Exhibit
10.1


 


EMPLOYMENT AGREEMENT


 


This
Employment Agreement (“Agreement”), the Release attached as Schedule A
hereto (“the Release”), the Nonsolicitation Agreement attached hereto as
Schedule B (the “Nonsolicitation Agreement”) and the Noncompetition Agreement
attached as Schedule C hereto (the “Noncompetition Agreement”) are made
and entered into as of the date indicated below between Digital River, Inc.,
including its agents, facilities, affiliates, associated entities, joint
ventures, 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”).  Notwithstanding
any other provision of this Agreement, this Agreement shall not be effective or
have 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.


 


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


 


I.                               MR. KERUTIS’
EMPLOYMENT.


 


The
parties agree that Mr. Kerutis will report to the Chief Executive Officer
on strategic sales matters, effective October 1, 2003 (the “Transfer
Date”), 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 sooner
if Mr. Kerutis accepts other employment (excluding board memberships and
part-time consulting arrangements) (such date, the “Separation Date”) or
materially breaches this Agreement, including the Schedules thereto.  The parties agree that Mr. Kerutis
shall 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 of
Digital River after the Transfer Date. 
The parties agree that Mr. Kerutis shall be paid $2,000, less
applicable withholdings, at the end of each month during the Strategic Planning
Period.


 


During
the Strategic Planning Period Mr. Kerutis shall assist Digital River in
such projects and work as Digital River may assign to Mr. Kerutis.  Digital River may assign work to
Mr. Kerutis at its sole discretion during the Strategic Planning
Period.  Mr. Kerutis may work at
such location as he deems appropriate, subject to the reasonable requirements
of Digital River.  .  Mr. Kerutis agrees during the Strategic
Planning Period that he will faithfully, industriously, and to the best of his
ability, experience, and talents, perform all of the duties that may be
required by Digital River.


 


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


 

















 


II.                           CONSIDERATION.


 


In
exchange for the covenants and promises contained in this Agreement and its
attachments, and subject to this Agreement, Digital River agrees to provide
Mr. Kerutis with the following compensation and benefits (the
“Consideration”):


 


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


 


B.         Stock Option.  Digital River agrees that, in the event
of the closing of a Change of Control of Digital River before the Separation
Date, any and all outstanding and unvested stock options of Mr. Kerutis that
would have vested by the Separation Date will automatically and immediately
vest and be fully exercisable.  For
purposes of this Agreement, a “Change of Control” shall mean (i) the sale by
Digital River of all or substantially all of its assets, or (ii) the merger or
consolidation of Digital River with another entity, after which the
stockholders of Digital River do not hold a majority of the outstanding voting
power of the surviving entity.   Mr.
Kerutis understands that if his stock options have terminated because of a
Separation Date that occurs prior to January 2, 2005, the acceleration benefits
provided by this paragraph (B) will have no force or effect.  Further, and notwithstanding any other
provision of this paragraph (B), in the event that any third party approval is
required (except for an acquirer in a change in control) for the acceleration
provided herein, then this paragraph (B) shall be of no force or effect.


 


C.         Withholding.  Digital River will withhold from the
compensation and benefits payable to Mr. Kerutis under this Agreement and
the attached Release all appropriate deductions for life insurance, short term
disability, health insurance and dental insurance, as applicable.


 


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


 


III.                       COVENANTS
OF MR. KERUTIS.


 


Confidentiality.  The Parties understand that this agreement will
be filed with the Securities and Exchange Commission at such time as required
by 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 warrants
that he has not disclosed, and agrees he will not in the future disclose, the
terms of this Agreement, or the existence or terms of consideration to be paid
by Digital River to Mr. Kerutis, as part of this Agreement and/or the
settlement of his claims, to any person, other than to Mr. Kerutis’
attorneys, spouse and tax advisors (“Confidential Persons”). Mr. Kerutis
agrees these Confidential Persons shall be bound by the same prohibitions
against disclosure as he is, and Mr. Kerutis shall be responsible for
advising these individuals of this confidentiality provision and obtaining
their commitment to maintain such confidentiality.


 


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A.         Return of Property.  No later than the Separation Date, except as
mutually agreed otherwise, Mr. Kerutis will return to Digital River all
company 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 all
information or data regarding clients, prospective clients and vendors of
Digital River, whether in original or duplicate form.


 


B.         Cooperation.  Mr. Kerutis agrees to cooperate fully
with Digital River, including its attorneys or accountants, in connection with
any potential or actual litigation, or other real or potential disputes, which
directly or indirectly involve Digital River. 
Mr. Kerutis agrees to appear as a witness and be available to
attend depositions, consultations or meetings regarding litigation or potential
litigation as requested by Digital River.


 


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


 


Mr. Kerutis expressly acknowledges that he
understands that the terms of this subsection are important to this Agreement
and that, if he breaches the terms of this subsection, he shall be responsible
for all damages to Digital River. 
Mr. Kerutis also acknowledges and agrees that the Confidential
Information acquired during his employment with Digital River is valuable and
unique, and that breach by Mr. Kerutis of the provisions of this
subsection would cause Digital River irreparable injury and damage that cannot
be reasonably or adequately compensated by money damages.  Mr. Kerutis therefore expressly agrees that
Digital River shall be entitled to injunctive or other equitable relief in
order to prevent a breach of this subsection of the Agreement in addition to
such other remedies legally available to Digital River.  Mr. Kerutis expressly waives the claim
that Digital River has an adequate remedy at law for such a breach.


 


IV.                      ADDITIONAL
PROVISIONS.  Mr. Kerutis
agrees to execute the Release attached as Schedule A, the Nonsolicitation
Agreement attached as Schedule B, and the Non-Competition Agreement
attached as Schedule C.


 


V.                          MISCELLANEOUS
PROVISIONS.


 


A.         Non-Assignment of
Claims.  Mr. Kerutis
represents that he has not sold, assigned, or transferred to any third party
any obligation, covenant, or claim of any nature whatsoever relating to any
matter covered by this Agreement.


 


B.         Successors.  This Agreement shall be binding upon,
enforceable by, and inure to the benefit of Mr. Kerutis’ personal or legal
representatives and heirs, and of Digital River and any successor company, but
neither this Agreement nor any rights or payments arising hereunder may be
otherwise assigned or pledged by the parties.


 


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C.         Controlling Law and
Venue.  The validity of this
Agreement and any of its provisions and conditions, as well as the rights and
duties of the parties, shall be interpreted and construed pursuant to and in
accordance with the internal laws, and not the law of conflicts, of the State
of Minnesota.  The Parties select and irrevocably
submit to the exclusive jurisdiction of any Minnesota or United States Federal
Court sitting in the State of Minnesota for any action to enforce, construe or
interpret this Agreement.  The Parties
further waive any objection to venue in such state on the basis of forum non
conveniens or of convenience of the party.


 


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


 


E.          Waiver.  No right arising out of this Agreement can
be waived unless the waiver is in writing signed by the party to be bound by
such waiver.  A waiver by any party of a
breach or default of any provision of this Agreement shall not be deemed a
waiver of future compliance.


 


F.          Entire Agreement.  Digital River and Mr. Kerutis each
represent that no promise or inducement has been offered or made except as set
forth or referenced above, or in Schedule A, Schedule B or
Schedule C, and that the consideration stated herein is the sole
consideration for this Agreement.


 


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


 


 


IN WITNESS WHEREOF, the parties hereto have
executed 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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