Exhibit 10.17

 

EMPLOYMENT TRANSITION AND CONSULTING AGREEMENT

 

This Employment Transition and Consulting Agreement (this “Agreement”) is
entered into between Omar Choucair, an individual (“Executive”), and Digital
Generation, Inc., a Delaware corporation (the “Company”), effective as of
February 27, 2012.

 

WHEREAS, Executive is currently employed by the Company as its Chief Financial
Officer and serves on the Company’s Board of Directors (the “Board”);

 

WHEREAS, Executive and the Company are parties to that certain Amended and
Restated Employment Agreement (the “Employment Agreement”) effective as of
December 31, 2008 (the “Effective Date”);

 

WHEREAS, in accordance with the Company’s and the Executive’s transition plans,
both the Executive and the Company have determined that it is in their mutual
best interests that Executive’s employment with the Company terminate, and that
their employment relationship be dissolved, and that Executive resign from the
Board, in the manner set forth in this Agreement;

 

WHEREAS, in accordance with the Company’s and the Executive’s transition plans,
both the Executive and the Company have determined that it is in their mutual
best interests that Executive continue to provide consulting services to the
Company following his termination of employment and service as a member of the
Board; and

 

WHEREAS, Executive and the Company desire to set forth the terms and conditions
of the foregoing arrangement.

 

NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties agree as follows:

 

1.                                       Employment Period.

 

(a)                                  Employment Period.  During the period (the
“Employment Period”) commencing on the Effective Date and ending on May 31, 2012
(the “Termination Date”), Executive shall continue to be employed by the Company
as its Chief Financial Officer.  Executive hereby resigns from his position as
Chief Financial Officer (and any other titles or officer positions he may hold)
of the Company (and any of its affiliates and subsidiaries) effective as of the
Termination Date.  Executive’s “separation from service” for purposes of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
shall be the Termination Date.

 

(c)                                  Continued Board Membership.  Executive
shall continue to serve as a member of the Board through the Termination Date. 
Executive hereby resigns from his position as a member of the Board effective as
of the Termination Date.  Executive shall execute any additional documentation
necessary to effectuate such resignation.

 

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(d)                                 Duties and Services During Employment
Period.  During the Employment Period, Executive shall have such authority and
duties as are usual and customary for the position of Chief Financial Officer,
and shall perform such additional services and duties as the Board may from time
to time designate consistent with such position, including, without limitation,
any necessary transition services.  Executive shall report solely to the Chief
Executive Officer.  Certain other senior officers of the Company, designated
from time to time by the Chief Executive Officer, may report, directly or
indirectly through other senior officers designated from time to time by the
Chief Executive Officer, to Executive, and Executive shall be responsible for
reviewing the performance of such senior officers of the Company.  Executive
shall devote his full business time and best efforts to the business affairs of
the Company; however, Executive may devote reasonable time and attention to:
(i) serving as a director of, or member of a committee of the directors of, any
not-for-profit organization or engaging in other charitable or community
activities; and (ii) serving as a director of, or member of a committee of the
directors of, the corporations or organizations for which Executive presently
serves in such capacity, and such other corporations and organizations that the
Board may from time to time approve in the future; provided, that except as
specified above, Executive may not accept employment with any other individual
or other entity, or engage in any other venture which is indirectly or directly
in conflict or competition with the then existing business of the Company.

 

(e)                                  Compensation During Employment Period.  As
compensation for the services to be rendered by Executive to the Company during
the Employment Period, Executive shall be paid the following compensation and
other benefits:

 

(i)                                     Base Salary:  Salary shall be payable in
equal bimonthly installments in arrears, or otherwise in accordance with the
Company’s ordinary payroll practices.  Executive shall be entitled to salary at
the rate of $355,000 per annum.

 

(ii)                                  Bonuses:  Executive will be paid an annual
bonus of $162,150 for 2011 by March 15, 2012.  In addition, Executive will be
eligible to receive a bonus of $83,500.00 for the period from January 1, 2012
through the Termination Date, subject to his continued employment and
performance of his duties through May 31, 2012, payable on the Termination Date.

 

(iii)                               Car Allowance:  The Company shall pay to
Executive a car allowance in an amount equal to $500 per month during the
Employment Period payable pursuant to the Company’s customary payroll practices.

 

(v)                                 Employee Benefit Plans:  Executive shall be
eligible to participate, on a basis comparable to other executive officers, in
any profit sharing, retirement, insurance, health or other employee benefit plan
maintained by the Company.

 

(vi)                              Reimbursement of Expenses:  In addition to the
compensation provided for hereof, upon submission of proper vouchers, the
Company will pay or reimburse Executive for all normal and reasonable travel and
entertainment expenses incurred by Executive during the Employment Period in
connection with Executive’s responsibilities to the Company.

 

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(vii)                           Company Payment of Health Benefit Coverage. 
During the Employment Period, the Company shall pay the amount of premiums or
other cost incurred for coverage of Executive and his eligible spouse and
dependent family members under the applicable Company health benefits
arrangement (consistent with the terms of such arrangement).

 

(viii)                        Vacations and Leave:  Executive shall be entitled
to four weeks of vacation per year and such additional leave time as is
customarily granted to the other executive officers of the Company.

 

(f)                                    Death Prior to Termination Date.  In the
event of Executive’s death prior to May 31, 2012, any amounts due and payable to
Executive through May 31, 2012, pursuant to Section 2(e) if his employment had
continued through such date, including base salary payable through the
Termination and the bonuses described above, will be paid to Executive’s estate
within thirty (30) days following Executive’s death.  In addition, Executive’s
estate shall receive the severance payments and benefits that would have been
payable to Executive under Section 3(d) below, which amounts shall be provided
in accordance with the payment schedule(s) outlined therein.  In addition, in
the event of Executive’s death prior to May 31, 2012, all of Executive’s Stock
Awards (as defined below) shall become fully vested and exercisable on the date
of his death and, following the Termination Date, Executive’s Stock Awards shall
be exercisable in accordance with the Executive’s Stock Award Agreements and any
plan under which such Stock Awards were issued.  For purposes of this Agreement,
“Stock Awards” means all stock options, stock appreciation rights, restricted
stock and such other awards granted pursuant to the Company’s stock option and
equity incentive award plans or agreements and any shares of stock issued upon
exercise thereof.

 

3.                                       Severance and Termination Payments.

 

(a)                                  Compensation Through Termination Date.  On
the Termination Date, the Company shall issue Executive his final paycheck,
reflecting (i) his earned but unpaid base salary through May 31, 2012, and
(ii) all accrued, unused vacation and sick leave due Executive through the
Termination Date.  Subject to the provisions of this Agreement, Executive
acknowledges and agrees that with his final check, the payment of any
outstanding expense reimbursements, and the payment of any amounts payable under
any of the employee benefit plans of the Company in accordance with the terms of
such plans, Executive will have received all monies, bonuses, commissions,
expense reimbursement, vacation pay, or other compensation he earned or was due
during his employment by the Company, excluding only severance or consulting
benefits as provided by this Agreement.

 

(b)                                 Expense Reimbursements.  The Company, within
thirty (30) days after the Termination Date, will reimburse Executive for any
and all reasonable and necessary business expenses incurred by Executive in
connection with the performance of his job duties prior to the Termination Date,
which expenses shall be submitted to the Company with supporting receipts and/or
documentation no later than thirty (30) days after the Termination Date.

 

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(c)                                  Benefits.  Subject to Section 3(d)(ii) and
3(d)(iii) below, Executive’s entitlement to benefits from the Company, and
eligibility to participate in the Company’s benefit plans, shall cease on the
Termination Date, except to the extent Executive elects to and is eligible to
receive continued healthcare coverage pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
for himself and any covered dependents, in accordance with the provisions of
COBRA.

 

(d)                                 Severance.  In exchange for Executive’s
agreement to be bound by the terms of this Agreement, including, but not limited
to, the release of claims in Sections 5 and 6, Executive shall be entitled to
receive the following, which shall be the exclusive severance benefits to which
Executive is entitled:

 

(i)                                     An amount in cash equal in the aggregate
to $177,500, representing an amount equal to six (6) months of Executive’s
current base salary pursuant to Section 14 of the Employment Agreement, such
amount to be paid on January 1, 2013.

 

(ii)                                  Provided that the Executive and his
covered spouse and dependents timely elect COBRA healthcare continuation
coverage, the Company shall reimburse the Executive or pay directly to the
carrier an amount equal to the COBRA premiums for Executive and his covered
spouse and dependents until the earlier of June 30, 2013, and the date on which
the Executive becomes eligible in another employer-sponsored health plan; and

 

(iii)                               The vesting and/or exercisability of all of
Executive’s outstanding Stock Awards shall be automatically accelerated on the
Termination Date.  Following the Termination Date, Executive’s vested Stock
Awards shall remain exercisable through the later of (A) the last day of the
Consulting Period (as defined below), or (B) such later date as is determined in
accordance with the Executive’s Stock Award agreements or any plan under which
such Stock Awards were issued (but in no event shall Executive’s Stock Awards be
exercisable beyond the original ten-year term of such Stock Awards); provided,
however, that Executive’s vested Stock Awards shall cease to be exercisable to
the extent awards under the Company’s equity incentive plans are terminated
pursuant to a change in control transaction or otherwise as set forth in such
plans.  The foregoing supersedes any contrary provision in the Executive’s Stock
Award agreements or any plan under which such Stock Awards were issued. 
Notwithstanding the foregoing, following the Termination Date, Executive shall
not be entitled to any additional grants of Stock Awards.

 

(v)                                 In the event of Executive’s death prior to
payment of all of the cash amounts due under this Section 3, any remaining
amounts shall be paid to Executive’s estate, in accordance with the payment
schedule outlined herein.

 

(e)                                  Exclusive Remedy.  Except as otherwise
expressly required by law (e.g., COBRA) or as specifically provided herein, all
of Executive’s rights to compensation, benefits, and other amounts hereunder (if
any) accruing after the termination of Executive’s employment by or service to
the Company shall cease upon such termination.  In addition, Executive
acknowledges and agrees that he is not entitled to any reimbursement by the
Company for any

 

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taxes payable by Executive as a result of the payments and benefits received by
Executive pursuant to this Section 3.  The severance payments and benefits set
forth in Section 3(d) above represent full satisfaction of the Company’s
severance obligations under Section 14 of the Employment Agreement.

 

(f)                                    No Mitigation.  Executive shall not be
required to mitigate the amount of any payment provided for in this Section 3 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 3 be reduced by any compensation earned by
Executive as the result of employment by another employer or self-employment or
by retirement benefits.

 

(g)                                 Company Property.  As of the Termination
Date, Executive shall immediately surrender to the Company all lists, books and
records of, or in connection with, the Company’s business, and all other
property belonging to the Company, it being distinctly understood that all such
lists, books and records, and other documents, are the property of the Company,
other than any such property that the Company determines is necessary for
Executive’s provision of consulting services pursuant to this Agreement or his
continued status as a member of the Board.

 

4.                                       Consulting Services.

 

(a)                                  Consulting Period.  During the period
commencing on the Termination Date and ending on June 30, 2013 (the “Consulting
Period”), Executive will continue to provide services to the Company.  The
Consulting Period may be extended upon mutual agreement of Executive and the
Chief Executive Officer of the Company.

 

(b)                                 Status as Consultant.  During the Consulting
Period, Executive shall be an independent contractor of the Company and not an
employee.

 

(c)                                  Scope of Services During Consulting
Period.  Executive shall devote such amount of his business time and effort to
the performance of his services hereunder as may be mutually agreed upon by the
Chief Executive Officer of the Company and Executive.  Executive shall, upon the
request or direction of the Board or the Chief Executive Officer of the Company,
provide such additional information, advice and assistance concerning matters
that are within the scope of Executive’s knowledge and expertise, which amount
shall not exceed ten (10) hours per month.  Executive’s advice shall be of an
advisory nature and Company shall not have any obligation to follow such
advice.  Executive agrees to perform the consulting service and any other
obligations or activities hereunder in accordance with (i) the terms of this
Agreement, (ii) all applicable laws, and (iii) all Company policies and
procedures provided to Executive in connection with Executive’s performance
under this Agreement.  Notwithstanding the foregoing, from and after the
Termination Date, the Company and Executive intend that the level of bona fide
services that Executive shall perform for the Company pursuant to this
Section 4(c) shall not exceed nineteen percent (19%) of the average level of
bona fide services performed by Executive for the Company as the Chief Financial
Officer over the thirty-six (36) month period immediately preceding the
Termination Date.

 

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(d)                                 Availability.  Executive shall be available
to provide services under this Agreement during normal business hours (“normal
business hours” being 9:00 a.m. to 5:00 p.m. Pacific Time on any day excluding
Saturday, Sunday and any day which is a legal holiday under the laws of the
State of Texas or is a day on which banking institutions located in California
are authorized or required by law or other governmental action to close).  If
requested by the Board or the Chief Executive Officer of the Company, Executive
shall provide the services in person at the principal executive offices of
Company or at another location to be mutually agreed by Executive and the Chief
Executive Officer of the Company.  The Company shall reasonably accommodate
Executive’s schedule when requesting Executive’s assistance pursuant to this
Section 4(d).

 

(e)                                  Compensation During Consulting Period.

 

(i)                                     During the Consulting Period, Executive
shall be paid a monthly retainer as follows:  $28,000 per month for the period
commencing on June 1, 2012 and ending on November 30, 2012, and $1,750 per month
for the period commencing on December 1, 2012 and ending on June 30, 2013,
payable monthly in arrears.

 

(ii)                                  Executive acknowledges that, following the
Termination Date, Executive shall not be eligible to participate in any plan or
program which, as a condition of eligibility for such plan or program, requires
Executive to be an employee of the Company.  During the Consulting Period,
Executive shall comply, at his expense, with all applicable provisions of
worker’s compensation laws, unemployment compensation laws, federal Social
Security laws and all other applicable federal, state, and local laws,
regulations and codes relating to terms and conditions of employment required to
be fulfilled by independent contractors.

 

(iii)                               During the Consulting Period, the Company
shall reimburse Executive for reasonable and pre-approved out-of-pocket business
expenses incurred in connection with the performance of his services hereunder,
subject to (a) such policies as the Company may from time to time establish, and
(b) Executive furnishing the Company with evidence in the form of receipts
satisfactory to the Company substantiating the claimed expenditures.

 

5.                                       Release.  Executive, on behalf of
himself, his descendants, dependents, heirs, executors, administrators, assigns,
and successors, and each of them, hereby covenants not to sue and fully releases
and discharges the Company and each of its parents, subsidiaries and affiliates,
past and present, as well as each of their trustees, directors, officers,
members, managers, partners, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and
each of them, hereinafter together and collectively referred to as the
“Releasees,” with respect to and from any and all claims, wages, demands,
rights, liens, agreements or contracts (written or oral), covenants, actions,
suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or nature in law,
equity or otherwise, whether now known or unknown, suspected or unsuspected, and
whether or not concealed or hidden (each, a “Claim”), which Executive now owns
or holds or Executive has at any time heretofore owned or held or may in the
future hold as against any of said Releasees arising out of or in any way

 

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connected with Executive’s service as an officer, director, employee, member or
manager of any Releasee and/or Executive’s separation from his position as an
officer, director, employee, manager and/or member, as applicable, of any
Releasee, resulting from any act or omission by or on the part of said
Releasees, or any of them, committed or omitted on or prior to the Termination
Date including, without limiting the generality of the foregoing, any Claim
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, the Family and Medical Leave Act of 1993, the Worker Adjustment and
Retraining Notification Act (or any similar state, local or foreign law), the
Texas Labor Code, the Texas Commission on Human Rights Act, or any other
federal, state or local law, regulation, or ordinance, or any Claim for
compensation or benefits, including any severance pay, bonus, sick leave,
holiday pay, vacation pay, life insurance, disability insurance, health or
medical insurance, retirement benefits, workers’ compensation or any other
fringe benefit; provided that such release shall not apply to any of the
following: (a) any right to indemnification that Executive may have pursuant to
the bylaws (or similar governing document) of the Company or any of its parents,
subsidiaries or other affiliates, the certificate of incorporation (or similar
governing document) of the Company or any of its parents, subsidiaries or other
affiliates, or pursuant to any statute, law, or common law principle; (b) any
rights that Executive may have to insurance coverage for any losses, damages,
fees or other expenses under any Company (or parent, subsidiary or affiliate)
directors and officers liability insurance policy; (c) any rights to continued
medical or dental coverage that Executive may have under COBRA (or similar
applicable state law); (d) any rights that Executive may have under this Release
Agreement; (e) any base salary amounts earned by Executive prior to the
Termination Date and not paid prior to the Termination Date, reimbursement for
any unreimbursed business expenses properly incurred by Executive in accordance
with Company policy prior to the Termination Date and any accrued but unpaid
vacation, to the extent payable pursuant to Company policy or (f) any rights to
payment of vested benefits (other than severance benefits and, for the avoidance
of doubt, any right to bonus amounts) that Executive may have under any other
benefit plan sponsored or maintained by the Company.  In addition, this Release
Agreement does not cover any Claim that cannot be so released as a matter of
applicable law.  Executive acknowledges and agrees that he has received any and
all leave and other benefits that he has been and is entitled to pursuant to the
Family and Medical Leave Act of 1993.

 

EXECUTIVE UNDERSTANDS THAT AS A CONDITION TO RECEIVING THE SEVERANCE PURSUANT TO
SECTION 3(D), EXECUTIVE MUST EXECUTE AN ADDITIONAL RELEASE OF CLAIMS ON THE
TERMINATION DATE IN THE FORM ATTACHED HERETO AS EXHIBIT A (THE “BRING DOWN
RELEASE”) AND THE BRING DOWN RELEASE MUST BECOME EFFECTIVE IN ACCORDANCE WITH
ITS TERMS.

 

6.                                       ADEA Waiver.  Executive expressly
acknowledges and agrees that by entering into this Release Agreement, Executive
is waiving any and all rights or Claims that he may have arising under the Age
Discrimination in Employment Act of 1967, as amended (the “ADEA”), which have
arisen on or before the Termination Date.  Executive further expressly
acknowledges and agrees that:

 

(a)                                  In return for this Agreement and the Bring
Down Release, the Executive will be entitled to receive consideration beyond
that which the Executive was already entitled

 

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to receive before entering into this Release Agreement;

 

(b)                                 Executive is hereby advised in writing by
this Agreement to consult with an attorney before signing this Agreement;

 

(c)                                  Executive has voluntarily chosen to enter
into this Release Agreement and has not been forced or pressured in any way to
sign it;

 

(d)                                 Executive is hereby informed that he has
twenty-one (21) days within which to consider this Release Agreement;

 

(e)                                  Executive is hereby informed that he has
seven (7) days following the date he executes this Agreement in which to revoke
this Agreement, and this Agreement will become null and void if Executive elects
revocation during that time.  Any revocation must be in writing and must be
delivered personally or sent by facsimile or certified or registered mail,
postage prepaid, to the Company during the seven-day revocation period, as
follows:

 

Digital Generation, Inc.

750 West John Carpenter Freeway, Suite 700

Irving, Texas 75039

Attention: Jack Reynolds, Vice President, Human Resources

 

In the event that Executive timely exercises his right of revocation under this
Agreement or the Bring Down Release, neither the Company nor Executive will have
any obligations under this Agreement; and

 

(f)                                    Nothing in this Agreement prevents or
precludes Executive from challenging or seeking a determination in good faith of
the validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties or costs from doing so, unless specifically authorized by
federal law.

 

7.                                       Certain Covenants.

 

(a)                                  Non-Disclosure of Confidential
Information.  Executive acknowledges that as a result of his employment with the
Company, he has been and will be making use of, acquiring, and/or adding to
confidential information of a special and unique nature and value relating to
such matters as the Company’s patents, copyrights, proprietary information,
trade secrets, systems, procedures, manuals, confidential reports, and lists of
customers (which are deemed for all purposes confidential and proprietary), as
well as the nature and type of services rendered by the Company, the equipment
and methods used and preferred by the Company’s customers, and the fees paid by
them.  As a material inducement to the Company to enter into this Agreement and
to pay to Employee the compensation in Sections 2 and 3, Employee covenants and
agrees that he shall not, at any time during or following the term of his
employment, directly or indirectly divulge or disclose for any purpose
whatsoever any confidential information that has been obtained by, or disclosed
to, him as a result of his employment by the Company.

 

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(b)                                 Covenants Against Competition.  Executive
acknowledges that the services he is to render are of a special and unusual
character with a unique value to the Company, the loss of which cannot
adequately be compensated by damages in action at law.  In view of the unique
value to the Company of the services of Executive because of the confidential
information to be obtained by or disclosed to Executive, as hereinabove set
forth, and as a material inducement to the Company to enter into this Agreement
and to pay to Executive the compensation stated in Sections 2 and 3, Executive
covenants and agrees that during Executive’s employment and for a period of
twelve (12) months following the Termination Date, he will not, except as
otherwise authorized by this Agreement, compete with the Company or any
affiliate of the Company, solicit the Company’s customers or the customers of an
affiliate or directly or indirectly solicit for employment any of the Company’s
employees.  For purposes of this paragraph:

 

(i)         the term “compete” means engaging in the same or any similar
business as the Company or any of its affiliates in any manner whatsoever (other
than as a passive investor), including without limitation, as a proprietor,
partner, investor, shareholder, director, officer, employee consultant,
independent contractor, or otherwise, within the United States of America;

 

(ii)        the term “affiliate” means any legal entity that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under the common control with the Company; and

 

(iii)        the term “customers” means all persons to whom the Company or any
of its affiliates has sold any product or service within a period of twelve (12)
months prior to the time Employee ceases to be employed by the Company.

 

(c)                                  Reasonableness of Non-Disclosure and
Noncompetition Restrictions.

 

(i)                                     Executive has carefully read and
considered the provisions of this Section 7, and, having done so, agrees that
the restrictions set forth in these paragraphs, including, but not limited to,
the time period of restriction and geographical areas of restriction are fair
and reasonable and are reasonably required for the protection of the interests
of the Company and its parent or subsidiary corporations, officers, directors,
shareholders, and other employees.

 

(ii)                                  In the event that, notwithstanding the
foregoing, any of the provisions of this Section 7 shall be held to be invalid
or unenforceable, the remaining provisions thereof shall nevertheless continue
to be valid and enforceable as though the invalid or unenforceable parts had not
been included therein.  In the event that any provision of Section 7 relating to
the time period and/or the areas of restriction and/or related aspects shall be
declared by a court of competent jurisdiction to exceed the maximum
restrictiveness such court deems reasonable and enforceable, the time period
and/or areas of restriction and/or related aspects deemed reasonable and
enforceable by the court shall become and thereafter be the maximum restriction
in such regard, and the restriction shall remain enforceable to the fullest
extent deemed reasonable by such court.

 

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(d)                                 Remedies for Breach of Employee’s Covenants
of Non-Disclosure and Noncompetition.  In the event of a breach or threatened
breach of any of the covenants in this Section 7, the Company shall have the
right to seek monetary damages for any past breach and equitable relief,
including specific performance by means of an injunction against Executive or
against Executive’s partners, agents, representatives, servants, employers,
employees, family members and/or any and all persons acting directly or
indirectly by or with him, to prevent or restrain any such breach, and, in the
event of a material breach, the right to cease all severance payments to
Executive under Section 3(d).

 

8.                                       Nondisparagement.  Executive agrees
that Executive shall neither, directly or indirectly, engage in any conduct or
make any statement disparaging in any way the Company, its subsidiaries or any
of their personnel nor, directly or indirectly, engage in any other conduct or
make any other statement that could be reasonably expected to impair the
goodwill of the Company or the reputation of the Company, in each case, except
to the extent required by law, and then only after consultation with the Company
to the extent possible, or to enforce the terms of this Agreement.  The Company
and its affiliates agree the officers and members of the Board of the Company
will not, directly or indirectly, engage in any conduct or make any statement
disparaging in any way Executive, or engage in any other conduct or make any
other statement that could be reasonably expected to impair the reputation of
Executive, in each case, except to the extent required by law, and then only
after consultation with Executive to the extent possible, or to enforce the
terms of this Agreement.  Nothing in this Section 8 shall prohibit either party
from providing testimony in any legal proceeding in which his testimony is
compelled by law or court order and no breach of this provision shall occur due
to any accurate, legally compelled testimony.

 

9.                                       Arbitration.

 

(a)                                  Generally.  Except as otherwise required by
law, any dispute, claim, question or controversy arising under or relating to
this Agreement, Executive’s employment with the Company or the termination
thereof (each such dispute, claim, question or controversy, a “Dispute”) shall
be resolved by submitting such Dispute to binding arbitration administered by
JAMS pursuant to its Employment Arbitration Rules and Procedures and subject to
its Employment Arbitration Minimum Standards of Procedural Fairness
(collectively, the “Rules”), and pursuant to the procedures set forth in this
Section 9.  In the event of any conflict between the Rules and the procedures
set forth in this Section 9 the procedures set forth in this Section 9 shall
control. Any such arbitration shall be brought within any otherwise applicable
statute of limitations period, and shall be the sole and exclusive means for
resolving such Dispute (other than for injunctive relief in the event of a
breach by Executive of Section 7 or as otherwise required by law).

 

(b)                                 Procedures.  Any arbitration shall be held
in the Dallas, Texas, and conducted before a single neutral arbitrator selected
by mutual agreement of the parties hereto within thirty (30) days of the
initiation of the arbitration or, if they are unable to agree, by JAMS under its
rules.  The arbitrator shall take submissions and hear testimony, if necessary,
and shall render a written decision as promptly as practicable.  The arbitrator
may grant any legal or equitable remedy or relief that the arbitrator deems just
and equitable, to the same

 

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extent that remedies or relief could be granted by a state or federal court in
the United States.  The decision of the arbitrator shall be final, binding and
conclusive on all parties and interested persons.  It is the intention of the
parties hereto that they shall be entitled to fair and adequate discovery in
accordance with the Federal Rules of Civil Procedure.  The parties hereto shall
keep confidential the fact of the arbitration, the dispute being arbitrated, and
the decision of the arbitrator.

 

(c)           Enforcement; Costs.  Judgment upon the award rendered by the
arbitrator may be entered in any court having competent jurisdiction.  All fees
and expenses of any arbitration, including, but not limited to, reasonable
attorneys’ fees and disbursements of all parties, with respect to a Dispute
under this Agreement shall be borne by the Non-prevailing Party.  The
determination of whether a party is to be deemed the “Non-prevailing Party” in
any arbitration shall be solely within the province of the arbitrator.

 

10.           Litigation Cooperation.  Executive agrees to give reasonable
cooperation, at the Company’s request, in any pending or future litigation or
arbitration brought against the Company and in any investigation the Company may
conduct, including taking such requested actions as are reasonably necessary to
preserve the Company’s attorney-client privilege.  However, nothing in this
Section 10 shall require Executive to give other than accurate testimony in any
legal proceeding.  The Company agrees to reimburse Executive for his reasonable
expenses incurred in connection with such cooperation within thirty (30) days
after receipt of an invoice from Executive setting forth in reasonable detail
such expenses.  Air travel, hotel costs and entertainment expenses will be
reimbursed consistent with the Company’s past practices with respect to
Executive, as determined by the Company’s Chief Executive Officer, in her
reasonable discretion.  Notwithstanding the foregoing, the Company shall have no
obligation by virtue of this Section 10 to pay Executive for time spent by
Executive in any pending or future litigation or arbitration where Executive is
a co-defendant or party to the arbitration or litigation.

 

11.           Agreed-Upon Statement; Employment References.  Any inquiries
regarding Executive from prospective employers shall be forwarded to the Chief
Executive Officer, who shall confirm that Executive resigned from the Company
for personal reasons.  Except as required by law or court order, the Company
shall not make any additional or inconsistent internal or public statements
regarding Executive’s resignation.

 

12.           Integration.  The Company and Executive acknowledge and agree that
this Agreement, including the Bring Down Release, constitutes the entire
agreement between the parties; that the parties have executed this Agreement
based upon the terms set forth herein; that the parties have not relied on any
prior agreement or representation, whether oral or written, which is not set
forth in this Agreement; that no prior agreement, whether oral or written, shall
have any effect on the terms and provisions of this Agreement; and that all
prior agreements, whether oral or written, are expressly superseded and/or
revoked by this Agreement.

 

13.          Survival.  The covenants, agreements, representations and
warranties contained in or made in this Agreement shall survive any termination
of Executive’s services or any termination of this Agreement.

 

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14.          Taxes.  All compensation payable to Executive under this Agreement
shall be subject to such deductions as the Company is from time to time required
to make pursuant to law, governmental regulation or order.  During the
Consulting Period, Executive shall be solely responsible for taxes required to
be paid with respect to his performance of services and the receipt of
consideration under this Agreement, including, without limitation, United States
federal, state and local income taxes, payroll taxes, social security,
unemployment or disability insurance, or similar items, and Executive will
indemnify Company and hold it harmless from and against all claims, damages,
losses and expenses, including reasonable fees and expenses of attorneys,
relating to any obligation imposed by law on Company to pay any withholding
taxes, payroll taxes, social security, unemployment or disability insurance, or
similar items in connection with consideration received by Executive pursuant to
this Agreement, whether such obligations are imposed by the Internal Revenue
Service or any other federal, state or local governmental authority.

 

15.           Additional Termination Provisions.

 

(a)           Section 409A Compliance.  Notwithstanding anything contained in
this Agreement to the Contrary, to the maximum extent permitted by applicable
law, amounts payable to Executive pursuant to this Agreement shall be made in
reliance upon Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans) or
Treas. Reg. Section 1.409A-1(b)(4) (Short-Term Deferrals).  However, to the
extent any such payments are treated as non-qualified deferred compensation
subject to Section 409A of the Code, then if Executive is deemed at the time of
his Separation from Service to be a “specified employee” for purposes of Section
409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any
portion of the benefits to which Executive is entitled under this Agreement is
required in order to avoid a prohibited distribution under Section
409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits
shall not be provided to Executive prior to the earlier of (i) the expiration of
the six-month period measured from the date of Executive’s Separation from
Service or (ii) the date of Executive’s death.  Upon the earlier of such dates,
all payments deferred pursuant to this Section 15(a) shall be paid in a lump sum
to Executive or his estate.  The determination of whether Executive is a
“specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of
the time of his Separation from Service shall made by the Company in accordance
with the terms of Section 409A of the Code and applicable guidance thereunder
(including without limitation Treas. Reg. Section 1.409A-1(i) and any successor
provision thereto).

 

(b)           Separate Payments.  This Agreement is intended to be written,
administered, interpreted and construed in a manner such that no payment or
benefits provided under the Agreement become subject to (a) the gross income
inclusion set forth within Code Section 409A(a)(1)(A) or (b) the interest and
additional tax set forth within Code Section 409A(a)(1)(B) (together, referred
to herein as the “Section 409A Penalties”), including, where appropriate, the
construction of defined terms to have meanings that would not cause the
imposition of Section 409A Penalties.  In no event shall the Company be required
to provide a tax gross-up payment to Executive or otherwise reimburse Executive
with respect to Section 409A Penalties.  For purposes of Section 409A of the
Code (including, without limitation, for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(iii)), each payment that

 

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Executive may be eligible to receive under this Agreement shall be treated as a
separate and distinct payment.

 

16.           Waiver.  A party’s failure to insist on compliance or enforcement
of any provision of this Agreement, shall not affect the validity or
enforceability or constitute a waiver of future enforcement of that provision or
of any other provision of this Agreement by that party or any other party.

 

17.           Governing Law; Venue.  This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Texas without regard to principles of conflicts of laws.  Subject to Section 9,
any suit brought hereon shall be brought in the state or Federal courts sitting
in Dallas, Texas, the parties hereto hereby waiving any claim or defense that
such forum is not convenient or proper.  Each party hereby agrees that any such
court shall have in personal jurisdiction over it and consents to service of
process in any manner authorized by Texas law.

 

18.           Severability.  The invalidity or unenforceability of any provision
in the Agreement shall not in any way affect the validity or enforceability of
any other provision and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision had never been in the Agreement.

 

19.           Notice.  Any and all notices required or permitted herein shall be
deemed delivered if delivered personally or if mailed by registered or certified
mail to the Company at its principal place of business and to Executive at the
address found on the Company’s payroll records, or at such other address or
addresses as either party may hereafter designate in writing to the other.

 

20.           Assignment.  This Agreement, together with any amendments hereto,
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, heirs and personal representatives, except
that the rights and benefits of either of the parties under this Agreement may
not be assigned without the prior written consent of the other party.

 

21.           Indemnification and Insurance; Legal Expenses.  The Company shall
indemnify Executive to the fullest extent permitted by the laws of the State of
Delaware, as in effect at the time of the subject act or omission, and shall
advance to Executive reasonable attorneys’ fees and expenses as such fees and
expenses are incurred (subject to an undertaking from Executive to repay such
advances if it shall be finally determined by a judicial decision which is not
subject to further appeal that Executive was not entitled to the reimbursement
of such fees and expenses) and he will be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the benefit
of its directors and officers (“Directors and Officers Insurance”) against all
costs, charges and expenses incurred or sustained by him in connection with any
action, suit or proceeding to which he may be made a party by reason of his
being or having been a director, officer or employee of the Company or any of
its subsidiaries or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company (other than any
dispute, claim or controversy arising under or relating to this Agreement).  The
Company covenants to maintain during the Employment Period for the

 

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benefit of Executive (in his capacity as an officer and director of the Company)
Directors and Officers Insurance providing benefits to Executive no less
favorable, taken as a whole, than the benefits provided to Executive by the
Directors and Officers Insurance maintained by the Company on the date hereof;
provided, however, that the Board may elect to terminate Directors and Officers
Insurance for all officers and directors, including Executive, if the Board
determines in good faith that such insurance is not available or is available
only at unreasonable expense.  This Section 21 shall survive termination of the
Employment Period, the Consulting Period and any termination of this Agreement.

 

22.           Amendments.  This Agreement may be amended at any time by mutual
consent of the parties hereto, with any such amendment to be invalid unless in
writing, signed by an officer of the Company and Executive.

 

23.           Burden and Benefit.  This Agreement shall be binding upon, and
shall inure to the benefit of, the Company and Executive, and their respective
heirs, personal and legal representatives, successors, and assigns.

 

24.           Headings.  The various headings in this Agreement are inserted for
convenience only and are not part of the Agreement.

 

25.           In-kind Benefits and Reimbursements.  Notwithstanding any thing to
the contrary in this Agreement, in-kind benefits and reimbursements provided
under this Agreement during any tax year of Executive shall not affect in-kind
benefits or reimbursements to be provided in any other tax year of Executive and
are not subject to liquidation or exchange for another benefit.  Notwithstanding
any thing to the contrary in this Agreement, reimbursement requests must be
timely submitted by Executive and, if timely submitted, reimbursement payments
shall be made to the Executive as soon as administratively practicable following
such submission, but in no event later than the last day of Executive’s taxable
year following the taxable year in which the expense was incurred.  In no event
shall Executive be entitled to any reimbursement payments after the last day of
Executive’s taxable year following the taxable year in which the expense was
incurred.  This paragraph shall only apply to in-kind benefits and
reimbursements that would result in taxable compensation income to Executive.

 

26.           Validity Contest.  The Company shall promptly pay any and all
legal fees and expenses incurred by Executive from time to time as a direct
result of the Company’s contesting the due execution, authorization, validity or
enforceability of this Agreement.  Reimbursement of such expenses shall be made
promptly after an expense reimbursement request has been presented to the
Company by Executive and in no event later than the last day of Executive’s
taxable year following the taxable year in which such expenses were incurred and
the reimbursement of such expenses shall be subject to the provisions of
Section 25.

 

27.           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

 

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28.           Construction.  The language in all parts of this Agreement shall
in all cases be construed simply, according to its fair meaning, and not
strictly for or against any of the parties hereto.  Without limitation, there
shall be no presumption against any party on the ground that such party was
responsible for drafting this Agreement or any part thereof.

 

29.           RIGHT TO ADVICE OF COUNSEL.  EXECUTIVE ACKNOWLEDGES THAT HE HAS
THE RIGHT, AND IS ENCOURAGED, TO CONSULT WITH HIS LAWYER; BY HIS SIGNATURE
BELOW, EXECUTIVE ACKNOWLEDGES THAT HE HAS CONSULTED, OR HAS ELECTED NOT TO
CONSULT, WITH HIS LAWYER CONCERNING THIS AGREEMENT.

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

 

 

DIGITAL GENERATION, INC.

 

 

 

By:

/s/ Neil Nguyen

 

 

 

Print Name:

Neil Nguyen

 

 

 

Title:

CEO and President

 

 

 

 

 

OMAR CHOUCAIR

 

 

 

 

 

/s/ Omar A. Choucair

 

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EXHIBIT A

 

BRING DOWN RELEASE

 

Reference is made to that certain Employment Transition and Consulting
Agreement, dated as of February 27, 2012 (the “Agreement”).  Capitalized terms
not defined herein shall have the meaning set forth in the Agreement.

 

For and in consideration of the benefits due to Executive pursuant to
Section 3(d) of the Agreement, Executive hereby re-affirms the release of claims
set forth in Section 5 of the Agreement, subject to the terms, conditions,
limitations and exclusions therein, as if such release of claims were executed
on the date hereof.

 

Nothing herein shall release or affect Executive’s right to receive the payments
and benefits set forth in the Agreement including, without limitation, the
Company’s obligations to Executive in Section 21 of the Agreement.  Section 17
of the Agreement shall also apply to this Bring Down Release.  This Bring Down
Release shall be subject to arbitration as set forth in Section 9 of the
Agreement.

 

Executive has been given the opportunity to review and consider this Bring Down
Release and has been advised to discuss this Bring Down Release with an
attorney.  Executive has read this Bring Down Release and understands its
terms.  By signing below, Executive acknowledges he has been provided with ample
and sufficient time to fully consider the Bring Down Release and its terms.

 

EXECUTIVE UNDERSTANDS THAT AS A CONDITION TO RECEIVING THE SEVERANCE PURSUANT TO
SECTION 3(D) OF THE AGREEMENT, EXECUTIVE MUST EXECUTE THIS BRING DOWN RELEASE ON
THE TERMINATION DATE (AS DEFINED IN THE AGREEMENT).  Executive understands that
he will not receive any payments under Section 3(d) of the Agreement unless this
Bring Down Release is executed on the Termination Date.

 

Executed this                                      , 2012.

 

 

 

 

 

 

 

Omar Choucair

 

 

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