EXHIBIT 10.70

 

PINNACLE SYSTEMS, INC.

 

TRANSITION EMPLOYMENT AGREEMENT

 

This Agreement (the “Agreement”) is made and entered into effective as of
November 1, 2003 (the “Start Date”), by and between Pinnacle Systems, Inc., a
California corporation (the ”Company”), and J. Kim Fennell (the “Employee”).

 

WHEREAS, the Company and the Employee entered into an Offer Letter and
Employment Contract dated as of June 18, 2002 (the “Offer Letter”);

 

WHEREAS, the Employee was employed by the Company as its President and Chief
Executive Officer and served as a member of the Company’s Board of Directors;

 

WHEREAS, the Employee has resigned from his position as the President and Chief
Executive Officer and his director position with the Company effective October
31, 2003;

 

WHEREAS, the Company and the Employee entered into a Change of Control Severance
Agreement dated as of January 30, 2003 (the “Severance Agreement”);

 

WHEREAS, the Company and the Employee have entered into certain written stock
option agreements to purchase common stock of the Company pursuant to the
Company’s 1996 Stock Option Plan and 1996 Supplemental Stock Option Plan (the
“Stock Agreements”);

 

WHEREAS, the Company and the Employee entered into an Employment, Confidential
Information and Invention Assignment Agreement (the “Confidentiality
Agreement”);

 

WHEREAS, the Company and the Employee desire to enter into this Agreement which
supersedes and replaces the Offer Letter and the Severance Agreement;

 

NOW THEREFORE, in consideration of the mutual promises made herein, the Company
and the Employee (collectively referred to as the “Parties”) hereby agree as
follows:

 

1. Resignation. The Employee hereby resigns from his position as the President
and Chief Executive Officer of the Company, which resignation shall be effective
October 31, 2003.

 

2. Employment.

 

(a) Employment Period; Position and Duties. The employment period shall begin
upon the Start Date and shall continue for one (1) year thereafter (the
“Employment Period”), unless sooner terminated pursuant to the provisions of
this Agreement. As of the Start Date, the Employee shall be employed by the
Company, reporting to the Company’s Board of Directors (the “Board”), and shall
assume and discharge such responsibilities as may be requested and deemed
necessary and appropriate by such officers. The Employee shall perform his
duties faithfully and to the best of his ability. The Employee may serve on the
boards of directors of other entities and engage in other

--------------------------------------------------------------------------------

business activities outside of his employment with the Company, so long as such
activities do not materially interfere with his duties to the Company.

 

(b) At-Will Employment. The Parties agree that the Employee’s employment with
the Company will be “at-will” employment and may be terminated at any time with
or without Cause (as defined below) or notice. No provision of this Agreement
shall be construed as conferring upon the Employee a right to continue as an
employee of the Company.

 

(c) Early Termination. The Company may terminate the Employee’s employment prior
to the end of the Employment Period. If the Company terminates the Employee’s
employment prior to the end of the Employment Period for any reason other than
for Cause, as defined below, the provisions of paragraph 10 shall apply. The
Employee may terminate his employment prior to the end of the Employment Period
by giving the Company five (5) days’ advance written notice. If the Employee
terminates his employment prior to the end of the Employment Period, the
provisions of paragraph 10 shall apply.

 

(d) Cause. The Company may terminate the Employee’s employment at any time for
“Cause.” For all purposes under this Agreement, “Cause” shall mean (i) any act
of personal dishonesty taken by the Employee in connection with his
responsibilities as an employee which is intended to result in substantial
personal enrichment of the Employee, (ii) the Employee’s conviction, or plea of
nolo contendere, of a felony, (iii) an act by the Employee which constitutes
misconduct and is materially injurious to the Company, or (iv) continued
violations by the Employee of the Employee’s obligations to the Company after
there has been delivered to the Employee a written demand for action from the
Company which describes the basis for the Company’s belief that the Employee has
not substantially performed his duties.

 

3. Compensation.

 

(a) Base Salary. For all services to be rendered by the Employee pursuant to
this Agreement, the Company agrees to pay the Employee during the Employment
Period a base salary at an annual rate of $395,000, less all applicable
withholding taxes (the “Base Salary”). The Base Salary shall be paid in periodic
installments in accordance with the Company’s regular payroll practices.

 

(b) Performance Bonus. Within ten (10) days following the Effective Date of this
Agreement, the Company agrees to pay the Employee the lump sum amount of
$316,000, less all applicable withholding taxes, which represents one hundred
percent (100%) of the Employee’s fiscal 2004 target performance bonus (the
“Bonus”). The Bonus shall be paid in accordance with the Company’s regular
payroll practices.

 

(c) Stock. Fifty percent (50%) of the unvested shares subject to all outstanding
Company options held by the Employee as of October 31, 2003 (the “Options”)
shall accelerate and become vested and exercisable on the Effective Date of this
Agreement. Such accelerated Options shall remain exercisable until three (3)
months after October 31, 2003. After October 31, 2003, none of the remaining
unvested shares subject to the Options shall vest. Except as otherwise provided
in this Agreement, the Options shall continue to be subject to the terms and
conditions of the Company’s applicable stock option plans and the Stock
Agreements.

 

-2-

--------------------------------------------------------------------------------

4. Employee Benefits. During the Employment Period, the Employee shall be
entitled to participate in employee benefit plans or programs of the Company,
subject to the rules and regulations applicable thereto. The Company reserves
the right to cancel or change the benefit plans and programs it offers to its
employees at any time.

 

5. Expenses. The Company shall reimburse the Employee for reasonable and
necessary travel, business or other expenses incurred by the Employee in the
furtherance of or in connection with the performance of the Employee’s duties
hereunder, in accordance with the Company’s expense reimbursement policy as in
effect from time to time.

 

6. Payment of Salary. The Employee acknowledges and represents that except as
provided in Section 2 and 3 of this Agreement, the Company has paid all salary,
wages, bonuses, accrued vacation, commissions and any and all other salary and
benefits due to the Employee.

 

7. Release of Claims. The Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to the
Employee by the Company. The Employee, on his own behalf and his respective
heirs, family members, executors and assigns, hereby fully and forever releases
the Company and its past, present and future officers, agents, directors,
employees, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, parents, predecessor and successor corporations, and assigns,
from, and agrees not to sue or otherwise institute or cause to be instituted any
legal or administrative proceedings 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 he 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 the Employee’s employment
relationship with the Company and the termination of that relationship;

 

(b) any and all claims relating to, or arising from, the Employee’s right to
purchase, or actual purchase of shares of stock of the Company, including,
without limitation, 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 for wrongful discharge of 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;

 

(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 California Fair Employment and Housing Act, and

 

-3-

--------------------------------------------------------------------------------

Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to
each such Act as well as the regulations issued thereunder;

 

(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; and

 

(g) any and all claims for attorneys’ fees and costs.

 

The Employee agrees 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.

 

8. Acknowledgement of Waiver of Claims under ADEA. The 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. The 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. The Employee acknowledges
that the consideration given for this waiver and release Agreement is in
addition to anything of value to which the Employee was already entitled. The
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; 

 

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

 

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

 

(e) nothing in this Agreement prevents or precludes the 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. The Employee represents that he is not aware of any
claims against the Company other than the claims that are released by this
Agreement. The Employee acknowledges that he has been advised by legal counsel
and 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 FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

 

-4-

--------------------------------------------------------------------------------

The Employee, being aware of said 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. Severance Payment. In the event the Employee’s employment terminates prior
to the end of the Employment Period other than for Cause (the “Termination
Date”), and subject to the Employee executing a release of claims agreement
substantially in the form attached hereto as Exhibit A (the “Release of
Claims”), the Employee shall be entitled to receive severance and other benefits
as follows:

 

(a) Cash. The Employee shall be entitled to a lump sum payment equal to the Base
Salary, less all applicable withholding taxes, that would otherwise be payable
from the Termination Date until the end of the Employment Period (the “Severance
Payment”). The Severance Payment, if applicable, shall be paid no later than
fifteen (15) days after the date on which the Release of Claims is signed by the
Parties.

 

(b) Benefits. The Employee’s health insurance benefits shall cease on the
Termination Date, subject to the Employee’s right to continue his health
insurance under COBRA. If the Employee timely elects COBRA, and provided that
the Employee constitutes a qualified beneficiary, as defined in Section
4980B(g)(1) of the Internal Revenue Code of 1986, as amended, the Company shall
reimburse the Employee for health care coverage for the Employee and the
Employee’s dependents until November 1, 2004, or until the Employee has secured
other employment, whichever occurs first. The Employee’s participation in all
other benefits and incidents of employment shall cease on the Termination Date.
The Employee shall cease accruing employee benefits, including, but not limited
to, vacation time and paid time off, as of the Termination Date.

 

11. Successors.

 

(a) Company’s Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. In the event the Company obtains such assumption agreement
prior to the effectiveness of any such succession, the Employee may elect to
receive the remainder of the Base Salary to which he is entitled pursuant to
Section 3(a) hereof as a lump sum payment. Such payment, if applicable, shall be
paid no later than fifteen (15) days after the effective date of such
succession. Failure of the Company to obtain such assumption agreement prior to
the effectiveness of any such succession shall entitle the Employee to the
benefits described in paragraph 10 of this Agreement, subject to the terms and
conditions therein.

 

(b) Employee’s Successors. Without the written consent of the Company, the
Employee shall not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity. Notwithstanding the
foregoing, the terms of this Agreement and all rights of the Employee hereunder
shall inure to the benefit of, and be enforceable by, the Employee’s personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

 

-5-

--------------------------------------------------------------------------------

12. Waiver. Failure or delay on the part of either party hereto to enforce any
right, power, or privilege hereunder shall not be deemed to constitute a waiver
thereof. Additionally, a waiver by either party or a breach of any promise
hereof by the other party shall not operate as or be construed to constitute a
waiver of any subsequent waiver by such other party.

 

13. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

14. Arbitration.

 

(a) Arbitration. In consideration of the Employee’s employment with the
“Company”, its promise to arbitrate all employment-related disputes and the
Employee’s receipt of the compensation, pay raises and other benefits paid to
the Employee by the Company, at present and in the future. The Employee agrees
that any and all controversies, claims, or disputes with anyone (including the
Company and any employee, officer, director, shareholder or benefit plan of the
Company in their capacity as such or otherwise) arising out of, relating to, or
resulting from the Employee’s employment with the Company or the termination of
the Employee’s employment with the Company, including any breach of this
Agreement, shall be subject to binding arbitration under the arbitration rules
set forth in California Code of Civil Procedure Section 1280 through 1294.2,
including Section 1283.05 (the “Rules”) and pursuant to California law. Disputes
which the Employee agrees to arbitrate, and thereby agrees to waive any right to
a trial by jury, include any statutory claims under State or Federal law,
including, but not limited to, claims under Title VII of the Civil Rights Act of
1964, the Americans with Disabilities Act of 1990, the Age Discrimination in
Employment Act of 1967, the Older Workers Benefit Protection Act, the California
Fair Employment and Housing Act, the California Labor Code, claims of
harassment, discrimination or wrongful termination and any statutory claims. The
Employee further understands that this Agreement to arbitrate also applies to
any disputes that the Company may have with employee.

 

(b) Procedure. The Employee agrees that any arbitration will be administered by
the American Arbitration Association (“AAA”) and that a neutral arbitrator will
be selected in a manner consistent with its national rules for the resolution of
employment disputes. The arbitration proceedings will allow for discovery
according to the rules set forth in the National Rules for the Resolution of
Employment Disputes. The Employee agrees that the arbitrator shall have the
power to decide any motions brought by any party to the arbitration, including
motions for summary judgment and/or adjudication and motions to dismiss and
demurrers, prior to any arbitration hearing. The Employee agrees that the
arbitrator shall issue a written decision on the merits. The Employee also
agrees that the arbitrator shall have the power to award any remedies, including
attorneys’ fees and costs, available under applicable law. The Employee
understands the Company will pay for any administrative or hearing fees charged
by the arbitrator or AAA except that the Employee shall pay the first $200.00 of
any filing fees associated with any arbitration the Employee initiates. The
Employee agrees that the arbitrator shall administer and conduct any arbitration
in a manner consistent with the rules and that to the extent that the AAA’s
National Rules for the Resolution of Employment Disputes conflict with the
rules, the rules shall take precedence.

 

-6-

--------------------------------------------------------------------------------

(c) Remedy. Except as provided by the rules, arbitration shall be the sole,
exclusive and final remedy for any dispute between the Employee and the Company.
Accordingly, except as provided for by the rules, neither the Employee nor the
Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.

 

(d) Availability of injunctive relief. In accordance with Rule 1281.8 of the
California Code of Civil Procedure, the Employee agrees that any party may also
petition the court for injunctive relief where either party alleges or claims a
violation of the employment, confidential information, invention assignment
agreement between the Employee and the Company or any other agreement regarding
trade secrets, confidential information, nonsolicitation or Labor Code §2870. In
the event either party seeks injunctive relief, the prevailing party shall be
entitled to recover reasonable costs and attorneys’ fees.

 

(e) Administrative relief. The Employee understands that this Agreement does not
prohibit the Employee from pursuing an administrative claim with a local, state
or federal administrative body such as the department of fair employment and
housing, the equal employment opportunity commission or the workers’
compensation board. This Agreement does, however, preclude the Employee from
pursuing court action regarding any such claim.

 

15. Execution of Release Agreement upon Termination. As a condition of entering
into this Agreement and of receiving benefits hereunder, the Employee agrees to
execute the Release of Claims attached hereto as Exhibit A upon the earlier of
(i) the termination of his employment with the Company or (ii) the end of the
Employment Period.

 

16. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties
hereto, with the full intent of releasing all claims. 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.

 

17. Integration. This Agreement, the Stock Agreements, and the Confidentiality
Agreement represent the entire agreement and understanding between the Parties
as to the subject matter herein and supersede and replace all prior or
contemporaneous agreements whether written or oral, including the Offer Letter
and the Severance Agreement. No waiver, alteration, or modification of any of
the provisions of this Agreement will be binding unless in writing and signed by
the Chairman of the Board.

 

-7-

--------------------------------------------------------------------------------

18. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of California.

 

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

 

20. Counterparts. This Agreement may be executed in one or more counterparts,
none of which need contain the signature of more than one party hereto, and each
of which shall be deemed to be an original, and all of which together shall
constitute a single agreement.

 

21. Acknowledgment. The Employee acknowledges that he has had the opportunity to
discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

 

-8-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by their duly authorized officers, as of the day and year first
above written.

 

PINNACLE SYSTEMS, INC.

By:   /s/    Arthur D. Chadwick  

--------------------------------------------------------------------------------

    Arthur D. Chadwick     Vice President, Finance and     Administration and
Chief Financial Officer      

 

EMPLOYEE

By:   /s/    J. Kim Fennell  

--------------------------------------------------------------------------------

    J. Kim Fennell

 

 

 

 

 

 

-9-

--------------------------------------------------------------------------------

EXHIBIT A

 

FORM OF RELEASE OF CLAIMS AGREEMENT

 

This Release of Claims Agreement (this “Agreement”) is made as of             ,
200_ by and between Pinnacle Systems, Inc. (the “Company”) and J. Kim Fennell
(the “Employee”).

 

RECITALS

 

WHEREAS, the Employee was employed by the Company pursuant to that certain
Transitional Employment Agreement effective as of November 1, 2003 (the
“Employment Agreement”);

 

WHEREAS, the Employee’s employment with the Company terminated on             ,
200_ (the “Termination Date”);

 

WHEREAS, the Company and the Employee entered into an Employment, Confidential
Information and Invention Assignment Agreement (the “Confidentiality
Agreement”);

 

WHEREAS, the Company and the Employee have entered into certain written stock
option agreements to purchase common stock of the Company pursuant to the
Company’s 1996 Stock Option Plan and 1996 Supplemental Stock Option Plan (the
“Stock Agreements”);

 

WHEREAS, the Company and the Employee, and each of them, 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 or in any way related
to the Employee’s employment with, or separation from, the Company;

 

NOW THEREFORE, in consideration of the mutual promises made herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee (collectively referred to as the
“Parties”) desiring to be legally bound do hereby agree as follows:

 

COVENANTS

 

1. Consideration. Subject to and in consideration of the Employee’s release of
claims as provided herein and such other consideration provided in the
Employment Agreement, the Company has agreed to pay the Employee certain
benefits and the Employee has agreed to provide certain benefits to the Company,
both as set forth in the Employment Agreement.

 

2. Payment of Salary. The Employee acknowledges and represents that the Company
has paid all salary, wages, bonuses, accrued vacation, commissions and any and
all other salary and benefits due to the Employee.

 

3. Release of Claims. The Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to the
Employee by the Company. The

--------------------------------------------------------------------------------

Employee, on his own behalf and his respective heirs, family members, executors
and assigns, hereby fully and forever releases the Company and its past, present
and future officers, agents, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, parents, predecessor and
successor corporations, and assigns, from, and agrees not to sue or otherwise
institute or cause to be instituted any legal or administrative proceedings
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 he 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 the Employee’s employment
relationship with the Company and the termination of that relationship;

 

(b) any and all claims relating to, or arising from, the Employee’s right to
purchase, or actual purchase of shares of stock of the Company, including,
without limitation, 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 for wrongful discharge of 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;

 

(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 California Fair Employment and Housing Act, and
Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to
each such Act as well as the regulations issued thereunder;

 

(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; and

 

(g) any and all claims for attorneys’ fees and costs.

 

The Employee agrees that the release set forth in this Section 3 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.

 

4. Acknowledgement of Waiver of Claims under ADEA. The 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. The

 

-11-

--------------------------------------------------------------------------------

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. The Employee acknowledges that the consideration given for this
waiver and release Agreement is in addition to anything of value to which the
Employee was already entitled. The 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;

 

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

 

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

 

(e) nothing in this Agreement prevents or precludes the 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.

 

5. Civil Code Section 1542. The Employee represents that he is not aware of any
claims against the Company other than the claims that are released by this
Agreement. The Employee acknowledges that he has been advised by legal counsel
and 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 FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

The Employee, being aware of said 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.

 

6. Confidential Information. The Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between the Employee and the Company. The Employee
shall return all of the Company’s property and confidential and proprietary
information in his possession to the Company on the Effective Date of this
Agreement.

 

7. No Pending or Future Lawsuits. The 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 other person or entity referred to
herein. The 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 other person or entity referred to herein.

 

-12-

--------------------------------------------------------------------------------

8. Confidentiality. The Employee agrees to use his best efforts to maintain in
confidence the existence of this Agreement, the contents and terms of this
Agreement, and the consideration for this Agreement (hereinafter collectively
referred to as “Release Information”). The Employee agrees to take every
reasonable precaution to prevent disclosure of any Release Information to third
parties and agrees that there will be no publicity, directly or indirectly,
concerning any Release Information. The Employee agrees to take every precaution
to disclose Release Information only to those attorneys, accountants,
governmental entities and family members who have a reasonable need to know of
such Release Information.

 

9. No Cooperation. The Employee agrees he will not act in any manner that might
damage the business of the Company. The Employee agrees that he will not 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 the Company and/or any officer, director, employee, agent,
representative, shareholder or attorney of the Company, unless under a subpoena
or other court order to do so.

 

10. Costs. The Parties shall each bear their own costs, expert fees, attorneys’
fees and other fees incurred in connection with this Agreement.

 

11. Arbitration. The Parties agree that 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
attorneys’ 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.

 

12. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who
may claim through it to the terms and conditions of this Agreement. The Employee
represents and warrants that he has the capacity to act on his own behalf and on
behalf of all who might claim through him to bind them to the terms and
conditions of this Agreement.

 

13. No Representations. The Employee represents that he 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.

 

14. Severability. In the event that any provision hereof 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.

 

-13-

--------------------------------------------------------------------------------

15. Entire Agreement. This Agreement, the Confidentiality Agreement, and the
Stock Agreements represent the entire agreement and understanding between the
Company and the Employee concerning the Employee’s separation from the Company,
and supersede and replace any and all prior agreements and understandings
concerning the Employee’s relationship with the Company and his compensation by
the Company.

 

16. 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 the Employee and an
executive officer of the Company.

 

17. Governing Law. This Agreement shall be deemed to have been executed and
delivered within the State of California, and it shall be construed,
interpreted, governed, and enforced in accordance with the laws of the State of
California, without regard to conflict of law principles.

 

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

 

19. 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.

 

20. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties
hereto, with the full intent of releasing all claims. 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.

 

-14-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

 

PINNACLE SYSTEMS, INC. By:      

--------------------------------------------------------------------------------

   

Mark L. Sanders

Chairman of the Board of Directors

     

EMPLOYEE

 

By:  

--------------------------------------------------------------------------------

    J. Kim Fennell

 

 

-15-