SEPARATION AGREEMENT
AND GENERAL RELEASE
This Separation Agreement and General
Release (this “Agreement”) is entered into on
October 2, 2006 by and between Brad Tesch, an individual (the
“Executive”), and DDi Corp., a Delaware corporation, on
behalf of itself and all of its subsidiaries (collectively,
“the Company”).
Recitals
A. The Executive has been
employed by the Company since October 16, 2000 in various
capacities, most recently as Chief Operations Officer.
B. The Executive is party to an
Offer Letter by and between the Company and the Executive dated
June 11, 2002 (the “Offer Letter”); and
C. The Executive is a
participant in the Company’s DDi Corp. Severance Plan For Key
Employees dated as of December 19, 2004 (the “Severance
Plan”); and
D. The Executive’s
employment with the Company and any of its parents, direct or
indirect subsidiaries, affiliates, divisions or related entities
(collectively referred to herein as “the Company and its
Related Entities”) will be ended on the terms and conditions
set forth in this Agreement.
Agreement
In consideration of the mutual
promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. Resignation . The
Executive hereby resigns from all positions as an officer and
employee of the Company and its Related Entities effective at 5:00
p.m PDT on October 2, 2006 (the “Termination
Date”).
2. No Continuation of
Benefits After the Termination Date . Except as expressly
provided in this Agreement or in the plan documents governing the
Company’s employee benefit plans, after the Termination Date,
the Executive will no longer be eligible for, receive, accrue, or
participate in any other benefits or benefit plans provided by the
Company and its Related Entities, including, without limitation,
medical, dental and life insurance benefits, and the
Company’s 401(k) retirement plan; provided, however, that
nothing in this Agreement shall waive the Executive’s right
to any vested amounts in the Company’s 401(k) retirement
plan, which amounts shall be handled as provided in the plan.
3. Normal Salary Through
Termination Date . Within one business day after the
Termination Date, the Company shall pay the Executive the prorated
portion of his salary, plus all accrued but unused vacation, earned
through the Termination Date.
4. Stock Options and
Bonus . In return for the Executive’s promises in this
Agreement, the Executive will be entitled to the following
benefits:
(a) Following the final
calculation of the Company’s Net EBITDA for fiscal 2006 in
accordance with the DDi Corp. 2006 Senior Management Bonus Program
(the “Bonus Program”), the Company shall pay the
Executive an amount equal to a pro-rata amount of the bonus the
Executive would have earned under the Bonus Program had the
Executive remained employed with the Company through March 31,
2007; provided , however, that the Company shall be required
to make such payment only if (1) employees of the Company are
entitled to bonuses under the Bonus Program based upon the
Company’s Net EBITDA; (2) the Executive remains employed
with Veritek Manufacturing Services, or one of its affiliates,
through March 31, 2007; and (3) the Executive has not
revoked this Agreement as provided in Section 11. Such
payment, if any, will be calculated as the product (A) the sum
of the Target EBIDTA Payment (as defined on Exhibit A) and
the Target Performance Payment (as defined on Exhibit A)
multiplied by (B) a fraction, the numerator equal to the
number days from January 1, 2006 through the Termination Date,
and the denominator being 365. Any payment pursuant to this Section
4(a) shall be subject to deductions required by law.
(b) Under the terms of the
Second Amendment to Restricted Stock Agreement dated as of
June 1, 2005 between the Executive and the Company, 3,571
shares of currently unvested restricted stock issued to Employee
under the DDi Corp. 2003 Management Equity Incentive Plan (the
“2003 Plan”) will be deemed to be fully vested and
unrestricted on the Termination Date.
(c) Under the terms of the
Amendment to Non-Qualified Stock Option Agreement dated as of June
1, 2005 between Executive and the Company, the following unvested
stock options granted to Executive under the 2003 Plan will vest
and become fully exercisable on the Termination Date: (a) 950
Tranche A1 Options (exercise price of $3.43/share); and
(b) 2,139 Tranche A4 Options (exercise price of
$0.007/share).
(d) The Company will accelerate
the vesting of the following unvested stock options, so that all
such stock options will vest and become fully exercisable on the
Termination Date: (a) 950 Tranche A1 Options (exercise price
of $3.43/share) granted to Executive under the 2003 Plan; and
(b) 19,048 stock options granted to Executive under the DDi
Corp. 2005 Stock Incentive Plan (exercise price of
$5.67/share).
(e) The post-termination
exercise period for the following outstanding options of the
Company held by the Executive shall be extended so that such
options expire on the first anniversary of the Termination Date:
(a) 2,851 Tranche A1 Options (exercise price of $3.43/share)
granted to Executive under the 2003 Plan; (b) 2,139 Tranche A4
Options (exercise price of $0.007/share) granted to Executive under
the 2003 Plan and (b) 19,048 stock options granted to
Executive under the DDi Corp. 2005 Stock Incentive Plan (exercise
price of $5.67/share).
5. Acknowledgement of Total
Compensation and Indebtedness . The Executive acknowledges and
agrees that the cash payments under Section 3 of this
Agreement extinguish any and all obligations for monies, or other
compensation or benefits that the Executive claims or could claim
to have earned or claims or could claim is owed to him as a result
of his employment by the Company and its Related Entities through
the Termination Date, under the Offer Letter, the Severance Plan or
otherwise.
6. Tax Consequences .
The Executive acknowledges that (a) the Company has not made
any representations to him about, and that he has not relied upon
any statement in this Agreement with respect to, any individual tax
consequences that may arise by virtue of any payment provided under
this Agreement and/or his exercise of any stock options, including,
but not limited to, the applicability of Section 409A of the
Internal Revenue Code, and (b) he has or will consult with his
own tax advisors as to any such tax consequences.
7. Status of Related
Agreements and Future Employment.
(a) Agreements Between the
Executive and the Company . The Executive and the Company agree
that, in addition to this Agreement, the Offer Letter the Severance
Plan, and the stock option and restricted stock agreements are the
only other executed agreement between the Company and the Executive
relating to the Executive’s employment.
(b) Offer Letter and
Severance Plan . The parties agree that the Offer Letter and
the Severance Plan (with respect to the Executive) shall be
terminated as of the Termination Date; and that Executive has no
additional rights thereunder.
8. Release by the
Executive . Except as otherwise expressly provided in this
Agreement, the Executive, for herself and his heirs, executors,
administrators, assigns, affiliates, successors and agents
(collectively, the “Executive’s Affiliates”)
hereby fully and without limitation releases and forever discharges
the Company and its Related Entities, and each of their respective
agents, representatives, shareholders, owners, officers, directors,
employees, consultants, attorneys, auditors, accountants,
investigators, affiliates, successors and assigns (collectively,
the “Company Releasees”), both individually and
collectively, from any and all rights, claims, demands,
liabilities, actions, causes of action, damages, losses, costs,
expenses and compensation, of whatever nature whatsoever, known or
unknown, fixed or contingent, which the Executive or any of the
Executive’s Affiliates has or may have or may claim to have
against the Company Releasees by reason of any matter, cause, or
thing whatsoever, from the beginning of time to the Termination
Date (“Claims”), including, without limiting the
generality of the foregoing, any Claims arising out of, based upon,
or relating to the recruitment, hiring, employment, relocation,
remuneration, investigation, or termination of the Executive by any
of the Company Releasees, the Executive’s tenure as an
employee and/or an officer of any of the Company Releasees, any
agreement or compensation arrangement between the Executive and any
of the Company Releasees (including, without limitation, the Offer
Letter and the Severance Agreement), or any act or occurrence in
connection with any actual, existing, proposed, prospective or
claimed ownership interest of any nature of the Executive or the
Executive’s Affiliates in equity capital or rights in equity
capital or other securities of any of the Company Releasees, to the
maximum extent permitted by law. The Executive specifically and
expressly releases any Claims arising out of or based on: the
California Fair Employment and Housing Act, as amended; Title VII
of the Civil Rights Act of 1964, as amended; the Americans With
Disabilities Act; the National Labor Relations Act, as amended; the
Equal Pay Act; ERISA; any provision of the California Labor Code;
the California common law on fraud, misrepresentation, negligence,
defamation, infliction of emotional distress or other tort, breach
of contract or covenant, violation of public policy or wrongful
termination; state or federal wage and hour laws; or any other
state or federal law, rule, or regulation dealing with the
employment relationship or operating a publicly held business.
Nothing contained in this Section 8 or any other provision of
this Agreement shall release or waive any right that Executive has
to indemnification and/or reimbursement of expenses by the Company
with respect to which Executive may be eligible as provided in the
Company’s Certificate of Incorporation, Bylaws and any
applicable directors and officers liability insurance.
9. Waiver of Civil Code
Section 1542 .
(a) The Executive understands
and agrees that the release provided herein extends to all Claims
released above whether known or unknown, suspected or unsuspected.
The Executive expressly waives and relinquishes any and all rights
he may have under California Civil Code Section 1542, which
provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER
MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.”
(b) The Executive expressly
waives and releases any rights and benefits which he has or may
have under any similar law or rule of any other jurisdiction. It is
the intention of each party through this Agreement to fully,
finally and forever settle and release the Claims as set forth
above. In furtherance of such intention, the release herein given
shall be and remain in effect as a full and complete release of
such matters notwithstanding the discovery of any additional Claims
or facts relating thereto.
10. Release of Federal Age
Discrimination Claims by the Executive . The Executive hereby
knowingly and voluntarily waives and releases all rights and
claims, known or unknown, arising under the Age Discrimination In
Employment Act of 1967, as amended, which he might otherwise have
had against the Company or any of the Company Releasees regarding
any actions which occurred prior to the Termination Date.
11. Rights Under the Older
Workers Benefit Protection Act . In accordance with the Older
Workers Benefit Protection Act of 1990, the Executive hereby is
advised of the following:
(a) The Executive has the right
to consult with an attorney before signing this Agreement and is
encouraged by the Company to do so;
(b) The Executive has
twenty-one (21) days from his receipt of this Agreement to
consider it; and
(c) The Executive has seven
(7) days after signing this Agreement to revoke
Sections 5, 8 and 10 of this Agreement (which must be revoked
in their entirety and as a group), and such Sections of this
Agreement (as a group) will not be effective until that revocation
period has expired without exercise. The Executive agrees that in
order to exercise his right to revoke this Agreement within such
seven (7) day period, he must do so in a signed writing
delivered to t
