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                                  EXHIBIT C


                               DIGITAL RIVER INC


                            CONVERTIBLE LOAN NOTE

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                                 DIGITAL RIVER, INC.

                             18% CONVERTIBLE DEBENTURE

                                DUE DECEMBER    1997


$_________________                                December        1996
                                                  Minneapolis, Minnesota, USA

Digital River, Inc., a Minnesota corporation ("the Company"), for value
received, hereby promises to pay to the order of                        or
any permitted assignee thereof ("the Holder") the principal sum of
Dollars ($       ) on December   1997, or such later date as shall be the
anniversary of the date hereof with interest on the unpaid balance of such
principal amount accrued from the day following the date hereof at an annual
rate of eighteen per cent (18%) calculated on the basis of a 365-day year,
such interest payable on the due date of this debenture unless this debenture
is converted as provided for below.

This Debenture is subject to the following terms and conditions:

1.    SERIES

      This Debenture is one of a series of convertible debentures issued or
      to be issued by the Company in connection with a private placement of
      up to $1,000,000.00 principal amount of convertible debentures.  The
      debentures in such series shall collectively be referred to herein as
      the "Debentures".

2.    CONVERSION

      This Debenture is convertible at the option of the Holder during the
      period from the date a private placement of shares completes as set
      forth below through the date of repayment into shares of Common Stock
      of the Company at a per share conversion price equal to the lesser of
      seventy-five per cent (75%) of the per share offering price at which
      the Company next offers its Common Stock pursuant to a planned private
      placement or six dollars ($6.00) per share.  Said private offering to
      be completed within twelve (12) months from the date hereof.  In the
      event the Company does not complete a private offering of its stock
      with twelve (12) months, the exercise price shall be six dollars
      ($6.00) per share.  The number of shares into which this Debenture is
      convertible and the conversion price shall be appropriately adjusted to
      reflect stock dividends, stock splits, and other events as hereinafter
      provided.  The conversion price in effect from time to time is herein
      called the "Conversion Price".

      This Debenture shall be automatically converted in its entirety upon
      the successful closing of the anticipated private stock offering.  Said
      conversion shall be at the

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      Conversion Price.  The Company undertakes to use its reasonable
      endeavors to effect such a private stock offering within twelve (12)
      months of the hereof.

      The Company shall not be required to issue any fraction of a share of
      Common Stock or scrip representing a fraction of a share of Common
      Stock on any conversion pursuant to the terms of this Debenture.  Upon
      the surrender to the Company of this Debenture for conversion, the
      Holder shall be entitled to receive the number of full shares of Common
      Stock equal to the quotient (exclusive of fractions) obtained by
      dividing the principal amount of this Debenture so surrendered by the
      Conversion Price, and an amount in cash, as an adjustment in lieu of
      any fraction of a share resulting from such division, equal to such
      fraction multiplied by the Conversion Price of one share.

      To convert this Debenture to shares of Common Stock, this Debenture
      shall be surrendered to the Company at its principal office or at such
      other agency as the Company may authorise for such purpose, endorsed or
      accompanied by a written instrument of surrender in a form satisfactory
      to the Company, duly executed by the Holder or his or her attorney or
      other signatory duly authorised in writing.

      The Company shall issue and deliver, in exchange for that portion of
      this Debenture so surrendered for conversion, as soon as practicable
      after such surrender, certificates representing the number of shares of
      Common Stock into which such Debenture shall be convertible, issued in
      the name of the Holder or in such name or names as the Holder may
      direct.  The conversion right in respect of this Debenture shall be
      deemed to be exercised upon the receipt by the Company of the Debenture
      so surrendered, duly endorsed or accompanied by a written instrument as
      above provided.  However, in the event of an automatic conversion,
      failure to deliver the Debenture shall not create any obligation to the
      Company other that to deliver the shares of Common Stock into which the
      Debenture is converted.  The Holder of this debenture shall be deemed
      to have become a shareholder of record as of the date upon which this
      Debenture shall have been been so received, provided the requirements
      hereof are complied with.  Thereupon, this Debenture shall be deemed to
      be satisfied and discharged and no longer outstanding for any purpose.
      The receipt of this Debenture so surrendered shall constitute full
      payment for the shares issued in conversion thereof.

      The number of shares of Common Stock into which this Debenture is
      convertible and the Conversion Price shall be subject to adjustment
      from time to time as follows:

      (a)    In the event the Company declares a dividend upon its Common
             Stock payable otherwise than in cash out of earnings or surplus,
             including a dividend payable in Common Stock or securities
             convertible into Common Stock, or in any rights or options to
             purchase Common Stock or securities convertible into Common
             Stock, the Holder shall, upon conversion of this Debenture, be
             entitled to receive Common Stock at the Conversion Price then in
             effect, and, in addition and without payment therefor, the cash,
             stock, or other securities and other property which such Holder
             would have received by way of dividends or distributions
             (otherwise than out of earnings or surplus) as if continuously
             since the record date

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             for any such dividend or distribution the Holder (i) had been
             the record Holder of the number of shares of Common Stock then
             received, and (ii) had retained all prior dividends or
             distributiosn in stock or securities paid as dividends or
             distributions and originating directly or indirectly from such
             Common Stock.

      (b)    In case the Company shall during the time this Debenture is
             outstanding subdivide its outstanding Common Stock into a
             greater number of shares, or shall combine outstanding shares of
             Common Stock into a smaller number of shares, the Conversion
             Price shall be proportionately adjusted to reflect the the
             respective reduction or increases in value of each such share of
             Common Stock.

      (c)    If any capital reorganisation 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, other securities or assets with
             respect to or in exchange for such Common Stock, then, as a
             condition of such reorganisation, reclassification,
             consolidation, merger, or sale, the Holder shall have the right
             to acquire upon the basis and upon the terms and conditions
             specified in this Debenture and in lieu of the shares of Common
             Stock that could be acquired immediately theretofore, such
             shares of stock, other securities, or assets as would have been
             issued or delivered to the Holder if the Holder had converted
             this Debenture prior to such reorganisation, 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 of the
             corporation purchasing such assets shall assume, by written
             instrument executed and mailed to the Holder at the last address
             of the Holder appearing on the books of the Company, the obligation
             to deliver to the Holder such shares of stock, other securities,
             or assets as, in accordance with the foregoing provisions, the
             Holder may be entitled to acquire.

      (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
             subparagraphs 1(a) through 1(c) hereof, but which should result
             in an adjustment in the Conversion Price in order to fairly
             protect the acquisition rights of the Holder, an appropriate
             adjustment to the Conversion Price shall be made by the Company.
             No adjustment in the Conversion Price shall be made on account
             of an increase in the number of outstanding shares of Common
             Stock resulting from (i) the issuance of shares pursuant to
             employee stock option plans; (ii) the exercise of any of the
             Company's outstanding Warrants; (iii) the conversion of any
             outstanding Convertible Preferred Stock or Convertible
             Debentures; or (iv) the sale or exchange by the Company for fair
             value (as determined in good faith by the Company's Board of
             Directors) of options, warrants, additional convertible
             Debentures, or rights to acquire securities of the Company.

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      (e)    Upon an adjustment of the Conversion Price, the Company shall
             give, within a reasonable time, written notice thereof, by first
             class mail, postage prepaid, addressed to the Holder, which
             notice shall state the Conversion Price resulting from such
             adjustment and the increase or decrease, if any, in the number
             of shares that may be acquired at such price upon the exercise
             of this Debenture, setting forth in reasonable detail the method
             of calculation and the facts upon which such calculation is
             based.  No failure to mail such notice or any defect therein or
             in the mailing thereof shall affect the validity thereof except
             as to the Holder to whom the Company failed to mail such notice,
             or except as to the Holder whose notice was defective.  The
             affidavit of an officer of the Company that such notice has been
             mailed shall, in the absence of fraud, be prima facie evidence
             of the facts stated therein.

      (f)    As used in this Section 1, the term the Company's "Common Stock"
             shall mean and include the Company's presently authorised shares
             of Common Stock and shall also include any capital stock of any
             class of the Company hereafter authorised which shall not be
             limited to a fixed sum or percentage or par value in respect of
             the rights of the holders thereof to participate in dividends or
             in the distribution of assets upon the voluntary or involuntary
             liquidation, dissolution or winding up of the Company.

3.    SECURITY

      The obligations of the Company represented by this Debenture shall be
      unsecured.

4.    PREPAYMENT

      (a)    This Debenture may not be redeemed or prepaid, except (i) by
             mutual agreement between the Company and the Holder, (ii) in
             accordance with Section 6, or (iii) in accordance with paragraph
             (b) below.

      (b)    The Company shall, unless it has already been converted or
             repaid, redeem this Debenture on the first anniversary of the
             date hereof by payment to the Holder of the principal amount set
             out above (the "Principal"), all interest payable thereon and,
             if the Company has failed to comply with the provisions of
             Section 1, a premium of 15 per cent (15%) of the Principal.

5.    CORPORATE OBLIGATIONS

      With the exception of a written communication to Holder, proven to
      constitute a knowing misrepresentation of a material fact, no recourse
      under or upon any obligation, covenant or agreement contained in this
      Debenture or for any claim based hereon or otherwise in respect
      thereof, shall be had against any promoter, subscriber to shares,
      incorporator, shareholder, officer or director, as such, past, present,
      or future, of the Company or any successor corporation either directly
      or through the Company or any successor corporation or through any
      trustee, receiver, or any other person, whether by virtue of any

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      constitution or statute, of, and in and all such rights and claims
      against, every such promoter, subscriber, incorporator, shareholder,
      officer or director, as such, are hereby expressly waiver and released
      by the acceptance of this Debenture and as a part of the consideration
      for the issuance hereof.

6.    DEFAULT

      The term "Event of Default" as used herein shall mean any one or more
      of the following events:-

      (a)    Failure of the Company to pay any accrued interest within
             forty-five (45) days of the date on which such interest payment
             is due and payable;

      (b)    Failure of the Company to pay the principal amount of this
             Debenture within forty-five (45) days of the date on which such
             principal payment is due and payable;

      (c)    Failure of the Company to observe or perform any other of the
             covenants or agreements of the Company in this Debenture for a
             period of forty-five (45) days; and/or

      (d)    The Company makes an assignment for the benefit of creditors, or
             admits in writing its inability to pay its debts as they become
             due, or files a voluntary petition in bankruptcy, or a decree or
             other order by a court of competent jurisdiction shall have been
             entered adjudging the Company bankrupt or insolvent under the
             provisions of the United States Bankruptcy Code or applicable
             insolvency law or statute providing for the modification or
             adjustment of the rights of creditors, and such degree or order
             shall have continued undischarged or unstayed for a period of
             sixty (60) days.

      If an Event of Default shall have occurred, the principal amount hereof
      may be declared by the Holder, and upon such declaration, shall become
      due and payable, without presentment of other notice or demand,
      together with all accrued but unpaid interest through the date of the
      Company's full payment hereof.  Upon an Event of Default, the Company
      agrees to pay all costs of collection, including reasonable attorneys'
      fees.

7.    RESERVATION OF COMMON STOCK

      The Company covenants that it will at all times reserve and keep
      available out of its authorised but unissued Common Stock, solely for
      the purpose of delivery upon conversion of this Debenture as herein
      provided, such number of shares of Common Stock as shall then be
      deliverable upon the conversion of this Debenture.

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8.    CONSENT OF HOLDERS REQUIRED

      Prior to the repayment on conversion of the Debentures, the Company
      will not, without the prior written consent of Debenture holders
      representing sixty-five percent (65%) of the Debentures in issue:

      (a)    repay the Debentures in advance of the due date of payment
             otherwise than in accordance with the provisions of Section 6 or
             paragraph 4(b); or

      (b)    create or suffer any material change in its business as the same
             is carried out at the date hereof or as contemplated by this
             document.

      In the event of the failure by the Company to obtain the consents
      referred to above, or in the event of Mr Ronning ceasing, for whatever
      reason, to be an executive officer of the Company, the Debentures
      shall be repaid forthwith with accrued interest and a fifteen percent
      (15%) penalty.

9.    COMPANY'S WARRANTY

      The Company hereby warrants the correctness of all statements of fact
      made in the Private Placement Memorandum and exhibits thereto issued by
      the Company dated 4 December 1996 under which this Debenture was issued.

10.   REPLACEMENT

      Upon receipt of evidence satisfactory to the Company of the loss,
      theft, destruction or mutilation of this Debenture, and at the option
      of the Company, in the case of any such loss, theft or destruction,
      upon delivery of a bond or indemnity satisfactory to the Company, or in
      the case of any such mutilation, upon surrender and cancellation of
      such Debenture, the Company shall issue a new Debenture of like tenor as
      if the lost, stolen, destroyed or mutilated Debenture was then
      surrendered for exchange in lieu of such lost, stolen, destroyed, or
      mutilated Debenture.

11.   CONSTRUCTION OF AGREEMENT

      This Debenture shall be construed in accordance with the laws of the
      State of Minnesota.  This Debenture may not be waived, changed,
      discharged, or terminated orally, nor shall any delay or failure on the
      part of the Holder of this Debenture in exercising any right hereunder
      affect such right or be deemed a waiver of any default on the part of
      the Company.  Wherever possible, each provision of this Debenture shall
      be interpreted in such a manner as to be effective and valid under
      applicable law, but if any provision of this Debenture is prohibited or
      invalid under applicable law, such provision shall be ineffective only
      to the extent of such prohibition or invalidity without invalidating
      the remainder of such provisions or the remaining provisions of this
      Debenture.

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12.   NO VOTING RIGHTS

      This Debenture shall not entitle the Holder to any voting right or
      other rights as a shareholder of the Company.

13.   NOTICES

      All notices, requests, consents and other communications required or
      permitted hereunder shall be in writing and shall be delivered, or
      mailed first class, postage prepaid (i) if to the Holder of this
      Debenture at the address set forth in Holders Subscription Agreement or
      at such other address as Holder may specify by written notice to the
      Company, or (ii) if to the Company, at 5198 West 76th Street, Edina,
      Minnesota, 55439, Attention:  Joel Ronning, CEO, or at such other
      address as the Company may specify by written notice to the Holder, and
      such notices and other communications shall for all purposes of this
      Debenture be treated as being effective or having ben given if
      delivered personally, or if sent by mail, when received.

14.   HEADINGS

      The headings of articles, sections and paragraphs in this Debenture are
      inserted for convenience only and shall not affect the remaining or
      interpretation of all or an part of this Debenture.

15.   FACSIMILE SIGNATURES

      Until such time as this Debenture, duly executed by the Company
      officers, has been delivered to Holder, a facsimile copy with the
      signatures of Company officers thereon delivered to the Holder shall be
      binding on the Company and constitute proof of funds advanced.

IN WITNESS WHEREOF the Company has caused this Debenture to be signed,
delivered and attested to by its duly authorised officers.



                                        DIGITAL RIVER, INC.


                                        By:
                                           --------------------------

                                        Its:
                                            -------------------------


ATTEST:

----------------------------
(Secretary)