderstands that the terms of this subsection are important to this Agreementand that, if he breaches the terms of this subsection, he shall be responsiblefor all damages to Digital River. Mr. Kerutis also acknowledges and agrees that the ConfidentialInformation acquired during his employment with Digital River is valuable andunique, and that breach by Mr. Kerutis of the provisions of thissubsection would cause Digital River irreparable injury and damage that cannotbe reasonably or adequately compensated by money damages.  Mr. Kerutis therefore expressly agrees thatDigital River shall be entitled to injunctive or other equitable relief inorder to prevent a breach of this subsection of the Agreement in addition tosuch other remedies legally available to Digital River.  Mr. Kerutis expressly waives the claimthat Digital River has an adequate remedy at law for such a breach.

 

**IV.****                      ADDITIONALPROVISIONS**.  Mr. Kerutisagrees to execute the Release attached as Schedule A, the NonsolicitationAgreement attached as Schedule B, and the Non-Competition Agreementattached as Schedule C.

 

**V.****                          MISCELLANEOUSPROVISIONS**.

 

**A.****         Non-Assignment ofClaims**.  Mr. Kerutisrepresents that he has not sold, assigned, or transferred to any third partyany obligation, covenant, or claim of any nature whatsoever relating to anymatter covered by this Agreement.

 

**B.****         Successors**.  This Agreement shall be binding upon,enforceable by, and inure to the benefit of Mr. Kerutis’ personal or legalrepresentatives and heirs, and of Digital River and any successor company, butneither this Agreement nor any rights or payments arising hereunder may beotherwise assigned or pledged by the parties.

 

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**C.****         Controlling Law andVenue**.  The validity of thisAgreement and any of its provisions and conditions, as well as the rights andduties of the parties, shall be interpreted and construed pursuant to and inaccordance with the internal laws, and not the law of conflicts, of the Stateof Minnesota.  The Parties select and irrevocablysubmit to the exclusive jurisdiction of any Minnesota or United States FederalCourt sitting in the State of Minnesota for any action to enforce, construe orinterpret this Agreement.  The Partiesfurther waive any objection to venue in such state on the basis of forum nonconveniens or of convenience of the party.

 

**D.****         Amendment**.  Any amendment to this Agreement shall bemade in writing and signed by the Parties.

 

**E.****          Waiver**.  No right arising out of this Agreement canbe waived unless the waiver is in writing signed by the party to be bound bysuch waiver.  A waiver by any party of abreach or default of any provision of this Agreement shall not be deemed awaiver of future compliance.

 

**F.****          Entire Agreement**.  Digital River and Mr. Kerutis eachrepresent that no promise or inducement has been offered or made except as setforth or referenced above, or in Schedule A, Schedule B orSchedule C, and that the consideration stated herein is the soleconsideration for this Agreement.

 

**G.****         Severability**.   If one or more provisions of this Agreementare held to be unenforceable under applicable law, (i) such provisionshall be excluded from this Agreement, (ii) the balance of the Agreementshall be interpreted as if such provision were so excluded and (iii) thebalance of the Agreement shall be enforceable in accordance with its terms.

 

 

**IN WITNESS WHEREOF,** the parties hereto haveexecuted this Agreement on the date set forth below:

 

 
| **Jay  Kerutis** | **DIGITAL  RIVER, INC.** |
|------------------|--------------------------|
|             |                     |
|             |                     |
| /s/ Jay Kerutis  |                     | By:  | /s/ Carter D. Hicks |   |
|             | Its:                | Chief Financial Officer |   |
|             |                     |
|             |                     |
| Date:       | August 5, 2003           |   | Date:  | August 5, 2003 |   |
|                  |                          |  |  |  |  |  |  |  |

 

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Schedules A, B and C - Intentionally Omitted

 

 

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