EXHIBIT 4.1
DECLARATION OF REGISTRATION RIGHTS
THIS DECLARATION OF REGISTRATION RIGHTS (this "Declaration") is made
effective as of March 29, 2000, between PINNACLE SYSTEMS, INC., a California
corporation ("Pinnacle"), for the benefit of shareholders of Puffin Designs,
Inc., a California corporation (the "Company"), acquiring shares of Pinnacle
Common Stock pursuant to that Agreement and Plan of Reorganization dated as of
March 24, 2000 (the "Reorganization Agreement"), among Pinnacle, Company and
Mont Dragon Acquisition, Inc., a California corporation and wholly-owned
subsidiary of Pinnacle ("Merger Sub"), and in consideration of such
shareholders' approving the Reorganization Agreement and the transactions
contemplated thereby.
SECTION 1
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement:
(a) The term "Effective Time" means the time of acceptance by the
California Secretary of State of the Agreement of Merger.
(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 a (i) a shareholder of the Company to whom
shares of Common Stock of Pinnacle are issued at the Effective Time pursuant to
Section 1.6(a) of the Reorganization Agreement, or (ii) a transferee to whom
registration rights granted under this Declaration are assigned pursuant to
Section 2.8 of this Declaration.
(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 for each Holder the number
of shares of Pinnacle Common Stock issued to such Holder pursuant to the
Reorganization Agreement, and for all Holders the sum of the Registrable
Securities held by them.
(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 United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.2 Reorganization Agreement. Capitalized terms not otherwise defined
herein have the meanings given to them in the Reorganization Agreement.
SECTION 2
REGISTRATION RIGHTS
2.1 Shelf Registration. As promptly as practicable and in any event within
30 days after the issuance of the shares of Pinnacle Common Stock on the
Effective Date and pursuant to Section 1.6(a) of the Reorganization Agreement,
Pinnacle shall file a registration statement on Form S-3 under the Securities
Act covering the Registrable Securities. The offerings made pursuant to such
registration shall not be underwritten.
2.2 Information by Holder. The Holders 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 2.2.
2.3 Obligations of Pinnacle. In connection with any registration of
Registrable Securities pursuant to this Section 2, Pinnacle shall:
(a) Use best efforts prepare and file with the SEC the registration
statement in accordance with Section 2 hereof with respect to the Registrable
Securities and shall use its best efforts to cause such registration statement
to become effective as promptly as practicable after filing and to keep such
registration statement effective until the sooner to occur of (A) the date on
which all Registrable Securities included within such registration statement
have been sold or (B) the first anniversary of the Effective Date.
(b) 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.
(c) Furnish to the participating Holders 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 Pinnacle
shall be required under the provisions hereof to cause the registration
statement to remain effective.
(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, and do any and all other acts or things which may be
necessary or advisable to enable each Holder to consummate the public sale or
other disposition of such Registrable Securities in such state; provided,
however, that Pinnacle 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 Pinnacle is not so qualified.
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(e) Notify each Holder, promptly after it shall receive notice thereof,
of the date and time the registration statement and each post-effective
amendment thereto has become effective or a supplement to any prospectus forming
a part of such registration statement has been filed.
(f) Cause all Registrable Securities registered pursuant to this
Section 2 to be listed on The Nasdaq National Market or such other exchange as
Pinnacle's Common Stock is then listed or quoted.
2.4 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 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 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.
2.5 Expenses.
(a) All 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, the reasonable fees and expenses of one counsel for the Holders 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 expenses incurred on their behalf with respect to any registration
pursuant to Section 2, including any counsel for the participating Holders
(other than counsel as provided in Section 2.5(a)) and all underwriting
discounts and selling commissions with respect to the Registrable Securities
sold by them pursuant to such registration statement.
2.6 Indemnification. In the event of any offering registered pursuant to
this Declaration:
(a) To the extent permitted by law, Pinnacle will indemnify each
Holder, 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 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
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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 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 or action,
provided that Pinnacle 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
Pinnacle 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 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 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
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 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 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 2.6 (the
"Indemnified Party") shall give 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 Declaration, except to the extent, but only to the
extent, that the Indemnifying Party's ability to defend against such claim or
litigation is 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 2.6, the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of
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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 2.6.
(d) In order to provide for just and equitable contribution between
Pinnacle and such Holders in circumstances in which the indemnification
provisions of this Section 2.6 are for any reason insufficient or inadequate to
hold the indemnified party harmless, Pinnacle and such Holders shall contribute
to the aggregate Losses (including any investigation, legal and other fees and
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution actually received from persons other than Pinnacle
and such Holders) to which Pinnacle and one or more of its directors or its
officers who sign such Registration Statement or such Holders or any controlling
person of any of them, or their respective officers, directors or employees may
become subject, under the Securities Act, under any other statute, at common law
or otherwise, insofar as such Losses or actions in respect thereof arise out of,
or are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement or arise out of, or are
based upon, the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading. Such contributions shall be in such amounts that the portion of such
Losses for which each such Holder shall be responsible under this Section 2.6(d)
shall be limited to the portion of such Losses which are directly attributable
to an untrue statement of a material fact or an omission to state a material
fact in said Registration Statement in reliance upon, and in conformity with,
written information furnished to Pinnacle by or on behalf of any such Holder
specifically for use therein, and Pinnacle shall be responsible for the balance
of such Losses; provided, however, that the liability of each such Holder to
make such contribution shall be limited to an amount equal to the proceeds of
the sale of shares of Registrable Securities by such Holder in the offering
which gives rise to the liability (net of underwriting commissions and
disbursements) paid or incurred in connection with the registration, if any, and
sale). As among themselves, such Holders agree to contribute to amounts payable
by other such Holders in such manner as shall, to the extent permitted by law,
give effect to the provisions in Section 2.6(b). Pinnacle and such Holders agree
that it would not be just and equitable if their respective obligations to
contribute pursuant to this Section were to be determined by pro rata allocation
(other than as set forth above) of the aggregate Losses by reference to the
proceeds realized by such Holders in a sale pursuant to said Registration
Statement or said Prospectus or by any other method of allocation which does not
take account of the considerations set forth in this Section 2.6(d). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution under this Section from
any person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of Pinnacle and each Holder under this Section 2.6
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Declaration and otherwise.
2.7 Sale without Registration. The Holder of a certificate representing
Registrable Securities required to bear the legend in substantially the form set
forth in Section 1.8(g) of the Reorganization Agreement (or any similar legend)
by acceptance thereof agrees to comply in all respects with the provisions of
this Section 2.7. 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 New Pinnacle
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
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Act; provided that nothing contained in this Section 2.7 shall relieve Pinnacle
from complying with any request for registration, qualification or compliance
made pursuant to the other provisions of this Section 2.
2.8 Transfer of Registration Rights. The rights to cause Pinnacle to
register securities granted by Pinnacle under this Declaration may be assigned
by any of the New Pinnacle 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 shareholders, partners, retired partners of the Holder (including
spouses and ancestors, lineal descendants, and siblings of such partners 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 Declaration.
SECTION 3
MISCELLANEOUS
3.1 Governing Law. This Declaration 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 the
Company shall be third party beneficiaries to this Declaration.
3.3 Successors and Assigns. This Declaration 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. Holders of a majority of the
Registrable Securities from time to time outstanding may, with the consent of
Pinnacle, amend the registration rights granted hereunder.
3.5 Notices and Dates. All notices or other communications required or
permitted under this Declaration shall be made in the manner provided in Section
9.3 of the Reorganization Agreement. In the event that any date provided for in
this Declaration 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 Declaration 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 Declaration 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: /s/ XXXXXX X. XXXXXXXX
--------------------------------
Xxxxxx X. Xxxxxxxx
Vice President, Finance and
Chief Finance Officer
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