As filed with the Securities and Exchange Commission on September 12, 1997
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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PINNACLE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
California 94-3003809
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
280 North Bernardo Ave.
Mountain View, California 94043
(650) 526-1600
(Address, including zip code, and
telephone number, including area code, of
Registrant's principal executive offices)
ARTHUR D. CHADWICK
Vice President, Finance and Administration,
Chief Financial Officer and Secretary
PINNACLE SYSTEMS, INC.
280 North Bernardo Ave.
Mountain View, California 94043
(650) 526-1600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
Copies to:
ROBERT P. LATTA, ESQ.
CHRIS F. FENNELL, ESQ.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
(650) 493-9300
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act") other than securities
offered only in connection with dividend or interest reinvestment plans, please
check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
====================================================================================================================================
Proposed
Maximum Proposed
Amount Offering Maximum
Title of Each Class of to be Price Per Aggregate Amount of
Securities to be Registered Registered Share(1) Offering Price(1) Registration Fee(1)
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<S> <C> <C> <C> <C>
Common Stock, no par value per share.......... 203,565(2) $24.31 $4,948,665 $1,500
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<FN>
(1) Estimated solely for the purpose of computing the amount of the
registration fee. The estimate is made pursuant to Rule 457 of the
Securities Act of 1933, as amended.
(2) Includes Preferred Share Purchase Rights which, prior to the occurrence of
certain events, will not be exercisable or evidenced separately from the
Common Stock.
</FN>
</TABLE>
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The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS (Subject to Completion)
Issued September 12, 1997
203,565 Shares
PINNACLE SYSTEMS, INC.
COMMON STOCK
(no par value)
----------------------
This Prospectus may be used in connection with the offer and sale, from
time to time, of up to 203,565 shares (the "Shares") of Common Stock, no par
value (the "Common Stock"), of Pinnacle Systems, Inc. ("Pinnacle" or the
"Company"), for the account of Miro Computer Products AG, a corporation
organized under the laws of Germany (the "Selling Shareholder"). All of the
Shares covered hereby are to be sold by the Selling Shareholder. The Company
will not receive any of the proceeds of sales made hereunder. The expenses
incurred in registering the Shares, including legal and accounting fees, will be
borne by the Company. None of the shares offered pursuant to this Prospectus
have been registered prior to the filing of the Registration Statement of which
this Prospectus is a part.
The Shares offered hereby were acquired by the Selling Shareholder from
the Company in connection with the acquisition by the Company of certain of the
assets of the Selling Shareholder and certain subsidiaries of the Selling
Shareholder in August 1997. The Shares may be offered and sold from time to time
by the Selling Shareholder directly or through broker-dealers or underwriters
who may act solely as agents, or who may acquire the Shares as principals. The
distribution of the Shares may be effected in one or more transactions that may
take place through the Nasdaq National Market, including block trades or
ordinary broker's transactions, or through privately negotiated transactions, or
through a combination of any such methods of sale, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specially negotiated brokerage fees or
commissions may be paid by the Selling Shareholder in connection with such
sales. See "Plan of Distribution."
The Common Stock of Pinnacle is traded on the Nasdaq National Market
under the symbol "PCLE." On September 11, 1997, the closing sale price of a
share of Pinnacle's Common Stock on the Nasdaq National Market was $24.75.
See "Risk Factors" on page 4 for a discussion of certain factors that
should be considered by prospective purchasers of the Common Stock offered
hereby.
The Selling Shareholder and any broker executing selling orders on
behalf of the Selling Shareholder may be deemed to be an "underwriter" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act.
----------------------
No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, nor shall there be any sale of these securities by any
person in any jurisdiction in which it is unlawful for such person to make such
offer, solicitation or sale. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create an implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________, 1997
<PAGE>
TABLE OF CONTENTS
Page
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Available Information..........................................................2
Information Incorporated by Reference..........................................3
Forward Looking Information....................................................3
The Company....................................................................4
Risk Factors...................................................................4
Use of Proceeds................................................................9
Selling Shareholder............................................................9
Plan of Distribution...........................................................9
Experts .....................................................................10
Legal Matters.................................................................10
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at its office at Room 1034,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission. The address of the site is http://www.sec.gov. The Company's Common
Stock is quoted on the Nasdaq National Market. Reports, proxy statements and
other information concerning the Company can also be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street N.W., Washington, D.C.
20002.
The Company has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement and
to the exhibits and schedules filed therewith. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.
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<PAGE>
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Commission:
(1) the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997;
(2) the Company's Current Report on Form 8-K filed on September
12, 1997;
(3) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A as filed with the
Commission on September 9, 1994; and
(4) the description of the Company's Preferred Share Purchase
Rights contained in its Registration Statement on Form 8-A as
filed with the Commission on December 19, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of securities contemplated hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for all purposes of this
Prospectus to the extent that a statement contained herein, therein or in any
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the written or oral
request of such person, a copy of any and all of the documents referred to above
which have been or may be incorporated in this Prospectus by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to: Chief Financial Officer, Pinnacle Systems, Inc., 280 North Bernardo Avenue,
Mountain View, California 94043; telephone number (650) 526-1600.
FORWARD LOOKING INFORMATION
This Prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act. Actual results could
differ materially from those projected in the forward-looking statements as a
result of the risk factors set forth below. Reference is made in particular to
the discussion set forth under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Annual Report on Form 10-
K for the fiscal year ended June 30, 1997, incorporated herein by reference. In
connection with forward-looking statements which appear in these disclosures,
prospective purchasers of the Common Stock offered hereby should carefully
consider the factors set forth in this Prospectus under "Risk Factors."
-3-
<PAGE>
THE COMPANY
Pinnacle Systems, Inc. ("Pinnacle" or the "Company") designs,
manufactures, markets and supports video post-production tools for high quality
real time video processing. The Company's products combine computer based and
specialized video processing technologies which perform a variety of video
post-production functions such as the addition of special effects, graphics and
titles to multiple streams of live or previously recorded video material. The
Company has sold over 10,000 post-production systems since the company's
inception in 1986 to customers in more than 60 countries. In 1994 the Company
introduced Alladin, its first PC-based product that connected directly to an
external computer and offered real-time video manipulation and special effects
capabilities with performance comparable to traditional video products but at a
substantially lower price. The Company has since introduced additional video
products which address needs in the broadcast, desktop and consumer video
post-production markets.
The Company was incorporated in California in 1986. The Company
maintains its executive offices at 280 North Bernardo Avenue, Mountain View,
California 94043, and its telephone number is (650) 526-1600.
RISK FACTORS
Risks Associated with Acquisition. In August 1997, the Company acquired
the Miro Digital Video Group from Miro Computer Products AG. As a result of the
acquisition, the Company acquired the assets of the Miro Digital Video Group,
including the miroVIDEO and miroMOTION product lines, certain technology and
other assets. Anticipated benefits of the acquisition will not be achieved
unless the operations being acquired are successfully combined with those of the
Company in a timely manner. Such combination will require substantial attention
from management. The diversion of the attention of management and any
difficulties encountered in the transition process could have a material adverse
impact on the revenues and operating results of the Company. The integration of
the Digital Video Group product lines will also require integration of the newly
acquired product offerings and the coordination of the research and development
and sales and marketing efforts of the Digital Video Group and the Company. The
difficulties of assimilation may be increased by the necessity of coordinating
geographically separated organizations, integrating personnel with disparate
business backgrounds and combining two different corporate cultures. In
addition, the process of assimilating the Digital Video Group into the Company
could cause the interruption of, or a loss of momentum in, the activities of the
Company's business, which could have a material adverse effect on the Company.
There can be no assurance that the Company will realize any of the anticipated
benefits of the acquisition. In addition, the announcement and consummation of
the acquisition could cause customers and potential customers of the Company or
the Digital Video Group to delay or cancel orders for products as a result of
customer concerns and uncertainty over product evaluation, integration and
support. Such a delay or cancellation of orders could have a material adverse
effect on the business, results of operations and financial condition of the
Company. The Company anticipates that a significant portion of the purchase
price will be charged as in-process research and development and other
non-recurring costs in the quarter ending September 30, 1997. In addition, the
negotiation and implementation of the acquisition will result in aggregate
(pre-tax) expenses to the Company of approximately $2.0 million for costs
associated with executing the transaction and integrating the businesses.
Although the Company does not believe costs will exceed the aforementioned
amount, there can be no assurance that the Company's estimate is correct or that
unanticipated contingencies will not occur that could substantially increase the
costs of combining the operations of the Miro
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<PAGE>
Digital Video Group with those of the Company. In any event, costs associated
with the acquisition will negatively impact the Company's results of operations
in the quarter ending September 30, 1997.
Concentration of Sales With OEMs. The Company has been highly dependent
on sales of Alladin and Genie products through original equipment manufacturers
("OEMs"), in particular Avid Technology, Inc. ("Avid"). This concentration of
net sales subjects the Company to a number of risks, in particular the risk that
its operating results will vary on a quarter to quarter basis as a result of
variations in the ordering patterns of the OEM customers. Variations in the
timing of revenues can cause significant fluctuations in quarterly results of
operations. The Company's results of operations have in the past and could in
the future be materially adversely affected by the failure of anticipated orders
to materialize, by deferrals or cancellations of orders, or if overall OEM
demand were to decline. For example, sales to Avid decreased sequentially for
the quarters ended June 30, September 30, and December 31, 1996 contributing to
the overall decline in net sales for the Company during those same periods, and
then sales to Avid increased sequentially for the quarter ended March 31, 1997,
and then again in the quarter ended June 30, 1997. If orders from OEM customers,
and in particular Avid, were to decrease, the Company's business, operating
results and financial condition would be materially adversely affected.
Significant Fluctuations in Quarterly Operating Results. The Company's
quarterly operating results have in the past varied, and are expected to vary in
the future as a result of a number of factors, including the timing of
significant orders from and shipments to major OEM customers, in particular
Avid, the timing and market acceptance of new products or technological advances
by the Company and its competitors, the mix of distribution channels through
which the Company's products are sold, changes in pricing policies by the
Company and its competitors, the accuracy of resellers' forecasts of end user
demand, the ability of the Company to obtain sufficient supplies of the major
subassemblies used in its products from its subcontractors, the ability of the
Company and its subcontractors to obtain sufficient supplies of sole or limited
source components for the Company's products, and general economic conditions
both domestically and internationally. The Company's expense levels are based,
in part, on its expectations as to future revenue and, as a result, net income
would be disproportionately affected by a reduction in net sales.
The Company experiences significant fluctuations in orders and sales,
due mainly to reduced customer purchasing activity during the summer months the
timing of major trade shows and the sale of consumer products in anticipation of
the holiday season. Sales usually slowdown during the summer months, especially
in Europe. The Company attends a number of trade shows which can influence the
order pattern of products shown at those shows including the National
Association of Broadcasters (NAB) convention held in April, the International
Broadcasters Convention (IBC) held in September and the COMDEX show held in
November of each year. The Company expects that its operating results will
fluctuate in the future as a result of these and other factors, including
changes in the rate of sales to OEM customers, in particular Avid, and the
Company's success in developing, introducing and shipping new products, in
particular DVExtreme, Lightning, and VideoDirector Studio 200. Due to these
factors and the potential quarterly fluctuations in operating results, the
Company believes that quarter-to-quarter comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as
indicators of future performance.
Risks Associated with the Consumer Market. The Company recently entered
the Consumer market with the purchase of Video Director product in June 1996 and
began shipping the VideoDirector Studio 200 product in March 1997. In addition,
the Company expects to expend considerable resources to develop, market and sell
products into the consumer video market. The Company has limited prior
experience developing, marketing and selling products into this market which has
certain risks. Because the
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<PAGE>
VideoDirector Studio 200 must be used with a personal computer, a camcorder and
a VCR not supplied by the Company, consumer acceptance will be adversely
affected to the extent end users experience difficulties installing and using
the VideoDirector Studio 200 with these components. The Company has limited
experience selling products through the consumer distribution channel. To be
successful in this market it is necessary that the Company establish and
maintain an effective consumer distribution channel including consumer
distributors, electronic retail stores and the ability to effectively handle
phone and Internet orders. Although the Company believes that the consumer video
market will continue to develop for products which offer consumers the ability
to edit home videos, there can be no assurance that this market will continue to
develop, or that the Company can successfully compete in this market. There can
also be no assurance that the Company will be able to compete successfully
against current and future competitors in the consumer video market, and to the
extent the Company is not successful with the development, introduction and sale
of products in this market segment, the Company's business, operating results
and financial condition could be adversely affected.
Risks Associated with Recent Product Introductions. The Company is
critically dependent on the successful introduction, market acceptance,
manufacture and sale of its recently introduced products to increase revenues
and return to profitability. These products include the VideoDirector Studio 200
which is sold into the Consumer market and which began shipping in March 1997,
and DVExtreme and Lightning which are sold into the Broadcast market both of
which began shipping in June 1997. There can be no assurance that these products
will achieve significant market acceptance, and to the extent they do not, the
Company's business, operating results and financial condition could be
materially adversely affected. In addition, as is typical with any new product
introduction, quality and reliability problems may arise and any such problems
could result in reduced bookings, manufacturing rework costs, delays in
collecting accounts receivable, additional service warranty costs and a
limitation on market acceptance of the product.
Competition. The market for the Company's products is highly
competitive and is characterized by rapid technological change, new product
development and obsolescence, evolving industry standards and significant price
erosion over the life of a product. The Company anticipates increased
competition in all three markets into which Pinnacle products are sold: the
Broadcast, Desktop, and Consumer video production markets. In particular, the
consumer video production market in which VideoDirector Studio 200 competes is
an emerging market and the sources of competition are not yet well defined.
There are several established video companies that are currently offering
products or solutions that compete indirectly with VideoDirector Studio 200 by
providing some of the same features and video editing capabilities. In addition,
the Company expects that existing manufacturers and new market entrants will
develop new, higher performance, lower cost consumer video products that may
compete directly with VideoDirector Studio 200. The Company expects that
competition will intensify significantly as the market for consumer video
editing products develops. The Company expects that potential competition in
this market is likely to come from existing video editing companies, software
application companies, or new entrants into the market. Suppliers of existing
video editing equipment have the financial resources and technical know-how to
develop products for the consumer video market. Suppliers of computer
application software also compete in the Consumer editing market. Increased
competition could result in price reductions, reduced margins and loss of market
share, all of which would materially and adversely affect the Company's
business, operating results and financial condition. There can be no assurance
that the Company will be able to compete successfully against current and future
competitors.
Dependence on Key Personnel. The Company's success depends in part upon
the continued service of its senior management and key technical personnel, none
of whom is bound by an employment agreement
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<PAGE>
or the subject of key man life insurance. The Company's success is also
dependent upon its ability to attract and retain qualified technical and
managerial personnel. Significant competition exists for such personnel and
there can be no assurance that the Company can retain its key technical and
managerial employees or that it will be able to attract, assimilate and retain
such other highly-qualified technical and managerial personnel as may be
required in the future. There can be no assurance that employees will not leave
the employ of the Company and compete against the Company, or that contractors
will not perform services for competitors of the Company. If the Company is
unable to retain key personnel, its business, operating results and financial
condition could be adversely affected.
Technological Change and Obsolescence: Risks Associated with
Development and Introduction of New Products. The video post-production
equipment industry is characterized by rapidly changing technology, evolving
industry standards and frequent new product introductions. The introduction of
products embodying new technologies or the emergence of new industry standards
can render existing products obsolete or unmarketable. The Company's future
operating results will depend to a considerable extent on its ability to
continually develop, introduce and deliver new hardware and software products
that offer its customers additional features and enhanced performance at
competitive prices. Inherent in this process are a number of risks. The
development of new, technologically advanced products is a complex and uncertain
process requiring high levels of innovation, as well as accurate anticipation of
technological market trends. Once a new product is developed, such as the
Companies most recently introduced products, VideoDirector Studio 200,
DVExtreme, and Lightning, the Company must rapidly bring it into volume
production, a process that requires accurate forecasting of customer
requirements and the attainment of acceptable manufacturing costs. The
introduction of new or enhanced products also requires the Company to manage the
transition from older, displaced products in order to minimize disruption in
customer ordering patterns, avoid excessive levels of older product inventories
and ensure that adequate supplies of new products can be delivered to meet
customer demand. For example, the Company expects that the introduction of
DVExtreme and Lightning will result in a significant decline in sales of Prizm
and Flashfile. In addition, since the Company's products are based in part on
proprietary, internally-developed software, delays in software development could
delay the ability of the Company to ship new products. The Company has
experienced delays in the shipment of new products in the past, and these delays
adversely affected sales of existing products and results of operations. Delays
in the introduction or shipment of new or enhanced products, the inability of
the Company to timely develop and introduce such new products, the failure of
such products to gain market acceptance or problems associated with new product
transitions could adversely affect the Company's business, operating results and
financial condition, particularly on a quarterly basis.
Dependence on Contract Manufacturers and Single Source Suppliers. The
Company relies on manufacturing subcontractors to manufacture major
subassemblies of the Company's products. The Company and its manufacturing
subcontractors are dependent upon single or limited source suppliers for a
number of components and parts used in the Company's products, including certain
key integrated circuits. The Company's strategy to rely on subcontractors for
major subassemblies and single source suppliers involves a number of significant
risks, including the loss of control over the manufacturing process, the
potential absence of adequate capacity, the unavailability of or interruptions
in access to certain process technologies and reduced control over delivery
schedules, manufacturing yields, quality and costs. In the event that any
significant subcontractor or single source suppliers were to become unable or
unwilling to continue to manufacture these subassemblies or provide critical
components in required volumes, the Company would have to identify and qualify
acceptable replacements. The process of qualifying manufacturing subcontractors
and suppliers could be lengthy and no assurance can be given that any additional
sources would be available to the Company on a timely basis. Any extended
interruption in the future supply of or increase in the cost
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<PAGE>
of the subassemblies manufactured by third party subcontractors could materially
and adversely affect the Company's business, operating results and financial
condition.
Dependence on Resellers; the Absence of Direct Sales Force. The Company
distributes its products primarily through a network of dealers, OEMs and other
resellers. Accordingly, the Company is dependent upon these resellers to assist
it in promoting market acceptance of the Broadcast, Desktop, and Consumer video
products. There can be no assurance that these dealers, OEMs and retailers will
devote the resources necessary to provide effective sales and marketing support
to the Company. The Company's dealers and retailers are generally not
contractually committed to make future purchases of the Company's products and
therefore could discontinue carrying the Company's products in favor of a
competitor's product or for any other reason. Because the Company sells a
significant portion of its products through dealers and retailers, it is
difficult to ascertain current demand for existing products and anticipated
demand for newly introduced products such as DVExtreme, Lightning and Studio 200
regardless of the level of dealer inventory for the Company's products.
Moreover, initial orders for a new product may be caused by the interest of
dealers to have the latest product on hand for potential future sale to end
users. As a result, initial stocking orders for a new product, such as
DVExtreme, Lightning, and Studio 200 may not be indicative of long term end user
demand. In addition, the Company is dependent upon the continued viability and
financial stability of these dealers and retailers, some of which are small
organizations with limited capital. The Company believes that its future growth
and success will continue to depend in large part upon its dealer and retail
channels. Accordingly, if a significant number of its dealers and/or retailers
were to experience financial difficulties, or otherwise become unable or
unwilling to promote, sell or pay for the Company's products, the Company's
results of operations could be adversely affected.
Risks of Third Party Claims of Infringement. There has been substantial
industry litigation regarding patent, trademark and other intellectual property
rights involving technology companies. In the future, litigation may be
necessary to enforce any patents issued to the Company to protect trade secrets,
trademarks and other intellectual property rights owned by the Company, to
defend the Company against claimed infringement of the rights of others and to
determine the scope and validity of the proprietary rights of others. Any such
litigation could be costly and a diversion of management's attention, which
could have material adverse effects on the Company's business, operating results
and financial condition. Adverse determination in such litigation could result
in the loss of the Company's proprietary rights, subject the Company to
significant liabilities, require the Company to seek licenses from third parties
or prevent the Company from manufacturing or selling its products, any of which
could have a material adverse effect on the Company's business, operating
results and financial condition.
International Sales are Subject to a Number of Risks. Sales of the
Company's products outside of North America represented approximately 39.7%,
38.7% and 46.5% of the Company's net sales in fiscal 1997, 1996 and 1995,
respectively. The Company expects that international sales will continue to
represent a significant portion of its net sales, particularly in light of the
acquisition of the Digital Video Group from Miro Computer Products AG.
International sales and operations may also be subject to risks such as the
imposition of governmental controls, export license requirements, restrictions
on the export of critical technology, currency exchange fluctuations, generally
longer receivable collection periods, political instability, trade restrictions,
changes in tariffs, difficulties in staffing and managing international
operations, potential insolvency of international dealers and difficulty in
collecting accounts receivable. There can be no assurance that these factors
will not have an adverse effect on the Company's future international sales and,
consequently, on the Company's business, operating results and financial
condition.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Shareholder.
SELLING SHAREHOLDER
Miro Computer Products AG (the "Selling Shareholder") acquired the
Shares in connection with the acquisition (the "Acquisition") by the Company of
certain of the assets of the Selling Shareholder and certain of its subsidiaries
effective August 31, 1997. All of the Shares offered hereby are being sold by
the Selling Shareholder. The Shares held by the Selling Shareholder represent
approximately 3% of the outstanding shares of the Company's Common Stock as of
September 11, 1997 and upon completion of this offering, the Selling Shareholder
will own none of the outstanding shares of Common Stock of Pinnacle.
Pursuant to the terms of the Registration Rights Agreement dated as of
August 29, 1997 (the "Registration Rights Agreement"), between the Company and
the Selling Shareholder, the Company undertook to use commercially reasonable
efforts to register the Shares held by the Selling Shareholder within fourteen
days of the date of issuance of shares in connection with the closing of the
Acquisition. The Registration Rights Agreement also includes certain
indemnification arrangements with the Selling Shareholder. Pursuant to the terms
of the Registration Rights Agreement, the Selling Shareholder has agreed to
effect any sale of shares covered by the Registration Rights Agreement through
the offices of Hambrecht & Quist.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholder or
by pledgees, donees, transferees or other successors in interest. Such sales may
be made in any one or more transactions (which may involve block transactions)
on the Nasdaq National Market, or any exchange on which the Common Stock may
then be listed, in the over-the-counter market or otherwise in negotiated
transactions or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Shareholder may effect such
transactions by selling shares to or through broker-dealers, and such
broker-dealers may sell the Shares as agent or may purchase such Shares as
principal and resell them for their own account pursuant to this Prospectus.
Such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Shareholder and/or
purchasers the Shares, for whom they may act as agent (which compensation may be
in excess of customary commissions). In connection with such sales, the Selling
Shareholder and any participating brokers or dealers may be deemed to be
"underwriters" as defined in the Securities Act.
The Registration Rights Agreement provides that the Company will
indemnify the Selling Shareholder against certain liabilities, including
liabilities under the Securities Act.
The Company may suspend the use of this Prospectus for a discrete
period of time, not exceeding 30 days, if, in the good faith determination of
its Board of Directors, a development has occurred or condition exists as a
result of which the Registration Statement or the Prospectus contains or
incorporates by reference a material misstatement or omission, the correction of
which would require the premature disclosure of
-9-
<PAGE>
confidential information that would, in the good faith determination of the
Board of Directors, materially and adversely affect the Company. The Company may
not exercise this delay right more than once in any twelve-month period. The
Company is obligated in the event of such suspension to use its reasonable
efforts to ensure that the use of the Prospectus may be resumed as soon as
practicable. This offering will terminate on the earliest of (a) two years from
the date of issuance of the Shares or (b) the date on which all Shares offered
hereby have been sold by the Selling Shareholder or (c) such time as all of the
shares can be sold by the Selling Shareholder within a three-month period
without compliance with the registration requirements of the Securities Act
pursuant to Rule 144 thereunder.
Any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Shareholder will sell any or
all of the shares of Common Stock offered by it hereunder.
EXPERTS
The consolidated financial statements and schedule of the Company as of
June 30, 1997 and 1996 and for each of the years in the three-year period ended
June 30, 1997 have been incorporated by reference in this Prospectus and in the
Registration Statement of which this Prospectus forms a part, in reliance upon
the reports of KPMG Peat Marwick LLP, independent certified public accountants,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been
passed upon for the Company by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.
-10-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, payable by the
Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and Nasdaq National Market
listing fee.
Amount to
Be Paid
-------
SEC registration fee ........................................ $ 1,500
Nasdaq National Market listing fee .......................... 4,072
Printing expenses ........................................... 10,000
Legal fees and expenses ..................................... 10,000
Accounting fees and expenses ................................ 7,500
Miscellaneous expenses ...................................... 6,928
-------
Total .............................................. $40,000
=======
Item 15. Indemnification of Directors and Officers
As permitted by Section 204(a) of the California General Corporation
Law, the Registrant's Articles of Incorporation eliminate a director's personal
liability for monetary damages to the Registrant and its shareholders arising
from a breach or alleged breach of the director's fiduciary duty, except for
liability arising under Sections 310 and 316 of the California General
Corporation Law or liability for (i) acts or omissions that involve intentional
misconduct or knowing and culpable violation of law, (ii) acts or omissions that
a director believes to be contrary to the best interests of the Registrant or
its shareholders or that involve the absence of good faith on the part of the
director, (iii) any transaction from which a director derived an improper
personal benefit, (iv) acts or omissions that show a reckless disregard for the
director's duty to the Registrant or its shareholders in circumstances in which
the director was aware, or should have been aware, in the ordinary course of
performing a director's duties, of a risk of serious injury to the Registrant or
its shareholders, (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
Registrant or its shareholders, (vi) interested transactions between the
corporation and a director in which a director has a material financial
interest, and (vii) liability for improper distributions, loans or guarantees.
This provision does not eliminate the directors' duty of care, and in
appropriate circumstances equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under California law.
Sections 204(a) and 317 of the California General Corporation Law
authorize a corporation to indemnify its directors, officers, employees and
other agents in terms sufficiently broad to permit indemnification (including
reimbursement for expenses) under certain circumstances for liabilities arising
under the Securities Act. The Registrant's Articles of Incorporation and Bylaws
contain provisions covering indemnification to the maximum extent permitted by
the California General Corporation Law of corporate directors, officers and
other agents against certain liabilities and expenses incurred as a result of
proceedings involving such persons in their capacities as directors, officers
employees or agents, including proceedings
II-1
<PAGE>
under the Securities Act or the Exchange Act. The Company has entered into
Indemnification Agreements with its directors and executive officers.
The Registration Rights Agreement dated as of August 29, 1997, by and
between the Registrant and Miro Computer Products AG provides that the Company
will indemnify the Selling Shareholder identified therein against certain
liabilities, including liabilities under the Securities Act.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought, nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
Item 16. Exhibits
Exhibit No. Description
----------- -----------
4.2 Registration Rights Agreement dated August 29, 1997 by and
between the Registrant and Miro Computer Products AG.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
23.1 Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see II-4).
Item 17. Undertakings
The Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
a. To include any prospectus required by Section 10(a)(3) of the
Securities Act;
b. To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
c. To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a) and (b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in the Registration
Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
II-2
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act, (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, the information omitted from
the form of Prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was declared
effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Mountain View, State of California, on the 12th
day of September, 1997.
PINNACLE SYSTEMS, INC.
By: /s/ ARTHUR D. CHADWICK
------------------------------------------------
Arthur D. Chadwick
Vice President, Finance and Administration,
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Mark L.
Sanders and Arthur D. Chadwick his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-3 (including post-effective amendments), to
sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, thereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutions, may do or
cause to be done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ MARK L. SANDERS President, Chief Executive Officer and September 12, 1997
- -------------------------- Director (Principal Executive Officer)
Mark L. Sanders
/s/ ARTHUR D. CHADWICK Vice President, Finance and September 12, 1997
- -------------------------- Administration and Chief Financial
Arthur D. Chadwick Officer (Principal Financial and
Accounting Officer)
/s/ AJAY CHOPRA Chairman of the Board, Vice President, September 12, 1997
- -------------------------- Desk Products
Ajay Chopra
Director
- --------------------------
John Lewis
/s/ CHARLES J. VAUGHAN Director September 12, 1997
- --------------------------
Charles J. Vaughan
/s/ NYAL D. McMULLIN Director September 12, 1997
- --------------------------
Nyal D. McMullin
/s/ GLENN E. PENISTEN Director September 12, 1997
- --------------------------
Glenn E. Penisten
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
4.2 Registration Rights Agreement dated August 29, 1997 by and
between the Registrant and Miro Computer Products AG.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
23.1 Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see II-4).
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
Between
PINNACLE SYSTEMS, INC.
and
MIRO COMPUTER PRODUCTS AG
Dated as of August 29, 1997
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made effective
as of August 31, 1997, between PINNACLE SYSTEMS, INC., a California corporation
(the "Company"), and MIRO COMPUTER PRODUCTS AG, a corporation organized under
the laws of Germany ("Miro").
RECITALS
A. Pursuant to the terms of the Asset Purchase Agreement dated as of
August 29, 1997 (the "Purchase Agreement"), by and among the Company, Pinnacle
Systems GmbH, Pinnacle Systems C.V., Pinnacle Systems, Ltd. and Miro, Miro shall
acquire from the Company Two Hundred Three Thousand Five Hundred Sixty-Five
(203,565) fully paid and nonassessable shares of the Company's Common Stock, no
par value (the "Pinnacle Shares").
B. The Purchase Agreement provides for the execution and delivery of
this Agreement at the closing of the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and conditions herein and in the Purchase Agreement, the parties
hereto hereby agree as follows:
SECTION 1
REGISTRATION RIGHTS
1.1 Shelf Registration.
(a) Initial Payment Shares. As promptly as practicable and in
any event within 14 days after the issuance of the shares of Pinnacle Common
Stock in connection with the Closing under the Purchase Agreement and pursuant
to Section 2.5(a)(i) of the Purchase Agreement, the Company shall file a
registration statement on Form S-3 under the Securities Act covering such
Pinnacle Shares.
(b) Earnout Payment Shares. As promptly as practicable and in
any event within 14 days after the issuance of shares of Pinnacle Common Stock
in connection with the Earnout Payment (as such term is defined in the Purchase
Agreement) and pursuant to Section 2.5(a)(ii) of the Purchase Agreement, the
Company shall file a registration statement on Form S-3 under the Securities Act
covering such Pinnacle shares.
1
<PAGE>
(c) Obligations of the Company. In connection with any
registration of Registrable Securities pursuant to this Section 1.1, the Company
shall:
(i) Use its commercially reasonable efforts to cause
such registration statement to become effective and to remain effective
until the earlier of (A) the second anniversary of the date of issuance
of the Pinnacle Shares, (B) the sale of all of such shares of
Registrable Securities so registered or (C) such time as all of the
Registrable Securities can be sold by Holders within a three-month
period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144 thereunder.
(ii) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus (the
"Prospectus") used in connection therewith as may be necessary to make
and to keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all securities proposed to be registered in such
registration statement.
(iii) Furnish to the participating Holders or the
underwriters such number of copies of any Prospectus (including any
preliminary Prospectus and any amended or supplemented Prospectus), in
conformity with the requirements of the Securities Act, as the Holders
may reasonably request in order to effect the offering and sale of the
shares of Registrable Securities to be offered and sold, but only while
the Company shall be required under the provisions hereof to cause the
registration statement to remain current.
(iv) Use its best efforts to register or qualify the
shares of Registrable Securities covered by such registration statement
under the securities or Blue Sky laws of such states as the
participating Holders shall reasonably request, maintain any such
registration or qualification current until the earlier of (A) the
second anniversary of the date of this Agreement, (B) the sale of all
the shares of Registrable Securities so registered or (C) such time as
all of the Registrable Securities can be sold by Holders within a
three-month period without compliance with the registration
requirements of the Securities Act pursuant to Rule 144 thereunder;
provided, however, that the Company shall not be required to take any
action that would subject it to the general jurisdiction of the courts
of any jurisdiction in which it is not so subject or to qualify as a
foreign corporation in any jurisdiction where the Company is not so
qualified.
(v) Take all such other action either necessary or
desirable to permit the shares of Registrable Securities held by Miro
(or its permitted assignees) to be registered and disposed of in
accordance with the method of disposition described herein.
(vi) Enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. Each participating Holder participating
in such underwriting shall also enter into and perform its obligations
under any such agreement.
2
<PAGE>
(vii) Cause all Registrable Securities registered
pursuant to this Section 1.1 to be listed on The Nasdaq National Market
or such other exchange as the Company's Common Stock is then listed or
quoted.
(d) Notwithstanding anything else in this Section 1.1, if, at
any time during which a Prospectus is required to be delivered in connection
with the sale of Registrable Securities, the Board of Directors of Pinnacle
determines in good faith that a development has occurred or a condition exists
as a result of which the registration statement or the Prospectus contains or
incorporates by reference a material misstatement or omission, the correction of
which would require the premature disclosure of confidential information that
would, in the good faith determination of the Board of Directors, materially and
adversely affect Pinnacle, Pinnacle will immediately notify the Holders thereof
by telephone and in writing. Upon receipt of such notification, Holders will
immediately suspend all offers and sales of any Registrable Securities pursuant
to the registration statement for a period not to exceed 30 days. Pinnacle may
not exercise this delay right more than once in any twelve (12) month period.
1.2 Company Registration.
(a) If, at any time or from time to time within seven (7)
years after the effective date of the first registration statement for a public
offering of securities of the Company, the Company shall determine to register
any of its securities, whether for its own account in connection with an
offering of its securities to the general public for cash on a form which would
permit the registration of Registrable Securities, other than (i) a registration
relating solely to employee benefit plans on Form S-1 or S-8 or similar forms
which may be promulgated in the future, or (ii) a registration on Form S-4 or
similar form which may be promulgated in the future relating solely to a SEC
Rule 145 transaction, the Company will promptly give to the Holders written
notice thereof and include in such registration (and any related qualification
under Blue Sky laws or other compliance), and in any underwriting involved
therein, all of the Registrable Securities specified in a written request or
requests, made within thirty (30) business days after mailing or personal
delivery of such written notice from the Company by any Holders, except as set
forth in Section 7.4(b). Such written request may specify all or a part of the
Holder's Registrable Securities.
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
1.2(a). In such event the right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned upon such Holder's participating in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company)
enter into an underwriting agreement in the form negotiated by the Company with
the underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.2, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may limit the number of Registrable
Securities to be included in such registration and underwriting to not less than
thirty percent (30%) of the securities sought to be included therein (based on
aggregate market values). The Company shall so
3
<PAGE>
advise all Holders whose securities would otherwise be registered and
underwritten pursuant hereto, and the number of Registrable Securities that may
be included in the registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities entitled to inclusion in such registration held by such
Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, such holder may elect to
withdraw therefrom by written notice to the Company and the underwriter.
(c) In the case of each registration effected by the Company
pursuant to Section 1.2, the Company will keep each Holder participating therein
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense the Company will:
(i) Keep such registration effective for a period of
one hundred twenty (120) days or until the Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; and
(ii) Furnish such number of prospectuses and other
documents incident thereto as a Holder participating in such registration from
time to time may reasonably request.
1.3 Expenses.
(a) All expenses, other than discounts and commissions,
incurred in connection with any registration pursuant to Section 1.1 and Section
1.2 shall be borne by the Company. The costs and expenses of any such
registration shall include, without limitation, the reasonable fees and expenses
of the Company's counsel and its accountants, the reasonable fees and expenses
of one counsel for the Holders and all other costs and expenses of the Company
incident to the preparation, printing and filing under the Securities Act of the
registration statement and all amendments and supplements thereto and the cost
of furnishing copies of each preliminary prospectus, each final prospectus and
each amendment or supplement thereto to underwriters, dealers and other
purchasers of the securities so registered, the costs and expenses incurred in
connection with the qualification of such securities so registered under the
"blue sky" laws of various jurisdictions, the fees and expenses of the Company's
transfer agent and all other costs and expenses of complying with the provisions
of this Section 1 with respect to such registration (collectively, "Registration
Expenses").
(b) Excluding the Registration Expenses, the participating
Holders shall pay all other expenses incurred on their behalf with respect to
any registration pursuant to Section 1.1 or 1.2, including any counsel for the
participating Holders (other than counsel as provided in Section 1.3(a)) and all
underwriting discounts and selling commissions with respect to the Registrable
Securities sold by them pursuant to such registration statement.
1.4 Indemnification.
(a) To the extent permitted by law, the Company will indemnify
each Holder (excluding Holders who are then directors or officers of the
Company), each of their respective officers and
4
<PAGE>
directors, and each person controlling such person, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1, and each underwriter, if any, and each person who controls any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on (i) any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or (ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws or
rule or regulation promulgated thereunder applicable to the Company and relating
to action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such person,
each of its officers and directors, and each person controlling such person,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by an instrument duly executed by such person or underwriter and stated
to be specifically for use therein.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by or issuable to such person are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, its legal counsel, each of its directors and
officers who sign such registration statement, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company within the meaning of the Securities Act and each other
such Holder, each of its officers and directors and each person controlling such
Holder, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on (i) any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or (ii) any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons or
underwriters for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section
1.4 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, if such
counsel is other than counsel named herein, shall be approved
5
<PAGE>
by the Indemnified Party (whose approval shall not unreasonably be withheld),
and the Indemnified Party may participate in such defense at such party's
expense, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall, if such failure is prejudicial to the
Indemnifying Party's ability to defend such action, relieve the Indemnifying
Party of its obligations under this Section 1, but not of any obligation arising
apart from this Section 1. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. If any such Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those available to
the Indemnifying Party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity agreement provided in
this Section 1.5, the Indemnifying Party shall not have the right to assume the
defense of such action on behalf of such Indemnified Party and such Indemnifying
Party shall reimburse such Indemnified Party and any person controlling such
Indemnified Party for that portion of the fees and expenses of any counsel
retained by the Indemnified Party which are reasonably related to the matters
covered by the indemnity agreement provided in this Section 1.4.
1.5 Information by Holder. The Holders whose securities are included in
any registration effected pursuant to this Section 1 shall furnish in writing to
the Company such information regarding such persons and the distribution
proposed by such persons as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1. The Company's obligations under this Section 1
are conditioned upon compliance by such persons with the provisions of this
Section 1.5.
1.6 Sale without Registration. The holder of each certificate
representing securities of the Company required to bear the legend in
substantially the form set forth in Section 6.14 of the Purchase Agreement (or
any similar legend) by acceptance thereof agrees to comply in all respects with
the provisions of this Section 1.6. Prior to any proposed transfer of any
Registrable Securities which shall not be registered under the Securities Act,
the holder thereof shall give written notice to the Company of such holder's
intention to effect such transfer, accompanied by: (a) such information as is
reasonably necessary in order to establish that such transfer may be made
without registration under the Securities Act; and (b) except for transfers
proposed to be made in accordance with SEC Rule 144 (as in effect at the date
hereof and as amended from time to time thereafter) or to any constituent
partner of any Miro, at the expense of the Holder or transferee, an unqualified
written opinion of legal counsel, satisfactory in form and substance to the
Company, to the effect that such transfer may be made without registration under
the Securities Act; provided that nothing contained in this Section 1.6 shall
relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to the other provisions of this
Section 1.
1.7 Transfer of Registration Rights. The rights to cause the Company to
register securities granted by the Company under Sections 1.1 and 1.2 may be
assigned by any Miro to the transferee or assignee of not less than 20% of
Registrable Securities (as adjusted for stock splits and the like) and
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provided that the Company is given written notice of any such transfer within
thirty (30) days of the date of said transfer, stating the name and address of
said transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned and provided further that the
transferee or assignee of such rights is not deemed by the Board of Directors of
the Company, in its reasonable judgment, to be a competitor of the Company and
provided further that the transferee or assignee of such rights assumes in
writing in a form reasonably acceptable to the Company the obligations of Miro
under this Agreement.
1.8 Termination of Registration Rights. The registration rights granted
pursuant to this Section 1 shall terminate as to any Holder at such time as all
Registrable Securities beneficially owned by such Holder can be sold within a
given three-month period without compliance with the registration requirements
of the Securities Act pursuant to Rule 144 and a written opinion to that effect
of legal counsel for the Company delivered to such Holder which shall be
reasonably satisfactory in form and substance to legal counsel for such Holder.
Notwithstanding the foregoing, such registration rights shall terminate seven
(7) years after the effective date of the first registration statement for a
public offering of securities of the Company.
1.9 Sale of Registrable Securities. The sale of Registrable Securities
of any Holder shall be effected through the offices of Hambrecht & Quist.
SECTION 2
MISCELLANEOUS
2.1 Certain Definitions. As used in this Agreement:
(a) The term "beneficially owned" refers to the meaning of
such terms as provided in Rule 13d-3 promulgated under the Exchange Act.
References to ownership of Voting Stock hereunder mean beneficial ownership.
(b) The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any similar federal statute and the rules and
regulations of the SEC thereunder, all as the same shall be in effect from time
to time.
(c) The term "person" shall mean any person, individual,
corporation, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(d) The term "Holder" means Miro and any transferee of
Registrable Securities pursuant to Section 1.8 of this Agreement, provided that
any such person shall cease to be a Holder at such time as the registration
rights to which such person is entitled hereunder terminate pursuant to Section
1.10.
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(e) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
by the SEC of the effectiveness of such registration statement.
(f) The term "Registrable Securities" means (i) the Pinnacle
Shares and (ii) any Common Stock of the Company issued by the Company to Miro in
respect of the Pinnacle Shares upon any stock split, stock dividend,
recapitalization, or similar event; provided, that if, upon any stock dividend,
recapitalization or similar event, the Company issues securities which are not
immediately convertible into Common Stock, the term "Registrable Securities"
shall also include such securities.
(g) The term "Securities Act" means the Securities Act of
1933, as amended, or any similar federal statute and the rules and regulations
of the SEC thereunder, all as the same shall be in effect at the time.
(h) The term "SEC" means the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
2.2 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California as applied to contracts entered
into solely between residents of, and to be performed entirely within, such
state.
2.3 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may not be assigned by a party without
the prior written consent of the other party. This Agreement is not intended and
shall not be construed to create any rights or remedies in any parties other
than Miro and the Company and no person shall assert any rights as third party
beneficiary hereunder.
2.4 Entire Agreement; Amendment. This Agreement contains the
entire understanding and agreement between the parties with regard to the
subject matter hereof and thereof and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
2.5 Notices and Dates. All notices or other communications
required or permitted under this Agreement shall be made in the manner provided
in Section 10.1 of the Purchase Agreement. In the event that any date provided
for in this Agreement falls on a Saturday, Sunday or legal holiday, such date
shall be deemed extended to the next business day.
2.6 Language Interpretation. In the interpretation of this
Agreement, unless the context otherwise requires, (i) words importing the
singular shall be deemed to import the plural and vice versa, (ii) words
denoting gender shall include all genders, (iii) references to persons shall
include corporations or other entities and vice versa, and (iv) references to
parties, sections, schedules, paragraphs and
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exhibits shall mean the parties, sections, schedules, paragraphs and exhibits of
and to this Agreement, unless otherwise indicated by the context.
2.7 Table of Contents; Titles; Headings. The Table of Contents,
titles and headings to Sections herein are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
2.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become a binding agreement when one or more counterparts have been signed
by each party and delivered to the other party.
2.9 Severability. If any provision of this Agreement or portion
thereof is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
"COMPANY" PINNACLE SYSTEMS, INC.,
a California corporation
By: /S/ ARTHUR D. CHADWICK
--------------------------------------------------
Name: Arthur D. Chadwick
--------------------------------------------------
Title: Vice President, Finance and Administration and CFO
--------------------------------------------------
"MIRO" MIRO COMPUTER PRODUCTS AG
a corporation organized under the laws
of Germany
By: /S/ G. BLINN
--------------------------------------------------
Name: G. Blinn
--------------------------------------------------
Title: CFO
--------------------------------------------------
EXHIBIT 5.1
[LETTERHEAD OF WILSON SONSINI GOODRICH & ROSATI]
September 12, 1997
Pinnacle Systems, Inc.
280 North Bernardo Avenue
Mountain View, California 94043
RE: Pinnacle Systems, Inc.; Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on September 12, 1997 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 203,565 shares of your Common Stock, no
par value (the "Shares"), all of which are authorized and have been previously
issued to the Selling Shareholder named therein in connection with the
acquisition by the Company of certain of the assets and assumption of certain
liabilities of the Selling Shareholder and certain wholly-owned subsidiaries of
the Selling Shareholder. The Shares are to be offered by the Selling Shareholder
for sale to the public as described in the Registration Statement. As your
counsel in connection with this transaction, we have examined the proceedings
taken and proposed to be taken in connection with the sale of the Shares.
It is our opinion that, upon completion of the proceedings being taken
or contemplated to be taken prior to the registration of the Shares, including
such proceedings to be carried out in accordance with the securities laws of the
various states, where required, the Shares, when sold in the manner referred to
in the Registration Statement, will be legally and validly issued, fully paid
and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
/s/ WILSON, SONSINI, GOODRICH & ROSATI
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
EXHIBIT 23.1
The Board of Directors
Pinnacle Systems, Inc.:
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Palo Alto, California
September 12, 1997
