Exhibit 10.77

 

SEPARATION AGREEMENT AND RELEASE

 

RECITALS

 

This Separation Agreement and Release (“Agreement”) is made by and between
Arthur D. Chadwick (“Employee”) and Pinnacle Systems, Inc. (“Company”) (jointly
referred to as the “Parties”):

 

WHEREAS, Employee was employed by the Company as its Senior Vice President,
Finance and Administration and Chief Financial Officer;

 

WHEREAS, the Company and Employee entered into an Employee Proprietary
Information Agreement dated August 31, 1994 (the “Confidentiality Agreement”);

 

WHEREAS, the Company and Employee have entered into certain written stock option
agreement(s) to purchase common stock of the Company pursuant to the Company
stock option plan (the stock option agreement(s) and stock option plan are
collectively referred to as the “Stock Agreements”);

 

WHEREAS, the Company and Employee entered into an Amended and Restated Change of
Control Severance Agreement dated May 11, 2004;

 

WHEREAS, Employee’s employment with the Company will terminate effective October
20, 2004 (the “Separation Date”); and

 

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions and demands that the Employee may have
against the Company as defined herein, including, but not limited to, any and
all claims arising out of, or related to, Employee’s employment with, or
separation from, the Company;

 

NOW THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:

 

COVENANTS

 

1. Resignation As of the Separation Date, Employee shall resign as an officer or
director, as the case may be, of the Company and of all of the Company’s
subsidiaries and affiliates.

 

2. Consideration.

 

(a) Cash Payment. The Company agrees to pay Employee the sum of two hundred
seventy-five thousand dollars ($275,000), less applicable withholdings. The
Company shall make this payment to Employee within two (2) days following the
Effective Date of this Agreement.

 

(b) COBRA. Employee’s health insurance benefits will cease on October 31, 2004,
subject to Employee’s right to continue his health insurance under COBRA. The
Company shall reimburse Employee for the payments he makes for COBRA coverage
for a period of six (6)

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months beginning November 1, 2004 and concluding on April 30, 2005. Employee’s
participation in all other benefits and incidents of employment (including, but
not limited to, the accrual of vacation and paid time off, and the vesting of
stock options) shall cease on the Separation Date.

 

3. Stock. The Parties agree that for purposes of determining the number of
shares of the Company’s common stock, which Employee is entitled to purchase
from the Company, pursuant to the exercise of outstanding options, the Employee
will be considered to have vested only up to the Separation Date. Therefore, the
stock options shall expire subject to the terms and conditions of the Stock
Option Agreements.

 

4. Confidential Information. Employee shall continue to comply with the terms
and conditions of the Confidentiality Agreement, and maintain the
confidentiality of all of the Company’s confidential and proprietary
information. Employee shall also return to the Company all of the Company’s
property, including all confidential and proprietary information, and all
documents and information that Employee obtained in connection with his
employment with the Company, on or before the Effective Date of this Agreement.

 

5. Payment of Salary. Employee acknowledges and represents that the Company has
paid all salary, wages, bonuses, accrued vacation, housing allowances,
relocation costs, interest, severance, stock, stock options, outplacement costs,
fees, commissions and any and all other benefits and compensation due to
Employee.

 

6. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company and its current and former: officers, directors, employees, agents,
investors, attorneys, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations and assigns (the
“Releasees”). Employee, on his own behalf, and on behalf of his respective
heirs, family members, executors, agents, and assigns, hereby fully and forever
releases the Company and the other Releasees from, and agrees not to sue
concerning, any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Employee may possess arising from any omissions, acts or facts
that have occurred up until and including the Effective Date of this Agreement
including, without limitation:

 

(a) any and all claims relating to or arising from Employee’s employment with
the Company, or the termination of that employment;

 

(b) any and all claims relating to, or arising from, Employee’s right to
purchase, or actual purchase of, shares of Company stock, including, but not
limited to, any claims for fraud, misrepresentation, breach of fiduciary duty,
breach of duty under applicable state corporate law, and securities fraud under
any state or federal law;

 

(c) any and all claims under the law of any jurisdiction, including, but not
limited to, wrongful discharge of employment; constructive discharge from
employment; termination in violation of public policy; discrimination; breach of
contract, both express and implied; breach of a covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

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(d) any and all claims for violation of any federal, state or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964; the
Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967; the
Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the
Employee Retirement Income Security Act of 1974; the Worker Adjustment and
Retraining Notification Act; the Older Workers Benefit Protection Act; the
Family and Medical Leave Act; the Fair Credit Reporting Act; the California
Family Rights Act; the California Fair Employment and Housing Act; and the
California Labor Code;

 

(e) any and all claims for violation of the federal, or any state, constitution;

 

(f) any and all claims arising out of any other laws and regulations relating to
employment or employment discrimination;

 

(g) any claim for any loss, cost, damage, or expense arising out of any dispute
over the non-withholding or other tax treatment of any of the proceeds received
by Employee as a result of this Agreement; and

 

(h) any and all claims for attorney fees and costs.

 

The Company and Employee agree that the release set forth in this section shall
be and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred under
this Agreement.

 

7. Release of Claims by the Company. The Company agrees to and does hereby
generally release and forever discharge Employee from any claims that the
Company may possess against Employee arising from any omissions, acts or facts
and agree not to sue concerning, any claim, duty, obligation or cause of action
relating to any matters of any kind, whether presently known or unknown,
suspected or unsuspected, that have occurred up until and including the
Effective Date of this Agreement. This release does not extend to any
obligations incurred under this Agreement.

 

8. Acknowledgement of Waiver of Claims Under ADEA. Employee acknowledges that he
is waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and
voluntary. Employee and the Company agree that this waiver and release does not
apply to any rights or claims that may arise under the ADEA after the Effective
Date of this Agreement. Employee acknowledges that the consideration given for
this waiver and release Agreement is in addition to anything of value to which
Employee was already entitled. Employee further acknowledges that he has been
advised by this writing that:

 

(a) he should consult with an attorney prior to executing this Agreement;

 

(b) he has up to twenty-one (21) days within which to consider this Agreement;

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(c) he has seven (7) days following his execution of this Agreement to revoke
this Agreement;

 

(d) this ADEA waiver shall not be effective until the revocation period has
expired; and,

 

(e) nothing in this Agreement prevents or precludes Employee 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 for doing
so, unless specifically authorized by federal law.

 

9. Civil Code Section 1542. Employee represents that he is not aware of any
claims against any of the Releasees. Employee acknowledges that he has been
advised to consult with legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provide as follows:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

Employee, being aware of this code section, agrees to expressly waive any rights
he may have thereunder, as well as under any other statute or common law
principles of similar effect.

 

10. No Pending or Future Lawsuits. Employee represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or
entity, against the Company or any of the other Releasees. Employee also
represents that he does not intend to bring any claims on his own behalf or on
behalf of any other person or entity against the Company or any of the other
Releasees.

 

11. Application for Employment. Employee understands and agrees that, as a
condition of this Agreement, he shall not be entitled to any employment with the
Company, its subsidiaries, or any successor, and he hereby waives any alleged
right of employment or re-employment with the Company, its subsidiaries or
related companies, or any successor.

 

12. Confidentiality. The Parties acknowledge that Employee’s agreement to keep
the terms and conditions of this Agreement confidential was a material factor on
which the Company relied in entering into this Agreement. Employee agrees to use
his best efforts to maintain in confidence the contents and terms of this
Agreement, including the consideration for this Agreement (hereinafter
collectively referred to as “Settlement Information”). Employee agrees to take
every reasonable precaution to prevent disclosure of any Settlement Information
to third parties, and agrees that there will be no publicity concerning any
Settlement Information. Employee is permitted to take every precaution to
disclose Settlement Information only to those attorneys, accountants,
governmental entities, and family members who have a reasonable need to know of
such Settlement Information. The Parties agree that if the Company proves that
Employee breached this Confidentiality provision, the Company shall be entitled
to an award of its costs spent enforcing this provision, including all
reasonable attorney fees associated with the enforcement action, without regard
to whether the Company can establish actual damages from Employee’s breach.

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13. No Cooperation. Employee agrees that he will not act in any manner that
might damage the business of the Company. The Parties acknowledge that
Employee’s employment with any of the Company’s competitors shall not, in and of
itself, constitute a breach of this provision. Employee further agrees that he
will not knowingly counsel or assist any attorneys or their clients in the
presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints by any third party against any of the Releasees, unless
under a subpoena or other court order to do so. Employee agrees both to
immediately notify the Company upon receipt of any such subpoena or court order,
and to furnish, within three (3) business days of its receipt, a copy of such
subpoena or court order to the Company. If approached by anyone for counsel or
assistance in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints against any of the Releasees,
Employee shall state no more than that he cannot provide counsel or assistance.

 

14. Breach. Employee acknowledges and agrees that any breach of Section 7
(“Release of Claims”), Section 9 (“Civil Code Section 1542”), or Section 13 (“No
Cooperation”) by Employee shall constitute a material breach of the Agreement
and shall entitle the Company immediately to recover the severance payments and
benefits provided in Section 2 hereof. This provision is not intended to render,
and does not render, any other breach of this Agreement immaterial.

 

15. Non-Disparagement. Employee agrees to refrain from any defamation, libel or
slander of the Company, or tortious interference with the contracts and
relationships of the Company. All inquiries by potential future employers of
Employee will be directed to the Human Resources. Upon inquiry, the Company will
only state the following: Employee’s last position and dates of Employment, and
any other information and/or documentation legally required to be disclosed.

 

16. Non-Solicitation. Employee agrees that for a period of twelve (12) months
immediately following the Effective Date of this Agreement, Employee shall not
directly or indirectly solicit, induce, recruit or encourage any of the
Company’s employees to leave their employment at the Company.

 

17. No Admission of Liability. The Parties understand and acknowledge that this
Agreement constitutes a compromise and settlement of disputed claims. No action
taken by the Parties, previously or in connection with this Agreement, shall be
construed to be: (a) an admission of the truth or falsity of any claims made, or
(b) an admission by either party of any fault or liability whatsoever to the
other party or to any third party.

 

18. Costs. The Parties shall each bear their own costs, expert fees, attorney
fees and other fees incurred in connection with the preparation of this
Agreement.

 

19. Alternative Dispute Resolution.

 

(a) Mediation. The Parties agree that, in the event that any dispute arises out
of, or relates to, the terms of this Agreement, their interpretation, and any of
the matters herein released, the Parties shall mediate the dispute with a
mediator who has been approved by both Parties (the “Mediation”). The Parties
must proceed with Mediation within forty-five (45) days following one party’s
receipt of a written notice from the other party of the existence of a dispute
that arises out of,

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or relates to, the Agreement. The Parties shall split the fees of the Mediation.
This section will not prevent either party from seeking injunctive relief (or
any other provisional remedy) from any court having jurisdiction over the
Parties and the subject matter of their dispute relating to Employee’s
obligations under this Agreement and the agreements incorporated herein by
reference.

 

(b) Binding Arbitration. The Parties also agree that if they fail to settle
their dispute through the mandatory Mediation set forth in Section 19 (a) above,
then any and all disputes arising out of, or relating to, the terms of this
Agreement, their interpretation, and any of the matters herein released, shall
be subject to binding arbitration in Santa Clara County before the American
Arbitration Association under its National Rules for the Resolution of
Employment Disputes. The Parties agree that the prevailing party in any
arbitration shall be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties agree that the
prevailing party in any arbitration shall be awarded its reasonable attorney
fees and costs. The Parties hereby agree to waive their right to have any
dispute between them resolved in a court of law by a judge or jury. This section
will not prevent either party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the Parties and the
subject matter of their dispute relating to Employee’s obligations under this
Agreement and the agreements incorporated herein by reference.

 

20. No Representations. Each party represents that it has had the opportunity to
consult with an attorney, and has carefully read and understands the scope and
effect of the provisions of this Agreement. Neither party has relied upon any
representations or statements made by the other party hereto which are not
specifically set forth in this Agreement.

 

21. Severability. In the event that any provision in this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable,
or void, this Agreement shall continue in full force and effect without said
provision so long as the remaining provisions remain intelligible and continue
to reflect the original intent of the Parties.

 

22. Entire Agreement. This Agreement, the Confidentiality Agreement, and the
Stock Agreements represent the entire agreement and understanding between the
Company and Employee concerning the subject matter of this Agreement and
Employee’s relationship with the Company, and supersede and replace any and all
prior agreements and understandings between the Parties concerning the subject
matter of this Agreement and Employee’s relationship with the Company.

 

23. No Oral Modification. Any modification or amendment of this Agreement, or
additional obligation assumed by either party in connection with this Agreement,
shall be effective only if placed in writing and signed by both Parties or their
authorized representatives.

 

24. Governing Law. This Agreement shall be governed by the laws of the State of
California, without regard for choice of law provisions.

 

25. Effective Date. This Agreement is effective after it has been signed by both
parties and after eight (8) days have passed following the date Employee signed
the Agreement (the “Effective Date”).

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26. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

 

27. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
with the full intent of releasing all claims, and without any duress or undue
influence by any of the Parties. The Parties acknowledge that:

 

(a) They have read this Agreement;

 

(b) They have been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of their own choice or that they have
voluntarily declined to seek such counsel;

 

(c) They understand the terms and consequences of this Agreement and of the
releases it contains; and

 

(d) They are fully aware of the legal and binding effect of this Agreement.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set
forth below.

 

Dated: October 15, 2004

  By:  

/s/ Scott E. Martin

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        Scott E. Martin         Senior Vice President, Human Resources and Legal

Dated: October 15, 2004

  By:  

/s/ Arthur D. Chadwick

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        Arthur D. Chadwick, an individual