Document:

EXHIBIT
10.13

 

CASH
COMPENSATION ARRANGEMENTS WITH EXECUTIVE OFFICERS

 

Fiscal 2008 Bonuses

 

The following are the
fiscal 2008 cash bonuses paid to the following executive officers:

 

	
  Executive Officer

  	
   

  	
  Title

  	
   

  	
  Bonus

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Todd Simpson

  	
   

  	
  Chief Executive Officer and President

  	
   

  	
  $

  	
  47,188

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  William Tamblyn

  	
   

  	
  Executive Vice President and Chief Financial Officer

  	
   

  	
  $

  	
  46,354

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lowell Trangsrud

  	
   

  	
  Executive Vice President and Chief Operating Officer

  	
   

  	
  $

  	
  46,354

  	
   

  

 

Fiscal 2009 Base Salary and Target Bonus

 

The following are the
fiscal 2009 salaries and target bonuses for the executive officers:

 

	
  Named Executive Officer

  	
   

  	
  Salary

  	
   

  	
  Target Bonus as %

  of Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mr. Simpson

  	
   

  	
  $

  	
  325,000

  	
   

  	
  75

  	
  %

  
	
  Mr. Tamblyn

  	
   

  	
  $

  	
  266,400

  	
   

  	
  60

  	
  %

  
	
  Mr. Trangsrud

  	
   

  	
  $

  	
  266,400

  	
   

  	
  60

  	
  %

  

 

Fiscal 2009 Management Bonus Plan

 

The following is the 2009
Management Bonus Plan applicable to the executive officers:

 

The 2009 Executive
Bonus Plan provides for the payment of an annual cash bonus for each Ditech
Networks officer, including the “named executive officers,” based on an
individual targeted bonus amount.  The 2009 target bonus amounts for the “named
executive officers” are as follows:

 

	
  Named Executive Officer

  	
   

  	
  Title

  	
   

  	
  Target Bonus 

  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Todd Simpson

  	
   

  	
  Chief Executive Officer and President

  	
   

  	
  $

  	
  243,750

  	
   

  
	
  William Tamblyn

  	
   

  	
  Executive Vice President and Chief Financial Officer

  	
   

  	
  $

  	
  159,840

  	
   

  
	
  Lowell Trangsrud

  	
   

  	
  Executive Vice President and Chief Operating Officer

  	
   

  	
  $

  	
  159,840

  	
   

  

 

Each executive’s
bonus will be earned based on (a) Company performance as against the
Company’s 2009 Operating Plan, (b) individual performance as against
established individual goals, and (c) a discretionary portion. 
Weighting of these components is as follows:

 

Weighting:

 

	
  Revenue

  	
   

  	
  40

  	
  %

  
	
  Operating Performance
  (1)

  	
   

  	
  30

  	
  %

  
	
  Individual Goals

  	
   

  	
  20

  	
  %

  
	
  Discretionary
  Bonus

  	
   

  	
  10

  	
  %

  
	
  Total

  	
   

  	
  100

  	
  %

  

 

	
  (1)

  	
  Operating
  Performance is GAAP operating profit/(loss) adjusted to reverse the FAS 123R
  non-cash expense charge for the period(s).

  

 

 

Revenue
Component of Executive’s Bonus:

 

No pay out if
actual revenue does not exceed at least 80% of target revenue as set forth in
the Company’s 2009 Operating Plan.

 

For every
percentage point actual revenue exceeds 80% of target revenue as set forth in
the Company’s 2009 Operating Plan, the executive will earn 5% of the portion of
target bonus allocated to the revenue component.

 

Operating
Performance Component of Executive’s Bonus:

 

No pay out if
actual Operating Performance is more than 30% unfavorable to the Company than
target Operating Performance as set forth in the Company’s 2009 Operating Plan.

 

If actual
Operating Performance is 30% more unfavorable to the Company than target
Operating Performance as set forth in the Company’s 2009 Operating Plan, the
executive will earn 40% of the portion of target bonus allocated to the
Operating Performance component.

 

For every
percentage point actual Operating Performance is more favorable to the Company
than Operating Performance for the minimum amount for a bonus to be earned, the
executive will earn (a) an additional 2% of the portion of target bonus
allocated to the Operating Performance component, until actual Operating
Performance equals target Operating Performance as set forth in the Company’s
2009 Operating Plan, and (b) an additional 3% of the portion of target
bonus allocated to the Operating Performance component for actual Operating
Performance being more favorable than target Operating Performance as set forth
in the Company’s 2009 Operating Plan.

 

Caps
on Bonus:

 

1.             For the revenue component of the payment to pay out
greater than 100% of target for the revenue component, the executive must have
earned some bonus amount under the Operating Performance component of the
Company’s 2009 Operating Plan.

 

2.             The total payout for each executive will be capped at
200% of target bonus.EXHIBIT 10.14

 

CASH
COMPENSATION ARRANGEMENTS WITH NON_EMPLOYEE DIRECTORS

 

	
  Annual Retainer*:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Board Members

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  Chairman of the
  Board (additional)

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  Audit Committee
  Chairperson (additional)

  	
   

  	
  $

  	
  7,500

  	
   

  
	
  Compensation
  Committee Chairperson (additional)

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  Corporate
  Governance and Nominating Committee Chairperson (additional)

  	
   

  	
  $

  	
  5,000

  	
   

  

 

*  Paid quarterly in
arrears.

 

	
  Meeting Fees:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Board of
  Directors

  	
   

  	
   

  	
   

  
	
  Annual offsite
  regular meeting

  	
   

  	
  $

  	
  2,500

  	
   

  
	
  Regular meeting

  	
   

  	
  $

  	
  1,000

  	
   

  
	
  Special
  (telephonic)

  	
   

  	
  $

  	
  500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee

  	
   

  	
   

  	
   

  
	
  Regular meeting

  	
   

  	
  $

  	
  2,500

  	
   

  
	
  Special (in
  person)

  	
   

  	
  $

  	
  1,000

  	
   

  
	
  Special
  (telephonic)

  	
   

  	
  $

  	
  750

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Compensation
  Committee

  	
   

  	
   

  	
   

  
	
  Regular meeting

  	
   

  	
  $

  	
  2,000

  	
   

  
	
  Special

  	
   

  	
  $

  	
  750

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Corporate
  Governance and Nominating Committee

  	
   

  	
   

  	
   

  
	
  Regular meeting

  	
   

  	
  $

  	
  2,000

  	
   

  
	
  Special

  	
   

  	
  $

  	
  750Exhibit 10.34

 

 

SEVERANCE AND RELEASE AGREEMENT

 

This
Severance and Release Agreement (“Agreement”) is entered into by and between
Gary Testa (“Employee” or “Testa”) and Ditech Networks, Inc., as well as
any of its past or present parent, subsidiary, related, affiliated,
predecessor, and/or successor corporations and entities, insurers, officers,
directors, shareholders, representatives, agents, and employees (collectively “Company”
or “Ditech”), for the following purposes and with reference to the following
facts:

 

RECITALS

 

A.           WHEREAS,
Employee’s last day of employment with the Company is effective as of April 30,
2008;

 

B.           WHEREAS,
Employee and the Company desire to settle fully and finally all
differences between them, including, but in no way limited to, any differences
that might arise out of the Employee’s employment with the Company, and the
termination thereof;

 

C.           WHEREAS,
without any admission of any liability, fact, allegation, claim or
defense by the parties, it is now the desire of the parties to amicably
compromise, settle and release all claims of whatever kind or description and
to effect a total resolution and compromise of all such disputes including,
without limitation, disputes constituting, relating to, or arising from
Employee’s application to, employment with, and termination from Ditech and/or
any matters encompassed by any allegations of unlawful conduct or violations of
company policy or practice;

 

1

 

NOW, THEREFORE, in consideration of the
mutual promises and covenants set forth herein, the parties do hereby agree as
follows:

 

AGREEMENTS

 

1.             Denial
of Liability

 

Employee
expressly recognizes that this Agreement shall not in any way be construed as
an admission of any unlawful or wrongful acts whatsoever against Employee or
any other person. Ditech, including any of its insurers, officers, directors,
shareholders, representatives, agents, and employees, specifically denies any
liability to, or wrongful acts against, Employee or any other person.

 

2.             Consideration
by Ditech

 

a.             Severance Pay In
consideration of the covenants and undertakings set forth in this Agreement,
after this Agreement becomes legally effective and enforceable as defined under
Paragraph 15 herein, and provided that Employee has provided, or at such time
thereafter that Employee does provide the following to the satisfaction of
Ditech, Ditech shall pay to Employee the sum of One hundred twenty five
thousand and no cents ($125,000.00) (hereinafter the “Severance Amount”). The
Severance Amount shall be reduced by authorized deductions and deductions or
withholdings required by law.

 

Employee
acknowledges that he is solely responsible for all tax reporting obligations,
if any, with respect to the Severance Amount. Employee agrees to indemnify and
hold Ditech harmless from any and all losses, interest, payments or penalties,
if any, incurred by Ditech as a result of Ditech not making deductions from the
Severance Amount or as a result of Ditech not reporting

 

2

 

a
portion of the Severance Amount as wages or income to any taxing authority, in
the event the Severance Amount should be deemed to be taxable to Employee.

 

3.             Employee’s
Warranty

 

Employee
represents that, other than the allegations described in this Agreement,
Employee has no other pending claims, complaints, charges or appeals against or
involving Ditech, as well as any of its past or present parent, subsidiary,
related, affiliated, predecessor, and/or successor corporations and entities,
insurers, officers, managers, directors, shareholders, agents, and employees
associated with Ditech, with any state or federal court, or any local, state,
federal or administrative agency. Employee agrees to cause to be withdrawn any
such claim, complaint or charge should one be found in fact to be pending.
Employee further specifically represents that Employee will not in the future
file, participate in, encourage, instigate or assist in the prosecution of any
claim, complaints, charges or in any lawsuit by any party in any state or
federal court or any proceeding before any local, state, federal or
administrative agency against Ditech or any of its past or present parent,
subsidiary, related, affiliated, predecessor, and/or successor corporations and
entities, insurers, officers, managers, directors, shareholders,
representatives, agents, and employees associated with Ditech (unless such aid
or assistance is ordered by a court or sought by a government agency or by
compulsory legal process) claiming that Ditech or any of its past or present
parent, subsidiary, related, affiliated, predecessor, and/or successor
corporations and entities, insurers, officers, managers, directors,
shareholders, representatives, agents, and employees have violated any local,
state or federal laws, statutes, ordinances or regulations, or committed
tortious conduct and/or violations of contractual relationships of any kind,
including, but not limited to: breach of contract or implied contract; breach
of the implied covenant of good faith and fair dealing; inducement of breach;
wrongful or

 

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unlawful
discharge or demotion; violation of public policy, retaliation; intentional or
negligent infliction of emotional distress; assault; battery; intentional or
negligent misrepresentation; conspiracy; tortious denial of a contract;
interference with proprietary interests; failure to pay wages, bonuses,
benefits, vacation pay, severance pay or other compensation of any sort;
negligence; negligent hiring, retention or supervision; defamation; unlawful
effort to prevent employment; violation of constitutional rights;
discrimination or harassment on the basis of race, color, sex, national origin,
religion, age, marital status, pregnancy, disability or medical condition;
wrongful termination in violation of public policy; retaliation; or other
wrongful conduct, based upon events occurring prior to the date this Agreement
is executed by Employee. Employee acknowledges that this warranty is a material
inducement for Ditech’s consideration described in this Agreement.

 

4.                                      Complete and General Release of Claims

 

a.             In
consideration of the covenants and undertakings set forth in this Agreement,
Employee waives, releases and forever discharges Ditech and each of its current
and former affiliates, subsidiaries, parents, divisions, investors, successors,
insurers, predecessors and assigns, as well as each of their respective past
and present representatives, agents, directors, officers, shareholders,
partners, insurers, representatives, consultants, attorneys, and employees,
(collectively, “Ditech Releasees”), and each of them, from any and all claims
of any kind or nature, whether known or unknown or suspected or unsuspected,
which Employee now owns or holds, or has at any time before the date this
Agreement is fully executed by Employee, owned or held against any of the
Ditech Releasees, and each of them. In addition, Employee acknowledges that
Employee has received the entirety of all wages, sums, and other monies that
were ever due to Employee by Ditech or any of the Ditech Releasees, other than
related to this

 

4

 

separation
agreement, which funds will be paid upon finalization (eight days after
signature, if not rescinded).

 

b.             The phrase “any
and all claims” as used in this Agreement includes, but is not limited to, all
claims, demands, causes of action, complaints, or actions of any kind, whether
known or unknown, anticipated or unanticipated, suspected or unsuspected, past
or present, contingent or fixed including, but not limited to: (i) any and
all claims constituting, relating to, or arising out of Employee’s employment
with Ditech, including any charges or complaints filed with any administrative
agency, including, without limitation, the U.S. Equal Employment Opportunity
Commission or the Department of Fair Employment and Housing; (ii) any and
all claims based on tort or contract; (iii) any and all claims arising
under federal, state or local law or statute, including, but not limited to any
and all claims of age discrimination arising under the Age Discrimination in
Employment Act, as amended, 29 U.S.C. § 621, et seq., Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq., the Civil
Rights Act of 1866, 42 U.S.C. § 1981, the Americans with Disabilities Act, 42
U.S.C. § 12101, et seq., the Family and Medical
Leave Act of 1993, 29 U.S.C., § 2601, et seq., the United
States Constitution, the Employee Retirement Income Security Act of 1974, 29
U.S.C., § 1001, et seq., and any other federal,
state or local fair employment practices or civil rights law, ordinance,
regulation, executive order and/or other law or regulation governing the terms
and conditions of employment; (iv) any and all claims arising out of,
related to or connected with the application to, employment of, or termination
of Employee by Ditech, the terms and conditions of Employee’s employment, the
termination of such employment, and/or the failure to employ Employee in the
future, and any employment practice, procedure, policy or decision of, or
omission or action taken by, the Ditech Releasees, and each of them, including,
but not limited to, any claims for wrongful discharge, retaliation, misrepresentation,
defamation, harassment,

 

5

 

denial
of promotion,
fraud, fraudulent inducement, emotional distress, or negligent hiring or
retention; and (v) any and all claims arising out of, related to, or
connected with any legal restrictions on Ditech’s right to terminate Employee’s
employment, and whether for compensatory, punitive, equitable or other relief,
including attorneys’ fees, all to the fullest extent permitted by law.

 

5.             Waiver
of California Civil Code Section 1542

 

Employee
does hereby, and for his heirs, legal representatives, agents,
successors-in-interest and assigns, expressly waive and relinquish all rights
and benefits afforded by Section 1542 of the Civil Code of California or
any other state laws, and does so understanding and acknowledging the
significance and consequences of such specific waiver of Section 1542.
Employee acknowledges that he is being represented in this matter by counsel,
and acknowledges that he is familiar with the provisions of 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.

 

Thus,
notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of all claims, Employee
expressly acknowledges that this Agreement is also intended to include in its
effect, without limitation, all

 

6

 

claims
which he does not know or expect to exist in his favor at the time of execution
hereof, and that this Agreement contemplates the extinguishment of any such
claim or claims.

 

6.             No
Assignment or Transfer of Released Matters

 

Employee
represents and warrants that Employee has full and exclusive authority to
release and discharge those matters released by this Agreement and that no
portion of any of the matters released pursuant to Paragraph 4 above has been
assigned or transferred to any other person, firm or corporation who is not a
party to this Agreement, in any manner, including by way of subrogation or
operation of law or otherwise. If any claim, action, demand, or suit should be
made or instituted against any of the mutual released parties because of any
such purported assignment, subrogation, or transfer, each party agrees to
indemnify and hold harmless the other released part(ies) against such claim,
action, suit or demand, including necessary expenses of investigation,
attorneys’ fees and costs.

 

7.             No
Future Employment With Ditech

 

Employee
expressly waives, releases and relinquishes any and all rights to apply again
to or become reinstated to Ditech and shall not seek further employment with
Ditech and each of its current and former affiliates, Subsidiaries, parents,
and divisions (“Ditech Affiliates”).. If Employee inadvertently seeks such
employment, Employee shall immediately withdraw any application for employment
upon being informed or otherwise learning that the employer or prospective
employer is an entity described in this Agreement. Any such employment
application submitted by Employee shall be null and void and Employee
accordingly waives all rights to employment or further consideration for
employment thereunder. Employee further agrees that, in the event Employee
inadvertently seeks such employment, none

 

7

 

of
the Ditech Affiliates shall have any obligation to consider such application
for employment from Employee or hire Employee for any position that may become
available and that this Agreement shall constitute good cause for Ditech or any
of the Ditech’s Affiliates refusal to offer any such employment to Employee,
irrespective of Employee’s qualifications for any such position or the number
or qualifications of any other applicants for the same position. Employee
further agrees that if Employee obtains employment through a temporary services
or other employment placement agency, Employee will not accept employment with
Ditech or any of the Ditech Affiliates. Employee further agrees that, in the
event that any of the Ditech Affiliates inadvertently hires and employs
Employee, this Agreement shall constitute good cause for Ditech to immediately
terminate Employee’s employment, irrespective of Employee’s qualifications for
any such position or the number or qualifications of any other applicants for
the same position.

 

8.             Non-Solicitation

 

Non-Solicitation
of Employees: In consideration of the Severance Amount provided
in paragraph 2 of this Agreement, Employee agrees that for a period of one year
after the effective date of this Agreement, he will not, directly or
indirectly, induce, solicit, recruit or encourage any employee of Company to
leave the employ of Company, which means that he/she will not: (i) disclose
to any third party the names, backgrounds or qualifications of any employees or
otherwise identify them as potential candidates for employment; or (ii) personally
or through any other person approach, recruit, interview or otherwise solicit
employees to work for Employee or any other employer as an employee, agent, or
independent contractor.

 

8

 

9.             Confidentiality

 

Employee
represents and warrants that, with the exception of Employee’s immediate
family, Employee shall not disclose, disseminate and/or publicize, or cause or
permit to be disclosed, disseminated or publicized, directly or indirectly,
specifically or generally, to any person, corporation, association, agency or
entity any of the events (including any negotiations) which led to the
execution of this Agreement, except (i) that Employee may reveal to
Employee’s attorneys and/or accountants such information but only to the extent
such a disclosure is necessary to assist and give Employee appropriate legal
and/or financial advice, or (ii) to the extent that Employee must comply
with, or respond to, a valid order, demand or regulation by a court or an
administrative or governmental agency.

 

10.          Non-Disclosure of Confidential Information

 

a.             Confidential
Information: Employee understands and agrees that while
employed by Ditech, Employee may have had access to, learned of, acquired or
otherwise became informed of Ditech’s proprietary and/or confidential
information that is not generally known to the public or the competitors of
Ditech, including without limitation, Company information regarding (i) marketing,
development, financial and sales data and strategies, including any contained
in any Company computer systems, (ii) lists of any customers, suppliers,
employees or agents, (iii) any business, marketing or sales reports,
plans, or similar analysis, (iv) terms of any contracts or agreements with
any customers, suppliers, employees or agents, (v) pricing and other
financial information, (vi) methods of operating any of its businesses, (vii) volumes
of business and profit margins, (viii) technical, technological and
production know-how, (ix) future plans and methods of doing business, (x) products,
inventions, applications, designs, programs, patents and other processes or
documentation, whether developed or in development, (xi) policies and
procedures relating to its customers, suppliers, employees or

 

9

 

agents;
(xii) Company customers’ contact information, volumes of business and profit
margins, business operations and methods, preferences and special needs,
pricings and other financial information, and terms of any contracts or
agreements with the Company; (xiii) Company employees’ salaries, commissions
and other benefits, levels of knowledge, performance, experience and expertise,
strengths and weaknesses, and special talents; and, (xiv) all non-public
personal, financial and/or health information regarding employees, agents,
clients or other individuals otherwise associated with Ditech (collectively “Confidential
Information”).

 

b.             Non-Disclosure: Employee
understands and agrees that such Confidential Information constitutes private
information subject to privacy rights under the California Constitution, and/or
other applicable statutes, rules and the common law. Ditech’s Confidential
Information is a competitive asset of Ditech that is and shall remain the
exclusive property of the Company and, to that end, Employee covenants and
warrants that Employee shall never directly or indirectly make known, divulge,
reveal, furnish, make available, disclose, or use any Confidential Information
until and unless any such Confidential Information shall have become, through
no fault of Employee, generally known to the public.

 

c.             Obligations: Employee
understands and agrees that Employee’s obligations of confidentiality hereunder
are in addition to, and not in limitation of or preemption of, all other
obligations of confidentiality Employee has to the Company in any agreements
signed during Employee’s employment with Ditech and/or under any general legal
or equitable principles.

 

11.          Return of
Company Property and Confidential Information

 

Employee
represents and warrants that Employee has returned to Ditech, and does not have
in Employee’s possession, any and all Company property and Confidential
Information

 

10

 

(defined
above in Paragraph 9) which were provided to Employee by Ditech or were
otherwise in Employee’s possession, custody or control as a result of Employee’s
employment with Ditech. Company property includes the original and all copies
of any documents, photographs, mechanical or electronic recordings, audio and
video tape recordings, computer disks or printouts, reports, drafts, memoranda,
notes, correspondence, analysis, calendars, appointment books, and all other
writings or recordings of any means, that constitute, contain, concern or
relate to any Confidential Information, including without limitation all
documents Employee produced to Ditech with respect to Employee’s allegations.

 

12.          Non-Disparagement

 

Employee
and Ditech agree to not make any negative, disparaging, detrimental or
derogatory comments to any third party concerning one another, or any of their
current and former officers, directors, managers, employees or agents, or
concerning its or their products, methods of doing business, or employment
practices.

 

13.          No Cooperation Regarding Other Potential Claims

 

Employee
shall not assist or aid any person, corporation, firm, partnership, or other
entity, with any legal action, legal proceeding, or litigation against Ditech,
unless such aid or assistance is ordered by a court or sought by a government
agency or by compulsory legal process. Employee also shall not (either orally
or in writing, or in any other manner whatsoever) voluntarily initiate
communications with, or respond to communications from, any person,
corporation, partnership, or other entity, about any action, cause of action,
or other matter against Ditech, unless such aid or assistance is ordered by a
court or sought by a government agency or by compulsory legal process. In the
event such assistance, aid or communication is legally

 

11

 

compelled,
Employee shall immediately provide Ditech copies thereof and all relevant
information available to Employee including copies of all relevant,
non-privileged documents to permit Ditech to intervene to quash, narrow, or
otherwise limit the scope of the order or legal process. Employee shall not
respond to the order or legal process or communicate with third parties
regarding matters addressed by the order or legal process until the date
prescribed for performance or, if Ditech has made opposition, until the court
or agency has ruled on Ditech’s opposition and Ditech has exhausted and waived
all opportunities for appeal.

 

14.          Remedies
for Breach of this Agreement

 

If
Employee breaches paragraphs 8, 9, 10, 11 and/or 12 of this Agreement, then
Ditech shall have, in addition to and without limiting any other remedy or
right it may have at law or in equity, the right to a temporary and permanent
injunction restraining any such breach, without any bond or security being
required. In any such proceeding, Employee shall waive any defense that the
Company has an adequate remedy at law or that the injury suffered as a
consequence of such breach is not irreparable. Employee further agrees that
should Employee engage in conduct or make disclosures forbidden by paragraphs
8, 9, 10, 11 and/or 12, it may be difficult or impossible to specify or prove
damages as a result of breach of these provisions and therefore agrees that
Employee shall be liable for, in addition to
the injunctive and other relief set forth herein, FIVE THOUSAND
DOLLARS AND ZERO CENTS ($5,000.00) in liquidated damages for each instance of
such violation.

 

15.          Review and
Consideration of Agreement

 

Employee
understands that Employee has been given a period of 21 days to review and
consider this Agreement before signing it. Employee further understands that

 

12

 

Employee
may use as much, or as little, of this 21-day period as Employee wishes prior
to signing this Agreement.

 

16.          Right to
Revoke Agreement

 

Employee
may revoke this Agreement within seven (7) calendar days following
Employee’s execution of this Agreement. Revocation may be made only by
delivering a written notice of revocation to John C. Fox, Esq., counsel
for Ditech, at MANATT, PHELPS & PHILLIPS, LLP, 1001 Page Mill
Road, Building 2, Palo Alto, CA 94304. This Agreement shall become legally
effective and enforceable after the expiration of the seven-day revocation
period. However, if Employee revokes this Agreement within the seven-day
revocation period, the Agreement shall not be effective or enforceable and
Employee shall not receive the payment or benefits described in this Agreement,
including that which is set forth in Paragraph 2 above.

 

17.          Older
Worker Benefit Protection Act

 

To
comply with the Older Worker Benefit Protection Act of 1990 (“OWBPA”), Employee
has been advised of Employee’s right to consult an attorney and of the legal
requirements of OWBPA, including Employee’s right to consider this Agreement
for 21 days before signing and Employee’s right to revoke the Agreement within
seven days after signing it, and fully incorporates the legal requirements by
reference into this Agreement.

 

13

 

18.          Miscellaneous
Provisions

 

a.             Governing Law

 

This
Agreement shall be governed by the laws of the State of California, both
procedural and substantive, without regard to its conflict of law provisions.

 

b.             Attorneys’ Fees and Costs

 

Except
as provided herein, each party shall bear its own attorneys’ fees and costs. In
the event of any dispute arising out of this Agreement, the prevailing party
shall be entitled to recover all of their costs and reasonable attorneys’ fees.

 

c.             Joint Preparation of Agreement

 

The
parties have cooperated in the preparation of this Agreement and, hence, it
shall not be interpreted or construed against or in favor of any party by
virtue of the identity, interest or affiliation of its preparer.

 

d.             Severability

 

In
the event that any portion of this Agreement shall be held to be void,
voidable, illegal or unenforceable, the remaining portions shall remain in
force and effect.

 

e.             Entire and Final Agreement; No Modification

 

This
Agreement is the entire agreement between Employee and Ditech and they
supersede any previous negotiations, agreements and understandings concerning
the subject matters of this Agreement. This Agreement is intended to be and is
final and binding, regardless of any claims of misrepresentation, concealment
of fact, or mistake of law or fact. Employee and Ditech acknowledge that
Employee/Ditech has not relied on any oral or written representation by the
other parties to induce the other to sign this Agreement, other than the terms
of this Agreement. No modifications of this Agreement can be made except in
writing signed by Employee and an authorized representative of Ditech.

 

14

 

f.              Execution and Counterparts

 

This
Agreement may be executed in counterparts, each of which shall be deemed the
original, all of which together shall constitute one and the same instrument. A
faxed copy shall be deemed as an original, but the parties agree to forward a
hard copy of their respective signatures to the other party promptly
thereafter.

 

EACH PARTY ACKNOWLEDGES THAT EMPLOYEE OR DITECH HAS BEEN
PROVIDED WITH SUFFICIENT TIME AND OPPORTUNITY TO CONSIDER THIS AGREEMENT AND
TIME TO CONSULT WITH COUNSEL. EACH PARTY ACKNOWLEDGES AND REPRESENTS THAT
EMPLOYEE AND DITECH ENTER INTO THIS AGREEMENT FREELY, KNOWINGLY, VOLUNTARILY
AND WITHOUT COERCION AND BASED ON EMPLOYEE’S OR DITECH’S OWN JUDGMENT AND NOT
RELIANCE UPON ANY REPRESENTATION OR PROMISES MADE BY ANY OTHER PARTY.

 

 

	
  DATED:

  	
  4/30/08

  	
   

  	
  /s/
  Gary Testa

  
	
   

  	
   

  	
   

  	
  Gary
  Testa

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATED:

  	
  4/30/08

  	
   

  	
  /s/
  Lowell Trangsrud

  
	
   

  	
   

  	
   

  	
  Lowell
  Trangsrud, EVP & COO

  
	
   

  	
   

  	
   

  	
  On
  Behalf of Ditech Networks

  

 

15

 

April 30,
2008

 

Todd
Simpson

President &
CEO

Ditech
Networks

825
E. Middlefield Rd.

Mountain
View, CA 94043

 

RE: ACKNOWLEDGEMENT OF RETURN OF COMPANY PROPERTY BY GARY TESTA

 

The
purpose of this letter is to document that Ditech acknowledges that I, Gary D.
Testa, have returned all Company Property in my possession to Ditech pursuant
to Article 11 Return of Company Property and Confidential Information of
the Severance and Release Agreement.

 

 

	
  Acknowledged
  and Agreed:

  	
   

  	
  Acknowledged
  and Agreed:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Gary D. Testa

  	
   

  	
  /s/
  Todd Simpson

  
	
   

  	
   

  	
   

  
	
  Gary
  D. Testa

  	
   

  	
  Todd
  Simpson

  
	
   

  	
   

  	
  President &
  CEO

  
	
   

  	
   

  	
  Ditech
  Networks

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