**Exhibit 10.23**

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**EMPLOYMENT AGREEMENT FOR JOEL A. RONNING**

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ThisAgreement is made effective as of August 8, 2005 between Digital River Inc., aDelaware corporation (the “Company”), with its principal administrative officeat 9625 W. 76th Street, Eden Prairie, MN 55344, and Joel A. Ronning(the “Executive”).

 

WHEREAS,the Company wishes to assure itself of the services of the Executive for theperiod provided in this Agreement; and

 

WHEREAS,the Executive is willing to serve in the employ of the Company on a full-timebasis for said period.

 

NOW,THEREFORE, in consideration of the mutual covenants herein contained, theparties hereby agree as follows:

 

**1.         POSITIONAND RESPONSIBILITIES.**

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Duringthe period of his employment hereunder, Executive agrees to serve as Chairmanand Chief Executive Officer of the Company. The Executive shall serve as a full time employee of the Company toperform such duties as the Company may from time to time reasonably direct.  The Executive’s responsibilities willinclude, among other things, (i) developing and assisting in thedevelopment of new products and business for the Company, (ii) supervisingthe preparation and development of budgets for the Company for approval by theBoard of Directors of the Company (the “Board”), and (iii) developing anddirecting the Company’s e-commerce, finance, marketing, sales andtechnology areas.  In the event that achange in legal or regulatory requirements applicable to the Company shallrequire the role of Chairman to be held by an independent director or beseparated from the position of Chief Executive Officer, Executive shallcontinue to serve as the Company’s Chief Executive Officer and such event shallnot be deemed, in and of itself, to be an Event of Termination (as definedbelow) under this Agreement.

 

**2.         TERM.**

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(a)        Theperiod of Executive’s employment under this Agreement shall be deemed to havecommenced as of the date hereof, and shall continue for a period of twenty-four(24) full calendar months thereafter (the “Expiration Date”).  Unless written notice shall have beendelivered by the party desiring to terminate this Agreement, which writtennotice shall have been delivered not later than 120 days prior to theExpiration Date (including the Expiration Date with respect to any renewedterm), this Agreement shall be renewed for consecutive one (1) year periods.

 

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(b)       Duringthe period of his employment hereunder, except for periods of absenceoccasioned by illness, and reasonable vacation periods, Executive shall devotesubstantially all his business time, attention, skill, and efforts to thefaithful performance of his duties hereunder, including activities and servicesrelated to the organization, operation and management of the Company, provided,however, that, with the approval of the Board, as evidenced by a resolution ofthe Board, from time to time, Executive may serve on the boards of directorsof, and hold any other offices or positions in, companies or organizations,which, in the Board’s judgment, will not present any conflict of interest withthe Company, or materially affect the performance of Executive’s dutiespursuant to this Agreement.

 

(c)        Notwithstandinganything herein contained to the contrary: (i) Executive’s employment with the Company may be terminated bythe Company or Executive during the term of this Agreement, subject to theterms and conditions of this Agreement; and (ii) nothing in this Agreementshall mandate or prohibit a continuation of Executive’s employment followingthe expiration of the term of this Agreement upon such terms and conditions asthe Board and Executive may mutually agree.

 

**3.         COMPENSATIONAND REIMBURSEMENT.**

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(a)        Thecompensation specified under this Agreement shall constitute the salary andbenefits paid for the duties described in Section 1.  The Company shall pay Executive ascompensation a salary of not less than $250,000 per year (“Base Salary”).  Such Base Salary shall be payable inaccordance with the Company’s payroll practice in effect from time totime.  During the period of thisAgreement, Executive’s Base Salary shall be reviewed at least annually; thefirst such review will be made no later than one year from the date of thisAgreement.  Such review shall beconducted by the Compensation Committee of the Board, and the Board mayincrease Executive’s Base Salary.  Anincrease shall become the “Base Salary” for purposes of this Agreement.  In addition to the Base Salary provided inthis Section 3(a), the Company shall also provide Executive at no cost toExecutive with all such other benefits as are provided uniformly to permanentfull-time employees of the Company.

 

(b)       TheExecutive shall also receive an annual bonus in an amount to be recommended bythe Compensation Committee and approved by the Board.  The Executive shall only be eligible for anannual bonus as long as the Executive remains an employee of the Company.

 

(c)        TheExecutive will be entitled to four (4) weeks paid vacation annually.  The Executive will be entitled to participatein or receive benefits under any employee benefit plans, including, but notlimited to, retirement plans (i.e., 401(k) plans), supplemental retirementplans, pension plans, profit-sharing plans, health-and-accident plan, medicalcoverage or any other employee benefit plan or arrangement made available bythe Company currently or in the future to its senior executives and keymanagement employees, subject to and on a basis consistent with the terms,conditions and overall administration of such plans and arrangements.  Executive will be entitled to incentivecompensation and bonuses as provided in any plan of the Company in whichExecutive is eligible to participate, and without limiting the foregoing, theCompany may grant stock options, restricted stock, stock appreciation rights orother incentive equity (“Incentive Equity”) to Executive in the future, in thediscretion of the Board or a committee of

 

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theBoard.  Nothing paid to the Executiveunder any such plan or arrangement will be deemed to be in lieu of othercompensation to which the Executive is entitled under this Agreement.  In addition, the Company shall maintain termlife insurance, naming the Executive’s designee as beneficiary, in the faceamount of $1,000,000.

 

(d)       Inaddition to the Base Salary provided for by paragraph (a) of thisSection 3 and other compensation provided for by paragraphs (b) and(c) of this Section 3, the Company shall pay or reimburse Executive forall reasonable travel and other reasonable expenses incurred by Executiveperforming his obligations under this Agreement.

 

**4.         PAYMENTSTO EXECUTIVE UPON AN EVENT OF TERMINATION.**

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Theprovisions of this Section shall in all respects be subject to the terms andconditions stated in Sections 7 and 14.

 

(a)        Uponthe occurrence of an Event of Termination (as herein defined) during theExecutive’s term of employment under this Agreement, the provisions of thisSection 4 shall apply.  As used inthis Agreement, an “Event of Termination” shall mean and include any one ormore of the following:  (i) thetermination by the Company of Executive’s full-time employment hereunder forany reason, including, without limitation, the Company’s failure to renew thisAgreement, other than a termination following a Change in Control (as definedin Section 5(a) hereof) within the term of this Agreement, upon Retirement (asdefined in Section 6 hereof), upon death or disability (as defined inSection 6 hereof), or for Cause (as defined in Section 7 hereof); and(ii) Executive’s resignation from the Company’s employ, upon any(A) failure to elect or reelect or to appoint or reappoint Executive as ChiefExecutive Officer, (B) unless consented to by the Executive, a materialchange in Executive’s function, duties, or responsibilities, which change wouldcause Executive’s position to become one of lesser responsibility, importance,or scope from the position and attributes thereof described in Section 1,above, (and any such material change shall be deemed a continuing breach ofthis Agreement); provided that any removal of the role of Chairman fromExecutive that is caused by a change in legal or regulatory requirementsapplicable to the Company shall not be deemed, in and of itself, to be an Eventof Termination hereunder, (C) a relocation of Executive’s principal placeof employment by more than 30 miles from its location at the effective date ofthis Agreement, or a material reduction in the benefits and perquisites to theExecutive from those being provided as of the effective date of this Agreementor (D) material breach of this Agreement by the Company.  Upon the occurrence of any event described inclauses (A), (B), (C) or (D) above (a “resignation for Good Reason”), Executiveshall have the right to elect to terminate his employment under this Agreementby resignation upon not less than thirty (30) days prior written notice givenwithin a reasonable period of time not to exceed, except in case of acontinuing breach, three (3) calendar months after the event giving rise tosaid right to elect.

 

(b)       Subjectto Section 10 hereof, upon the occurrence of an Event of Termination, theCompany shall be obligated to pay Executive, as severance pay or liquidateddamages, or both, an amount equal to the sum of (i) twelve (12) months ofthe Executive’s Base Salary at the time of the occurrence of the Event ofTermination plus (ii) the average of the annual bonus amount paid toExecutive for the three (3) prior years. Such payment shall be made in twelve

 

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(12)equal monthly installments during the twelve (12) months following Executive’stermination.

 

(c)        Uponthe occurrence of an Event of Termination, the Company will cause to becontinued life, medical, dental and disability coverage (to the extentavailable) substantially identical to the coverage maintained by the Companyfor Executive prior to his termination for twelve (12) months.

 

(d)       Uponthe occurrence of an Event of Termination, the Executive will be entitled toreceive vested benefits due him under or contributed by the Company on hisbehalf pursuant to any retirement, incentive, profit sharing, bonus,performance, disability (if coverage is available under the Company’s currentpolicy) or other employee benefit plans maintained by the Company on theExecutive’s behalf to the extent that such benefits are not otherwise paid toExecutive under a separate provision of this Agreement.

 

(e)        Uponthe occurrence of an Event of Termination, any unexercised Incentive Equitygranted to the Executive pursuant to Section 3(c) of this Agreement shallimmediately vest and be immediately exercisable and free from any right ofrepurchase upon the Executive’s receipt of the Notice of Termination (asdefined below) relating to such Event of Termination, and any stock optionsheld by Executive shall remain exercisable for a period of one hundred twenty(120) days thereafter, after which (unless otherwise provided in the IncentiveEquity agreement) they shall terminate.

 

**5.         CHANGEIN CONTROL.**

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(a)        Nobenefit shall be payable under this Section 5 unless there shall have beena Change in Control of the Company as set forth below.  For purposes of this Agreement, a “Change inControl” of the Company shall mean any of the following:  (A) individuals who constitute the Boardon the date hereof (the “Incumbent Board”) cease for any reason to constituteat least a majority thereof, provided that any person becoming a directorsubsequent to the date hereof whose election was approved by a vote of at leasta majority of the directors comprising the Incumbent Board (or directorselected by the process set forth in this clause (A)), shall be, forpurposes of this clause (A), considered as though he were a member of theIncumbent Board; or (B) a sale of all or substantially all of the assetsof the Company, (C) a plan of reorganization, merger or consolidation orsimilar transaction occurs in which the stockholders of the Company prior tosuch transaction do not continue to hold, as a result of shares of capitalstock of the Company held by them prior to such transaction, a majority of thevoting power of the capital stock of the surviving corporation or entity;(D) a proxy statement shall be distributed soliciting proxies from stockholdersof the Company, by someone other than the current management of the Company,seeking stockholder approval of a plan of reorganization, merger orconsolidation of the Company with one or more entities as a result of which theoutstanding shares of the class of securities then subject to such a plan ortransaction are subsequently exchanged for or converted into cash or propertyor securities not issued by the Company shall be distributed; or (E) atender offer is completed for 50% or more of the voting securities of theCompany then outstanding.

 

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(b)       Ifany of the events described in Section 5(a) hereof constituting a Change inControl have occurred or the Board has determined that a Change in Control has occurred,Executive shall be entitled to the benefits provided in paragraphs (c) and(d) of this Section 5 upon his subsequent termination of employment by theCompany or resignation for Good Reason or in the event of Executive’ssubsequent death, in each case at any time during the term of this Agreement,unless such termination is because of Termination for Cause.

 

(c)        Uponthe occurrence of a Change in Control followed by the Executive’s terminationof employment by the Company (other than a Termination for Cause or aresignation without Good Reason), or in the event of Executive’s subsequentdeath, the Company shall pay Executive, or in the event of his subsequentdeath, his beneficiary or beneficiaries, or his estate, as the case may be, asseverance pay or liquidated damages, or both, an amount equal to the sum of(i) twelve (12) months of the Executive’s Base Salary at the time of theoccurrence of the Change in Control plus (ii) the average of the annualbonus amount for the prior three (3) years. Such payment shall be made in equal monthly installments during thetwelve (12) months following Executive’s termination.

 

(d)       Uponthe occurrence of a Change in Control followed by the Executive’s terminationof employment by the Company (other than a Termination for Cause or aresignation without Good Reason), the Company will cause to be continued life,medical, dental and disability coverage (if coverage is available under theCompany’s current policy) substantially identical to the coverage maintained bythe Company for Executive prior to his termination for twelve (12) monthsfollowing termination.

 

(e)        Uponthe occurrence of a Change in Control, any unvested Incentive Equity granted tothe Executive pursuant to Section 3(c) of this Agreement shall immediately vestand be immediately exercisable and free from any rights of repurchase, subjectto the provisions of Section 5(f) hereof.

 

(f)        Ifany payment or benefit Executive would receive pursuant to this Section 5(“Payment”) would constitute a “parachute payment” within the meaning ofSection 280G of the Internal Revenue Code (the “Code”), and, but for thisparagraph (f), be subject to the excise tax imposed by Section 4999 of the Code(the “Excise Tax”), then such Payment shall be equal to the Reduced Amount.  The “Reduced Amount” shall be either(x) the largest portion of the Payment that would result in no portion ofthe Payment being subject to the Excise Tax or (y) the largest portion, upto and including the total, of the Payment, whichever amount, after taking intoaccount all applicable federal, state and local employment taxes, income taxes,and the Excise Tax (all computed at the highest applicable marginal rate),results in Executive’s receipt, on an after-tax basis, of the greater amount ofthe Payment notwithstanding that all or some portion of the Payment may besubject to the Excise Tax.  If areduction in payments or benefits constituting “parachute payments” isnecessary so that the Payment equals the Reduced Amount, reduction shall occurin the following order unless Executive elects in writing a different order (*provided, however,* that such electionshall be subject to Company approval if made on or after the effective date ofthe event that triggers the Payment): reduction of cash payments; cancellation of accelerated vesting ofIncentive Equity; reduction of employee benefits.  In the event that acceleration of vesting ofIncentive Equity compensation is to be reduced, such acceleration of vesting shallbe cancelled in the reverse order of the date of grant of Executive’s

 

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IncentiveEquity unless Executive elects in writing a different order forcancellation.  The Company shall appointa nationally recognized accounting firm to make the determinations requiredhereunder, and shall bear the expenses thereof. Such accounting firm shall provide its calculations, together withdetailed supporting documentation, to the Company and Executive within thirty (30)calendar days after the date on which Executive’s right to a Payment istriggered (if requested at that time by the Company or Executive).  If the accounting firm determines that noExcise Tax is payable with respect to a Payment, either before or after theapplication of the Reduced Amount, it shall furnish the Company and Executivewith an opinion reasonably acceptable to Executive that no Excise Tax will beimposed with respect to such Payment. Any good faith determinations of the accounting firm made hereundershall be final, binding and conclusive upon the Company and Executive.

 

**6.         TERMINATIONUPON RETIREMENT, DEATH, AND DISABILITY.**

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(a)        Terminationby the Company of the Executive based on “Retirement” shall mean termination inaccordance with the Company’s retirement policy or in accordance with anyretirement arrangement established with Executive’s consent with respect tohim.  Upon termination of Executive uponRetirement, Executive shall be entitled to all benefits under any retirementplan of the Company and other plans to which Executive is a party.

 

(b)       ThisAgreement shall automatically terminate upon the death of the Executive.  If terminated because of death, the rightsgranted in section 4(e) will be immediately available for Executive’sbeneficiaries.  In addition, Executiveshall be awarded a pro-rated bonus, in an amount equal to the Board’s goodfaith estimate of the bonus Executive would have been awarded for the currentyear, pro-rated by the number of completed calendar months of such year (suchthat, for example, a termination on October 5 in a calendar year would resultin payment of the 9/12 of Executive’s bonus); provided that in no event willsuch bonus amount be less than such pro-rated portion of the average ofExecutive’s bonuses for the three most recent years.

 

(c)        Ifthe Executive is Disabled (as defined below) for a continuous period of six (6)months, the Company may terminate this Agreement upon written notice to theExecutive.  If the Company terminates theExecutive due to the Disability of the Executive, the Company shall, for aperiod of one (1) year from the date of termination, provide the Executive withthe term life insurance and medical insurance and, to the extent permitted bylaw and the terms and conditions of the Company’s benefit plans, other employeebenefits generally available to the Company’s employees, that are in effect atthe time of termination.  The Executive,for purposes thereof, shall be deemed to be “Disabled” when, as a result ofbodily injury or disease or mental disorder he is so disabled that he isprevented from performing the principal duties of his employment and is underthe regular care of a currently licensed physician or surgeon for such bodilyinjury, disease or mental disorder.  In addition,Executive shall be awarded (i) a cash amount equal to twelve (12) months of theExecutive’s Base Salary at the time of termination due to Disability, and (ii)a pro-rated bonus, in an amount equal to the Board’s good faith estimate of thebonus Executive would have been awarded following the end of the current year,pro-rated by the number of completed calendar months of such year (such that,for example, a termination on October 5 in a calendar year would result inpayment of the 9/12 of Executive’s bonus); provided that in no event will suchbonus amount be less than such pro-rated portion of the average of Executive’sbonuses for the three most recent years.

 

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**7.         TERMINATIONFOR CAUSE.**

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Theterm “Termination for Cause” shall mean termination because of (i) anyknowing act, or knowing failure to act, by the Executive involving fraud orwillful malfeasance in the performance of his duties under this Agreement,including, but not limited to, Executive’s willful failure to serve as a full timeemployee of the Company pursuant to the terms and provisions of Section 1of this Agreement, or (ii) the Executive’s unlawful appropriation of acorporate opportunity or other breach of fiduciary duty or other obligation tothe Company, or (iii) the conviction of the Executive of a felony underfederal or state law.  For purposes ofthis Section, no act, or the failure to act, on Executive’s part shall be “willful”unless done, or omitted to be done, not in good faith and without reasonablebelief that the action or omission was in the best interest of the Company orits affiliates.  Notwithstanding theforegoing, Executive shall not be deemed to have been Terminated for Causeunless and until there shall have been delivered to him a Notice of Terminationwhich shall include a copy of a resolution duly adopted by the affirmative voteof a  majority of the members of theBoard at a meeting of the Board called and held for that purpose (after 30 days’notice to Executive and an opportunity for him, together with counsel, to beheard before the Board), finding that in the good faith opinion of the Board,Executive was guilty of conduct justifying termination for Cause and specifyingthe particulars thereof in detail.  TheExecutive shall not have the right to receive compensation or other benefitsfor any period after Termination for Cause.

 

**8.         NOTICE**

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(a)        Anypurported termination by the Company or by the Executive shall be communicatedby Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice ofTermination” shall mean a written notice which shall indicate the specifictermination provision in this Agreement relied upon and shall set forth inreasonable detail the facts and circumstances claimed to provide a basis fortermination of Executive’s employment under the provision so indicated.

 

(b)       “Dateof Termination” shall mean (A) if Executive’s employment is terminated forDisability, thirty (30) days after a Notice of Termination is given (providedthat he shall not have returned to the performance of his duties on a full-timebasis during such thirty (30) day period), and (B) if his employment isterminated for any other reason, the date specified in the Notice ofTermination.

 

**9.         CONFIDENTIALITY**

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Executivewill not, during or after the term of his employment, disclose any knowledge ofthe past, present, planned or considered business activities of the Company toany person, firm, corporation, or other entity for any reason or purposewhatsoever which is not otherwise publicly available.  In the event of a breach or threatened breachby the Executive of the provisions of this Section 9, the Company will beentitled to an injunction restraining Executive from disclosing, in whole or inpart, the knowledge of the past, present, planned or considered businessactivities of the Company, or from rendering any services to any person, firmcorporation or other entity to whom such knowledge, in whole or in part, hasbeen disclosed or is threatened to be disclosed.  Nothing herein will be construed asprohibiting the Company from pursuing any other remedies

 

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available to the Company for such breach orthreatened breach, including the recovery of damages from Executive.

 

**10.       NON-COMPETITION.**

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Uponany termination of Executive’s employment hereunder, Executive agrees not tocompete with the Company for a period of twelve (12) months following suchtermination in those states within the United States and those countriesoutside the United States in which the Company conducts business (the “RestrictedArea”); provided that the ownership by the Executive of less than five percent(5%) of a publicly-traded class of securities shall not be deemed a violationof this Section 10.  Executive agreesthat during such period and within the Restricted Area, Executive shall notwork for or advise, consult or otherwise serve with, directly or indirectly,any entity whose business materially competes with the Company.  The parties hereto, recognizing thatirreparable injury will result to the Company, its business and property in theevent of Executive’s breach of this Section 10 agree that in the event ofany such breach by Executive, the Company will be entitled, in addition to anyother remedies and damages available, to an injunction to restrain theviolation hereof by Executive.  Executiverepresents and admits that in the event of the termination of his employment,Executive’s experience and capabilities are such that Executive can obtainemployment in a business engaged in other lines and/or of a different naturethan the Company, and that the enforcement of a remedy by way of injunctionwill not prevent Executive from earning a livelihood.  Nothing herein will be construed asprohibiting the Company from pursuing any other remedies available to theCompany for such breach or threatened breach, including the recovery of damagesfrom Executive.

 

**11.       SOURCEOF PAYMENTS.**

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Allpayments provided in this Agreement shall be timely paid in cash or check fromthe general funds of the Company.  TheCompany may use insurance proceeds especially obtained therefor as partialpayment in the event of disability.

 

**12.       EFFECTON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.**

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ThisAgreement contains the entire understanding between the parties hereto andsupersedes any prior employment agreement between the Company or anypredecessor of the Company and Executive (including without limitationExecutive’s Employment Agreement dated May 25, 1998).  No provision of this Agreement shall beinterpreted to mean that Executive is subject to receiving fewer benefits thanthose available to him without reference to this Agreement.

 

**13.       NOATTACHMENT.**

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(a)        Exceptas required by law, no right to receive payments under this Agreement shall besubject to anticipation, commutation, alienation, sale, assignment,encumbrance, charge, pledge, or hypothecation, or to execution, attachment,levy, or similar process or assignment by operation of law, and any attempt,voluntary or involuntary, to affect any such action shall be null, void, and ofno effect.

 

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(b)       ThisAgreement shall be binding upon, and inure to the benefit of, Executive and theCompany and their respective successors and assigns.

 

**14.       MODIFICATIONAND WAIVER.**

 

(a)        ThisAgreement may not be modified or amended except by an instrument in writingsigned by the parties hereto.

 

(b)       Noterm or condition of this Agreement shall be deemed to have been waived, norshall there be any estoppel against the enforcement of any provision of thisAgreement, except by written instrument of the party charged with such waiveror estoppel.  No such written waivershall be deemed a continuing waiver unless specifically stated therein, andeach such waiver shall operate only as to the specific term or condition waivedand shall not constitute a waiver of such term or condition for the future asto any act other than that specifically waived.

 

**15.       SEVERABILITY.**

 

If,for any reason, any provision of this Agreement, or any part of any provision,is held invalid, such invalidity shall not affect any other provision of thisAgreement or any part of such provision not held so invalid, and each suchother provision and part thereof shall to the full extent consistent with lawcontinue in full force and effect.

 

**16.       HEADINGSFOR REFERENCE ONLY.**

 

Theheadings of sections and paragraphs herein are included solely for convenienceof reference and shall not control the meaning or interpretation of any of theprovisions of this Agreement.

 

**17.       GOVERNINGLAW**

 

Thisagreement shall be governed by the laws of the State of Minnesota.

 

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INWITNESS WHEREOF, the parties hereto have caused this Employment Agreement to beduly executed and delivered as of the day and year first above written.

 
| EXECUTIVE: | COMPANY:            |
|------------|---------------------|
|       |                |
|       | DIGITAL RIVER, INC. |
| By:        | /s/ Joel A. Ronning |   |   |
|       | Joel A. Ronning     |   |
|       |                |
|       | By:                 |  /s/ Thomas F. Madison |   |
|       |                | Thomas F. Madison, Lead  Director |
|            |                     |  |  |  |  |

 

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