SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment no. __)
Filed by the Registrant [ ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
PINNACLE SYSTEMS, INC.
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(Name of Registrant as Specified in Its Charter)
PINNACLE SYSTEMS, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
PRELIMINARY COPY
Filed March 26, 1999
[PINNACLE SYSTEMS LOGO]
TO THE SHAREHOLDERS:
The Board of Directors of Pinnacle Systems, Inc. (the "Company") has
called a Special Meeting of Shareholders (the "Special Meeting") as described in
the enclosed Notice of Special Meeting of Shareholders and Proxy Statement. At
the Special Meeting, the Shareholders will be asked to (i) approve an amendment
to the Company's Articles of Incorporation to increase the number of shares of
Common Stock that the Company is authorized to issue, from 15,000,000 to
30,000,000 shares and (ii) to approve an amendment of the Company's Bylaws to
increase to nine the maximum number of directors on the Board of Directors.
Although you are entitled to attend the Special Meeting and to vote in
person, we encourage you to complete, sign and date the enclosed Proxy as
promptly as possible and return it in the enclosed envelope.
Arthur D. Chadwick
Secretary
<PAGE>
PRELIMINARY COPY
Filed March 26, 1999
PINNACLE SYSTEMS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held May 11, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
PINNACLE SYSTEMS, INC., a California corporation (the "Company"), will be held
on Tuesday, May 11, 1999, at 9:00 a.m., local time, at the Company's principal
executive offices, 280 North Bernardo Avenue, Mountain View, California, for the
following purposes:
1. To approve an amendment to the Company's Articles of
Incorporation to increase the number of shares of Common Stock
that the Company is authorized to issue from 15,000,000 to
30,000,000.
2. To approve an amendment to the Company's Bylaws to increase to
nine the maximum number of directors on the Board of
Directors.
3. To transact such other business as may properly come before
the Special Meeting, including any motion to adjourn to a
later date to permit further solicitation of proxies if
necessary, or before any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on March 31, 1999 are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
Arthur D. Chadwick
Secretary
Mountain View, California
April 7, 1999
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YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU
ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
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<PAGE>
PINNACLE SYSTEMS, INC.
---------------------------
PROXY STATEMENT FOR
SPECIAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
PINNACLE SYSTEMS, INC., a California corporation (the "Company" or "Pinnacle"),
for use at the a Special Meeting of Shareholders (the "Special Meeting") to be
held Tuesday, May 11, 1999, at 9:00 a.m., local time, or at any adjournment
thereof, for the purposes set forth herein and in the accompanying Notice of
Special Meeting of Shareholders. The Special Meeting will be held at the
Company's principal executive offices located at 280 North Bernardo Avenue,
Mountain View, California 94043, and its telephone number at that location is
(650) 237-1600.
These proxy solicitation materials were first mailed on or about April
7, 1999 to all shareholders entitled to vote at the meeting.
Record Date and Principal Share Ownership
Shareholders of record at the close of business on March 31, 1999 (the
"Record Date") are entitled to notice of and to vote at the meeting. The Company
has one series of common shares outstanding, designated Common Stock, no par
value. At the Record Date, ________ shares of the Company's Common Stock were
issued and outstanding and held of record by ___ shareholders. No shares of the
Company's Preferred Stock were outstanding.
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company as of March 31, 1999 as to
(i) each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, (ii) each director of the Company, (iii)
the Chief Executive Officer of the Company and the next four most highly
compensated executive officers of the Company during the fiscal year ended June
30, 1998 and (iv) all directors and executive officers as a group.
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<TABLE>
<CAPTION>
Common Stock Approximate
Five Percent Shareholders, Directors Beneficially Percentage
and Certain Executive Officers Owned(1) Owned (2)
------------------------------ -------- ---------
<S> <C> <C>
Morgan Stanley Dean Witter & Co. (3) ................................................. 736,000 6.6%
1585 Broadway
New York, NY 10036
Entities affiliated with Putnam Investments, Inc. (4) ................................ 665,656 6.0%
One Post Office Square
Boston, Massachusetts 02109
Mark L. Sanders ...................................................................... 163,020 1.4%
Ajay Chopra .......................................................................... 119,456 1.1%
Charles J. Vaughan ................................................................... 47,410 *
William Loesch ....................................................................... 33,665 *
Glenn E. Penisten .................................................................... 29,464 *
Nyal D. McMullin ..................................................................... 15,475 *
Robert Wilson ........................................................................ 24,925 *
John Lewis ........................................................................... 6,875 *
Kevin Hunt ........................................................................... 1,749 *
L. Gregory Ballard ................................................................... 625 *
All directors and executive officers as a group (16 persons) ......................... 568,927 5.1%
<FN>
- -------------
Less than 1%
(1) Includes the following shares subject to options to purchase shares of
Common Stock that are currently exercisable or will be exercisable within
60 days of March 31, 1999: Mark L. Sanders (123,605); Ajay Chopra (50,915);
Charles Vaughan (6,875); William Loesch (32,915); Glenn E. Penisten
(6,875); Nyal D. McMullin (6,875); Robert Wilson (23,438); John Lewis
(6,875); Kevin Hunt (1,749); L. Gregory Ballard (625) and for all directors
and officers as a group (380,175).
(2) Applicable percentage of ownership is based on 11,050,160 shares of Common
Stock outstanding as of March 31, 1999 together with applicable options for
such shareholder. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission, and includes voting and
investment power with respect to shares. Shares of Common Stock subject to
options currently exercisable or exercisable within 60 days after March 31,
1999 are deemed outstanding for computing the percentage ownership of the
person holding such options, but are not deemed outstanding for computing
the percentage of any other person.
(3) Reflects ownership as reported on Schedule 13G dated February 2, 1999 filed
with the Securities and Exchange Commission by Morgan Stanley Dean Witter &
Co. relating to accounts managed on a discretionary basis by Morgan Stanley
Dean Witter & Co. which are known to have the right to or power to direct
the receipt of dividends from or the proceeds from the sale of such
securities.
(4) Reflects ownership as reported on Schedule 13G/A dated February 11, 1999
filed with the Securities and Exchange Commission by Putnam Investments,
Inc. Putnam Investments, Inc. ("PI"), which is a wholly-owned subsidiary of
Marsh & McLennan Companies, Inc. ("MMC"), wholly owns two registered
investment advisors, Putnam Investment Management, Inc. ("PIM") and The
Putnam Advisory Company, Inc. ("PAC"). PIM has shared dispositive power
over 517,114 shares of the Company's Common Stock and PAC has shared
dispositive power over 148,542 shares of the Company's Common Stock (and
shared voting power over 93,800 of such shares). Pursuant to Rule 13(d)-4,
MMC and PI declared that the filing of the 13G should not be deemed an
admission by either or both of them that they are, for the purposes of
Section 13(d) or 13(q) the beneficial owner of the shares beneficially
owned by PAC or PIM and that neither of them have any power to vote or
dispose of, or direct the voting or disposition of, any of the shares
beneficially owned by PAC or PIM. The address for Marsh & McLennan
Companies, Inc. is 1166 Avenue of the Americas, New York, New York 10036.
</FN>
</TABLE>
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Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or attending the meeting and voting in person.
Voting and Solicitation
Each shareholder is entitled to one vote for each share of Common Stock
held by the shareholder on the Record Date. A quorum comprising the holders of a
majority of the outstanding shares of Common Stock on the Record Date must be
present or represented for the transaction of business at the Special Meeting.
Abstentions and broker nonvotes will be counted in establishing the quorum.
This solicitation of proxies is made by the Company, and all related
costs will be borne by the Company. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally or by
telephone or telegram.
Deadline for Receipt of Shareholder Proposals for 1999 Annual Meeting
Shareholders are entitled to present proposals for action at a
forthcoming meeting if they comply with the requirements of the proxy roles
promulgated by the Securities and Exchange Commission. Proposals of shareholders
of the Company that are intended to be presented by such shareholders at the
Company's 1999 Annual Meeting of Shareholders must be received by the Company no
later than May 19, 1999 in order that they may be considered for inclusion in
the proxy statement and form of proxy relating to that meeting. If a shareholder
intends to submit a proposal at the 1999 Annual Meeting, which is not eligible
for inclusion in the proxy statement and form of proxy relating to that meeting,
the shareholder must do so no later than August 2, 1999. If such shareholder
fails to comply with the foregoing notice provisions, the proxy holders will be
allowed to use their discretionary voting authority when the proposal is raised
at the 1999 Annual Meeting.
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<PAGE>
PROPOSAL ONE
AMENDMENT OF ARTICLES OF INCORPORATION
Introduction
The Company's Articles of Incorporation, as currently in effect (the
"Articles"), provide that the Company's authorized capital stock shall consist
of 15,000,000 shares of Common Stock (the "Common Stock"), no par value, and
5,000,000 shares of Preferred Stock, (the "Preferred Stock"), no par value.
On March 24, 1998, the Company's Board of Directors authorized an
amendment of the Articles (the "Amendment"), subject to shareholder approval, to
increase the number of shares of Common Stock authorized for issuance under the
Articles by 15,000,000 shares to a total of 30,000,000 shares. If the Amendment
is adopted, it will become effective upon the filing of the Amendment with the
Secretary of State of the State of California. Under the proposed amendment,
paragraphs (A) and (B) of Article III of the Articles would be amended to read
as follows:
(A) This corporation is authorized to issue 35,000,000 shares of its
capital stock, which shall be divided into two classes known as
"Common Stock" and "Preferred Stock."
(B) The total number of Common Stock which this corporation is
authorized to issue is 30,000,000 and the total number of
Preferred Stock which this corporation is authorized to issue
is 5,000,000."
The shareholders are being asked to approve such Amendment. The
authorized but unissued shares of Common Stock would be available for issuance
from time to time for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further action by the
shareholders, except for those instances in which applicable law or stock
exchange rules require shareholder approval.
Current Use of Shares
As of the Record Date, the Company has approximately 11,050,200 shares
of Common Stock outstanding and approximately ______________ shares reserved for
issuance under the Company's employee stock plans, of which, approximately
___________ are covered by outstanding options and approximately ____________
are available for grant or purchase. Additionally, 25,000 shares are reserved
for issuance upon conversion of the Series A Participating Preferred Stock that
has been reserved in connection with the Company's preferred share rights plan.
Therefore, the Company's total share requirement as of the Record Date was
______________ shares (the "Share Requirement").
Purpose of the Proposed Amendment
The Board of Directors believes that it is in the Company's best
interest to increase the number of authorized shares of Common Stock in order to
have additional authorized but unissued shares available for issuance to meet
business needs as they arise without the expense and delay of a special meeting
of shareholders. The Board of Directors believes that the availability of such
additional shares of Common Stock will provide the Company with the flexibility
to issue Common Stock for proper corporate purposes that may be identified in
the future. Such future activities may include, without limitation, raising
equity capital, adopting additional employee stock plans or reserving additional
shares for issuance under its existing employee stock plans, and making
acquisitions through the use of stock. Other than as permitted or required under
the Company's existing employee stock plans and outstanding options, the Board
of Directors has no immediate plans, understandings, agreements or commitments
to issue additional shares of Common Stock for any purposes.
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<PAGE>
The Board of Directors believes that the proposed increase in the
authorized Common Stock will make a sufficient number of shares available,
should the Company decide to use its shares for one or more of such previously
mentioned purposes or otherwise. The Company reserves the right to seek a
further increase in authorized shares from time to time in the future as
considered appropriate by the Board of Directors.
Possible Effects of the Proposed Amendment
If the stockholders approve the proposed Amendment, the Board of
Directors may cause the issuance of additional shares of Common Stock without
further vote of the shareholders of the Company, except as provided under
California corporate law or under the rules of any national securities exchange
on which shares of Common Stock of the Company are then listed. Under the
Company's Articles, the Company's shareholders do not have preemptive rights to
subscribe to additional securities which may be issued by the Company, which
means that current shareholders do not have a prior right to purchase any new
issue of capital stock of the Company in order to maintain their proportionate
ownership of the Company's Common Stock. In addition, if the Board of Directors
elects to issue additional shares of Common Stock, such issuance could have a
dilutive effect on the earnings per share, voting power and shareholdings of
current shareholders.
In addition to the corporate purposes discussed above, the proposed
Amendment could, under certain circumstances, have an anti-takeover effect,
although this is not the intent of the Board of Directors. For example, it may
be possible for the Board of Directors to delay or impede a takeover or transfer
of control of the Company by causing such additional authorized shares to be
issued to holders who might side with the Board in opposing a takeover bid that
the Board of Directors determines is not in the best interests of the Company
and its shareholders. The Amendment therefore may have the effect of
discouraging unsolicited takeover attempts. By potentially discouraging
initiation of any such unsolicited takeover attempt, the proposed Amendment may
limit the opportunity for the Company's shareholders to dispose of their shares
at the higher price generally available in takeover attempts or that may be
available under a merger proposal. The proposed Amendment may have the effect of
permitting the Company's current management, including the current Board of
Directors, to retain its position, and place it in a better position to resist
changes that stockholders may wish to make if they are dissatisfied with the
conduct of the Company's business. However, the Board of Directors is not aware
of any attempt to take control of the Company and the Board of Directors has not
presented this proposal with the intent that it be utilized as a type of
anti-takeover device.
The Company adopted a Preferred Shares Rights Agreement in December
1996, as amended in May 1998 (the "Rights Agreement"). The Rights Agreement is
designed to protect shareholders from proposed takeovers and other abusive
takeover tactics, which the Board of Directors believes are not in the best
interest of shareholders, by providing shareholders with certain rights to
acquire capital stock of the Company or of an acquiring entity upon the
occurrence of certain events. A copy of the Rights Agreement was filed (as
amended and restated) on May, 19, 1998. Although the Rights Agreement provides
for the issuance of the Company's Preferred Stock in the event rights become
exercisable under the terms of the Rights Agreement, the Company may, under
certain circumstances, be required to issue a substantial number of shares of
Common Stock. A failure to have a sufficient number of shares available could
result in a delay or failure of implementation of the Rights Agreement. An
increase in the authorized number of shares of Common Stock could therefore make
a change in control of the Company more difficult by facilitating the operation
of the Rights Agreement.
Vote Required; Recommendation of the Board of Directors
Affirmative votes constituting a majority of the shares of outstanding
Common Stock on the Record Date and entitled to vote will be required to approve
the Amendment to the Company's Articles. Since the required vote of the
shareholders is based upon the number of outstanding shares of Common Stock,
rather than on shares actually voted, the failure by the holder of any such
shares to submit a proxy or to vote in person at the Special Meeting, including
Abstentions and "broker non-votes" will have the same effect as a vote against
the
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<PAGE>
approval of the amendment to the Articles. Upon the execution and return of the
enclosed form of Proxy, the shares represented thereby will be voted in
accordance with the terms of the Proxy, unless the Proxy is revoked. If no
directions are indicated in such Proxy, the shares represented thereby will be
voted "FOR" the approval of the proposed Amendment.
The Company's Board of Directors recommends that shareholders vote "FOR"
the Amendment to the Articles of Incorporation.
6
<PAGE>
PROPOSAL TWO
AMENDMENT TO THE COMPANY'S BYLAWS
At the Special Meeting, shareholders are being asked to approve an
amendment of the Company's Bylaws to authorize an increase in the maximum number
of directors authorized to serve on the Board of Directors. The Company's Bylaws
currently authorize a maximum number of seven directors to serve on the Board of
Directors. By resolution of the Board of Directors, the exact number of
directors has been set at seven. The Company's Board of Directors has adopted,
subject to shareholder approval, an amendment to the Bylaws that would increase
the maximum number of directors authorized to serve on the Company's Board of
Directors to nine.
If the proposal to amend the Bylaws is approved, Section 3.2 of Article
III of the Company's Bylaws would be amended and restated in its entirety as
follows:
"3.2 Number of Directors. The number of directors of
the corporation shall be not less than five (5) nor more than
nine (9). The exact number of directors shall be eight (8)
until changed, within the limits specified above, by a By-Law
amending this Section 3.2, duly adopted by the board of
directors or by the shareholders. The indefinite number of
directors may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted
amendment to the articles of incorporation or by an amendment
to this by-law adopted by the vote or written consent of
holders of a majority of the outstanding shares entitled to
vote; provided, however, that an amendment reducing the fixed
number or the minimum number of directors to a number less
than five (5) cannot be adopted if the votes cast against its
adoption at a meeting, or the shares not consenting in the
case of an action by written consent, are equal to more than
sixteen and two-thirds percent (16 2/3%) of the outstanding
shares entitled to vote thereon.
No reduction of the authorized number of directors
shall have the effect of removing any director before the
director's term of office expires."
Purpose of the Amendment
The purpose of the Amendment to the Bylaws is to provide the Board of
Directors with flexibility to select additional directors who might add valuable
experience to the Board of Directors without having to have a current director
resign.
Vote Required; Recommendation of the Board of Directors
Affirmative votes of a majority of the shares of outstanding Common
Stock on the Record Date and entitled to vote will be required to approve the
amendment to the Bylaws. Since the required vote of the shareholders is based
upon the number of outstanding shares of Common Stock, rather than upon the
shares actually voted, the failure by the holder of any such shares to submit a
proxy or to vote in person at the Special Meeting, including abstentions and
"broker non-votes", will have the same effect as a vote against the approval of
the amendment to the Bylaws.
The Company's Board of Directors recommends that shareholders vote "FOR"
the Amendment to the Bylaws.
7
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: April 7, 1999
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<PAGE>
PRELIMINARY COPY
March 26, 1999
PROXY
PINNACLE SYSTEMS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS MAY 11, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of PINNACLE SYSTEMS, INC., a California
corporation, hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and Proxy Statement, each dated April 7, 1999, and hereby appoints
Mark L. Sanders and Arthur D. Chadwick, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Special Meeting of
Shareholders of PINNACLE SYSTEMS, INC. to be held on May 11, 1999 at 9:00 a.m.,
local time, at the Company's principal executive offices, 280 North Bernardo
Avenue, Mountain View, California 94043 and at any adjournment or adjournments
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
on the reverse side.
1. Proposal to approve the amendment of the Company's Articles of Incorporation
to increase the number of shares of Common Stock that the Company is authorized
to issue from 15,000,000 to 30,000,000.
[_] FOR [_] AGAINST [_] ABSTAIN
2. Proposal to approve an amendment to the Company's Bylaws to increase to nine
the maximum number of directors on the Board of Directors.
[_] FOR [_] AGAINST [_] ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting, including any motion to adjourn to a later date to
permit for the solicitation of proxies or before any adjournment or adjournments
thereof.
Both of such attorneys or substitutes (if both are present and acting at said
meeting or any adjournment(s) thereof, or, if only one shall be present and
acting, then that one) shall have and may exercise all of the powers of said
attorneys-in-fact hereunder.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_]
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION AND
FOR THE AMENDMENT OF THE COMPANY'S BYLAWS, OR AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, INCLUDING, AMONG
OTHER THINGS, CONSIDERATION OF ANY MOTION MADE FOR ADJOURNMENT OF THE MEETING.
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<PAGE>
Dated:___________________________________________
_________________________________________________
Signature
_________________________________________________
Signature
(This Proxy should be marked, dated and signed by the shareholders(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
10
