EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made effective
as of April 6, 2000, between PINNACLE SYSTEMS, INC., a California corporation
("Pinnacle") and DAVID ENGELKE, SETH M. HABERMAN and SIMON V. HABERMAN, (Mr.
Engelke and Messrs Haberman are being referred to collectively as the
"Shareholders" and individually as a "Shareholder"), the sole shareholders of
Montage Group Ltd., a New Hampshire corporation ("Montage"), pursuant to the
Stock Acquisition Agreement, (the "Acquisition Agreement").
RECITALS
A. Pursuant to the terms of the Acquisition Agreement, Pinnacle shall
issue to the Shareholders 125,224 shares of common stock of Pinnacle, no par
value (the "Pinnacle Shares"), in connection with the acquisition of all of the
outstanding capital stock of Montage.
B. Section 1.4 of the Acquisition Agreement provides for the execution
and delivery of this Agreement concurrent with the signing of the Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and conditions herein and in the Acquisition Agreement, the parties
hereto hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement:
(a) The term "Effective Time" means October 3, 2000.
(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 non-governmental
entity or any governmental agency, court, authority or other
body (whether foreign, federal, state, local or otherwise).
(d) The term "Holder" means (i) the Shareholders or (ii) a
transferee to whom registration rights granted under this
Agreement are assigned pursuant to Section 2.9 of this
Agreement.
(e) The term "Initial Registrable Securities" means 62,612 of the
Pinnacle Shares issued to the Shareholders pursuant to Section
1.2 of the Acquisition Agreement and shall include all
Pinnacle Shares received by any Holder in respect thereof
pursuant to a stock split, stock dividend or other
recapitalization of Pinnacle or pursuant to any merger,
consolidation or reorganization involving Pinnacle.
(f) The term "First Earnout Registrable Securities" means one-half
of any of the shares issued in connection with an Earnout
Payment made for the First Earnout Period to such Holder
pursuant to Section 1.3 of the Acquisition Agreement and shall
include all Pinnacle Shares received by any Holder in
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respect thereof pursuant to a stock split, stock dividend or
other recapitalization of Pinnacle or pursuant to any merger,
consolidation or reorganization involving Pinnacle.
(g) The term "Second Earnout Registrable Securities" means all of
the shares issued in connection with an Earnout Payment made
for the Second Earnout Period to such Holder Pursuant to
Section 1.3 of the Acquisition Agreement and shall include all
Pinnacle Shares received by any Holder in respect thereof
pursuant to a stock split, stock dividend or other
recapitalization of Pinnacle or pursuant to any merger,
consolidation or reorganization involving Pinnacle.
(h) The term "Pinnacle Public Sale Event" shall mean any sale by
Pinnacle of Common Stock for its own account as contemplated
by Section 2.2 of this Agreement pursuant to an effective
Registration Statement filed by Pinnacle, filed on Form S-1 or
any other form for the general registration of securities with
the SEC (other than a Registration Statement filed by Pinnacle
on either Form S-4 or Form S-8 or any registration in
connection with a standby underwriting in connection with the
redemption of outstanding convertible securities).
(i) The term "Pinnacle Sale Notice" shall mean a written notice of
offering pursuant to SubSection 2.2(b) of this Agreement from
Pinnacle to each Holder stating that Pinnacle proposes to
effect a Pinnacle Public Sale Event and which notice shall
describe the proposed registration and distribution.
(j) 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.
(k) The term "Registrable Securities" means all of the Pinnacle
Shares issued to any Holder pursuant to Section 1.3 of the
Acquisition Agreement, and shall include all Pinnacle Shares
received by any Holder in respect thereof pursuant to a stock
split, stock dividend or other recapitalization of Pinnacle or
pursuant to any merger, consolidation or reorganization
involving Pinnacle.
(l) The term "Registration Statement" shall mean any registration
statement (including the Preliminary Prospectus, the
Prospectus, any amendments (including any post-effective
amendments) thereof, any supplements and all exhibits thereto
and any documents incorporated therein by reference pursuant
to the rules and regulations of the SEC), filed by Pinnacle
with the SEC under the Securities Act in connection with the
SEC provisions of Section 2 of this Agreement.
(m) 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.
(n) The term "SEC" means the United States Securities and Exchange
Commission or any other federal agency at the time
administering the Securities Act.
1.2 Acquisition Agreement. Capitalized terms not otherwise defined
herein have the meanings given to them in the Acquisition Agreement.
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SECTION 2
REGISTRATION RIGHTS
2.1 Shelf Registration.
(i) Initial Registration. Prior to the Effective Time, Pinnacle
shall file a Registration Statement on Form S-3 under the Securities Act
covering all of the Initial Registrable Securities. The offering made pursuant
to such registration shall not be underwritten. Pinnacle shall use its best
efforts to cause such Registration Statement to be declared effective, at its
expense, by the SEC by the Effective Time and to keep such Registration
Statement effective until the sooner to occur of (A) the date on which all
Initial Registrable Securities included within such Registration Statement have
been sold or (B) the first anniversary of the date hereof.
(ii) First Earnout Registration. Within 45 days following the
issuance and delivery of First Earnout Registrable Securities to one or more
Holders pursuant to Section 1.3 of the Acquisition Agreement, if any, Pinnacle
shall file a Registration Statement on Form S-3 under the Securities Act
covering such First Earnout Registrable Securities. The offering made pursuant
to such registration shall not be underwritten. Pinnacle shall use its best
efforts to cause such Registration Statement to be declared effective by the SEC
within 120 days of the issuance of such First Earnout Registrable Securities and
to keep such Registration Statement effective until the sooner to occur of (A)
the date on which all First Earnout Registrable Securities included within such
Registration Statement have been sold or (B) the first anniversary of the date
of issuance of such First Earnout Registrable Securities.
(iii) Second Earnout Registration. Within 45 days following the
issuance and delivery of Second Earnout Registrable Securities to one or more
Holders pursuant to Section 1.3 of the Acquisition Agreement, if any, Pinnacle
shall file a Registration Statement on Form S-3 under the Securities Act
covering such Second Earnout Registrable Securities. The offering made pursuant
to such registration shall not be underwritten. Pinnacle shall use its best
efforts to cause such Registration Statement to be declared effective by the SEC
within 120 days of the issuance of such Second Earnout Registrable Securities
and to keep such Registration Statement effective until the sooner to occur of
(A) the date on which all Second Earnout Registrable Securities included within
such Registration Statement have been sold or (B) the first anniversary of the
date of issuance of such Second Earnout Registrable Securities.
2.2 Pinnacle Public Sale Events.
(a) Determination. Subject to Section 2.5 of this Agreement,
Pinnacle may at any time effect a Pinnacle Public Sale Event pursuant to a
Registration Statement filed by Pinnacle if Pinnacle gives each Holder a
Pinnacle Sale Notice, provided that such Pinnacle Sale Notice is given not less
than 10 days prior to the initial filing of the related Registration Statement.
The obligation of Pinnacle to give to each Holder a Pinnacle Sale Notice and to
permit piggyback registration rights to Holders with respect to Registrable
Securities in connection with Pinnacle Public Sale Events in accordance with
this Section 2.2 shall terminate on the date that is the later of (i) 12 months
from the date hereof or (ii) 12 months following the date on which any Pinnacle
Shares are issued to the Shareholders in connection with an Earnout Payment made
under Section 1.7 of the Acquisition Agreement.
(b) Notice. The Pinnacle Sale Notice shall offer the Holders the
opportunity to participate in such offering and shall include the number of
shares of Registrable Securities that will be available for sale by the Holders
in the proposed offering, which number shall represent the best estimate of the
lead managing underwriter (or, if not known or applicable, Pinnacle) of the
maximum number of shares of Registrable Securities that may be included in the
proposed offering.
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(c) Piggyback Rights of Holders. (A) If Pinnacle shall have
delivered a Pinnacle Sale Notice, Holders shall be entitled to participate on
the same terms and conditions as Pinnacle in Pinnacle Public Sale Event to which
such Pinnacle Sale Notice relates and to offer and sell shares of Registrable
Securities therein only to the extent provided in this Section 2.2(c). Each
Holder desiring to participate in such offering shall notify Pinnacle no later
than five days following receipt of a Pinnacle Sale Notice of the aggregate
number of shares of Registrable Securities that such Holder then desires to sell
in the offering. (B) Each Holder desiring to participate in a Pinnacle Public
Sale Event may include shares of Registrable Securities in any Registration
Statement relating to a Pinnacle Public Sale Event to the extent that the
inclusion of such shares shall not reduce the number of shares of Common Stock
to be offered and sold by Pinnacle to be included therein. If the lead managing
underwriter selected by Pinnacle for a Pinnacle Public Sale Event advises
Pinnacle in writing that the total number of shares of Common Stock to be sold
by Pinnacle together with the shares of Registrable Securities which such
Holders intend to include in such offering would be reasonably likely to
adversely affect the price or distribution of the Common Stock offered in such
Pinnacle Public Sale Event or the timing thereof, then there shall be included
in the offering only that number of shares of Registrable Securities, if any,
that such lead managing underwriter reasonably and in good faith believes will
not jeopardize the marketing of the offering; provided that if the lead managing
underwriter determines that such factors require a limitation on the number of
shares of Registrable Securities to be offered and sold as aforesaid and so
notifies Pinnacle in writing, the number of shares of Registrable Securities to
be offered and sold by Holders desiring to participate in Pinnacle Public Sale
Event, shall be allocated among those Holders desiring to participate in such
Pinnacle Public Sale Event on a pro rata basis based on their holdings of
Registrable Securities. If any Holder does not request inclusion of the maximum
number of shares of Registrable Securities allocated to it pursuant to the
above-described procedure, the remaining portion of its allocation shall be
reallocated among those requesting Holders whose allocation did not satisfy
their requests pro rata on the basis of the number of shares of Registrable
Securities held by such Holders, and this procedure shall be repeated until all
of the shares of Registrable Securities which may be included in the
underwriting have been so allocated. Notwithstanding anything to the contrary
herein, each Holders' right to participate in a Pinnacle Public Sale Event shall
be subject to Section 3.11 of the Stock Restriction and Registration Rights
Agreement dated as of August 2, 1999 between Pinnacle and Hewlett-Packard
Company, which agreement permits the inclusion by one or more Holder of
Registrable Securities in such Pinnacle Public Sale Events only to the extent
that the inclusion of such Registrable Securities will not reduce the amount of
shares of Pinnacle Common Stock held by Hewlett Packard Company, or any
transferee thereof, that Hewlett-Packard Company, or any transferee thereof, is
authorized to include or has included in such Pinnacle Public Sale Event.
(d) Discretion of Pinnacle. In connection with any Pinnacle Public
Sale Event, subject to the provisions of this Agreement, Pinnacle, in its sole
discretion, shall determine whether (a) to proceed with, withdraw from or
terminate such Pinnacle Public Sale Event, (b) to enter into a purchase
agreement or underwriting agreement for such Pinnacle Public Sale Event, and (c)
to take such actions as may be necessary to close the sale of Common Stock
contemplated by such offering, including, without limitation, waiving any
conditions to closing such sale which have not been fulfilled.
(e) Market-Standoff Agreement. In connection with a Pinnacle Public
Sale Event, each Holder agrees, upon the request of Pinnacle or the underwriters
managing any underwritten offering of Pinnacle's securities, not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of Pinnacle (other than those included in the
registration) without the prior written consent of Pinnacle or such
underwriters, as the case may be, for such period of time after the
effectiveness of the Registration Statement as specified by such underwriters,
not to exceed one hundred eighty (180) days; provided that all officers,
directors and 5% stockholders of Pinnacle are bound by and have entered into
similar agreements. Each Holder agrees that Pinnacle may instruct its transfer
agent to place stop-transfer notations in its records to enforce the provisions
of this Section 2.2(e).
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2.3 Information by Holder(s). The Holder(s) whose securities are
included in any registration effected pursuant to this Section 2 shall furnish
in writing to Pinnacle such information regarding such persons and the
distribution proposed by such persons as Pinnacle may request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Section 2. Pinnacle's obligations under this
Section 2 are conditioned upon compliance by such persons with the provisions of
this Section 2.3.
2.4 Obligations of Pinnacle. In connection with any registration of
Registrable Securities pursuant to this Section 2, Pinnacle shall:
(a) 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.
(b) Furnish to the participating Holders such number of copies of
any Prospectus (including any preliminary Prospectus and any amended or
supplemented Prospectus) 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 Pinnacle shall be required under the provisions
hereof to cause a Registration Statement to remain current. In addition, during
such period, Pinnacle shall provide the Holders, without charge, with one copy
of any Registration Statement and any post-effective amendments thereto
(including financial statements and schedules and the exhibits thereto).
(c) Provide to any Holder requesting to include Registrable
Securities in such Registration Statement and any managing underwriter(s)
participating in any distribution thereof and to any attorney, accountant or
other agent retained by such Holder or managing underwriter(s), reasonable
access to appropriate officers and directors of Pinnacle, its independent
auditors and counsel to ask questions and to obtain information (including any
financial and other records and pertinent corporate documents) reasonably
requested by any such Holder, managing underwriter(s), attorney, accountant or
other agent in connection with such Registration Statement or any amendment
thereto, provided, however, that (i) in connection with any such access or
request, any such requesting persons shall cooperate to the extent reasonably
practicable to minimize any disruption to the operation by Pinnacle of its
business and (ii) any records, information or documents shall be kept
confidential by such requesting persons, unless (i) such records, information or
documents are in the public domain or otherwise publicly available or (ii)
disclosure of such records, information or documents is required by court or
administrative order or by applicable law (including, without limitation, the
Securities Act).
(d) 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.
(e) Take all such other action either necessary or desirable to
permit the shares of Registrable Securities held by the Holders to be registered
and disposed of in accordance with the method of disposition described herein.
(f) 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.
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(g) Cause all Registrable Securities registered pursuant to this
Section 2 to be listed on The Nasdaq National Market or on any other exchange on
which Pinnacle's Common Stock is then listed or quoted.
(h) Provide for or designate a transfer agent and registrar (which
may be the same entity) for the Registrable Securities covered by the
Registration Statement from and after the effective date of such Registration
Statement.
(i) Cooperate with the selling Holders of Registrable Securities
and any managing underwriters to facilitate the timely issuance and delivery to
any underwriters to which any Holder may sell Registrable Securities in such
offering certificates evidencing shares of the Registrable Securities not
bearing any restrictive legends and in such denominations and registered in such
names as the managing underwriters may request.
(j) Pinnacle will keep the Holders informed of Pinnacle's best
estimate of the earliest date on which such Registration Statement or any
post-effective amendment thereto will become effective and will notify each
Holder, Holders' Counsel and the managing underwriter(s), if any, participating
in the distribution pursuant to such Registration Statement promptly (i) when
such Registration Statement or any post-effective amendment to such Registration
Statement is filed or becomes effective, (ii) of any request by the SEC for an
amendment or any supplement to such Registration Statement or any related
Prospectus, or any other information request by any other governmental agency
directly relating to the offering, and promptly deliver to each Holder
participating in the offering and the managing underwriter(s), if any, copies of
all correspondence between the SEC or any such governmental agency or
self-regulatory body and all written memoranda relating to discussions with the
SEC or its staff with respect to the Registration Statement or proposed sale of
shares, to the extent not covered by attorney-client privilege or constituting
attorney work product, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or of any order
preventing or suspending the use of any related Prospectus or the initiation or
threat of any proceeding for that purpose, (iv) of the suspension of the
qualification of any shares of Common Stock included in such Registration
Statement for sale in any jurisdiction or the initiation or threat of a
proceeding for that purpose, (v) of any determination by Pinnacle that an event
has occurred (the nature and pendency of which need not be disclosed during a
"black-out period" pursuant to Section 2.5 of this Agreement) which makes untrue
any statement of a material fact made in such Registration Statement or any
related Prospectus or which requires the making of a change in such Registration
Statement or any related Prospectus in order that the same will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
completion of the distribution contemplated by such Registration Statement if it
relates to a Pinnacle Public Sale Event.
(k) In the event of the issuance of any stop order suspending the
effectiveness of such Registration Statement or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any shares of Common Stock included in such Registration Statement for sale in
any jurisdiction, Pinnacle will obtain its withdrawal at the earliest possible
time.
2.5 Suspension of Prospectus. Notwithstanding anything else in this
Section 2, 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 reasonably 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
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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 twice in any 12-month period. In the event of the delivery
of the notice described above by Pinnacle, Pinnacle shall use its best efforts
to amend such Registration Statement and/or amend or supplement the related
prospectus if necessary and to take all other actions necessary to allow the
proposed sale to take place as promptly as possible, subject, however, to the
right of Pinnacle to delay further sales of Registrable Securities until the
conditions or circumstances referred to in the notice have ceased to exist or
have been disclosed.
2.6 Expenses.
(a) All costs and expenses, other than discounts and commissions,
incurred in connection with any registration pursuant to Section 2 shall be
borne by Pinnacle. The costs and expenses of any such registration shall
include, without limitation, the reasonable fees and expenses of Pinnacle's
counsel and its accountants, and all other costs and expenses of Pinnacle
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 Pinnacle's
transfer agent and all other costs and expenses of complying with the provisions
of this Section 2 with respect to such registration (collectively, "Registration
Expenses").
(b) Excluding the Registration Expenses, the participating Holders
shall pay all other fees and expenses incurred on their behalf with respect to
any registration pursuant to this Section 2, including any counsel for the
participating Holders and all underwriting discounts and selling commissions
with respect to the Registrable Securities sold by them pursuant to such
Registration Statement.
2.7 Indemnification. In the event of any offering registered pursuant
to this Agreement:
(a) To the extent permitted by law, Pinnacle will indemnify each
Holder (excluding Holders who are then directors or officers of Pinnacle), each
of their respective officers and directors, and each person controlling such
person, with respect to which registration, qualification or compliance has been
effected pursuant to this Section 2, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages,
liabilities and expenses (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 preliminary or final prospectus, offering circular or other
document (including any related Registration Statement, notification or the
like) or any amendment or supplement thereto 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 Pinnacle of any
rule or regulation promulgated under the Securities Act or any state securities
laws or rule or regulation promulgated thereunder applicable to Pinnacle and
relating to action or inaction required of Pinnacle 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, expense or
action, provided that Pinnacle will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based upon written information
furnished to Pinnacle by an instrument duly executed by such person or
underwriter and stated to be specifically for use therein.
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(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 Pinnacle, its legal counsel, each of its directors and
officers who sign such Registration Statement, each underwriter, if any, of
Pinnacle's securities covered by such a Registration Statement, each person who
controls Pinnacle 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, liabilities and expenses (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, preliminary or final prospectus, offering circular or
other document, or any amendment or supplement thereto, 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
Pinnacle, 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, expense 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, preliminary or final prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to Pinnacle by an instrument duly executed by such Holder
and stated to be specifically for use therein; provided, however, that the
obligations of such Holders hereunder shall be limited to an amount equal to the
gross proceeds before expenses and commissions to each such Holder of
Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 2.7
(the "Indemnified Party") shall give written notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has written notice 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,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably 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 not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is materially impaired as a result of such
failure to give notice. 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 any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
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
2.7, 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 2.7.
(d) The obligations of Pinnacle and each Holder under this Section
2.7 shall survive the completion of any offering of Registrable Securities in a
Registration Statement under this Agreement and otherwise.
2.8 Sale without Registration. The Holder of a certificate representing
Registrable Securities required to bear the legend in substantially the form set
forth in Section 5.2 of the Acquisition Agreement (or
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any similar legend) by acceptance thereof agrees to comply in all respects with
the provisions of this Section 2.8. 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 Pinnacle 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 of the Shareholders, at the expense of the Holder or transferee,
an unqualified written opinion of legal counsel, satisfactory in form and
substance to Pinnacle, to the effect that such transfer may be made without
registration under the Securities Act; provided that nothing contained in this
Section 2.8 shall relieve Pinnacle from complying with any request for
registration, qualification or compliance made pursuant to the other provisions
of this Section 2.
2.9 Transfer of Registration Rights. The rights to cause Pinnacle to
register securities granted by Pinnacle under this Agreement may be assigned by
the Shareholders only if: (i) Pinnacle is, prior to such transfer, furnished
with written notice of the name and address of such transferee and the
Registrable Securities with respect to which such registration rights are being
assigned and a copy of a duly executed written instrument in form reasonably
satisfactory to Pinnacle by which such transferee assumes all of the obligations
and liabilities of its transferor hereunder and agrees itself to be bound
hereby; (ii) such assignment includes all of the Registrable Securities
originally issued to the transferee, or such lesser amount if not less than
10,000 shares of Registrable Securities; provided, however, that such 10,000
share limitation shall not apply to transfers by a Holder to spouses and
ancestors, lineal descendants, and siblings of such Holders or spouses who
acquire Registrable Securities by right, will, or intestate succession, if all
such transferees or assignees agree in writing to appoint a single
representative as their attorney-in-fact for the purpose of receiving any
notices and exercising their rights under this Agreement.
2.10 Rule 144. Pinnacle covenants that it shall file any reports
required to be filed by it under the Exchange Act, and that it shall take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell the Registrable Securities
without registration under the Securities Act within the limitations of the
exemptions provided by (a) Rule 144 under the Securities Act, as such rule may
be amended from time to time, or (b) any similar rule or regulation adopted by
the SEC. Pinnacle shall, upon the request of any Holder of Registrable
Securities, deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 3
MISCELLANEOUS
3.1 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.
3.2 Third Party Beneficiaries. It is intended that the shareholders of
Pinnacle shall be third party beneficiaries to this Agreement.
3.3 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.
3.4 Amendment of Registration Rights. This Agreement may be amended or
modified only by a writing signed by Pinnacle and holders of a majority of the
Registrable Securities from time to time outstanding.
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3.5 Notices and Dates. All notices or other communications required or
permitted under this Agreement shall be made in the manner provided in Section
8.1 of the Acquisition 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.
3.6 Severability. If any provision of this Agreement or portion thereof
is held by a court of competent jurisdiction to be invalid, illegal, 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
"PINNACLE" PINNACLE SYSTEMS, INC.,
a California corporation
By:
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Arthur D. Chadwick, Vice President, Finance
and Chief Financial Officer
"THE SHAREHOLDERS"
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DAVID ENGELKE
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SETH M. HABERMAN
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SIMON V. HABERMAN
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