EXHIBIT 10.26

EXHIBIT 10.26

EXECUTION COPY

PINNACLE SYSTEMS, INC.

DECLARATION OF REGISTRATION RIGHTS

This Declaration of Registration Rights ("Declaration") is made as of
July 25, 2003, by Pinnacle Systems, Inc., a California corporation ("the
Company"), for the benefit of SCM Microsystems, Inc., a Delaware corporation (
"Parent"), acquiring shares of Company Common Stock pursuant to that Asset
Purchase Agreement dated as of June 29, 2003 (the "Agreement"), among the
Company, Parent and Dazzle Multimedia, Inc., a Delaware corporation sometimes
doing business as "Dazzle, Inc." and wholly-owned subsidiary of Parent.

WHEREAS, it is a condition to Parent's obligation to consummate the
transactions contemplated by the Agreement that the Company enter into this
Declaration.

1. Definitions. As used in this Declaration:

(a) "Exchange Act" means the Securities Exchange Act of
1934, as amended.

(b) "Form S-3" means such form under the Securities Act as
is in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the SEC that similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.

(c) "Holder" shall mean (i) Parent or (ii) a transferee of
Registrable Securities to whom registration rights granted under this Agreement
are assigned pursuant to Section 8 of this Agreement.

(d) "Registrable Securities" means the number of shares of
Company Common Stock issued to Parent pursuant to the Agreement at Closing;
provided, however, that such shares of Company Common Stock held by Parent shall
cease to be Registrable Securities (i) after a registration statement on Form
S-3 with respect to the sale of such shares shall have been declared effective
under the Securities Act and such shares shall have been disposed of in
accordance with such registration statement and with Section 2 hereof or (ii)
the one-year anniversary of the Closing Date.

(e) "Securities Act" means the Securities Act of 1933, as
amended.

(f) "SEC" means the United States Securities and Exchange
Commission.

Terms not otherwise defined herein have the meanings given to them in
the Agreement.

2. Registration Statement on Form S-3.

(a) The Company shall use its best efforts to cause the
Registrable Securities to be registered under the Securities Act so as to permit
the resale thereof. In connection therewith, the


Company shall prepare and file with the SEC a registration statement on Form S-3
(or any successor form to Form S-3, or if Form S-3 is not available, another
appropriate form) covering all Registrable Securities within twenty (20) days of
the Closing Date. It shall be a condition precedent to the obligations of the
Company pursuant to this Declaration register the Registrable Securities that
Parent shall provide all such information and materials regarding Parent and
take all such action as may be required under applicable laws and regulations in
order to permit the Company to comply with all applicable requirements of the
Securities Act and the Exchange Act that relate to the Company's ability to file
and have declared effective a registration statement pursuant to this
Declaration, and to obtain any desired acceleration of the effective date of
such registration statement. The offerings made pursuant to such registration
shall not be required to be underwritten.

(b) The Company shall (i) prepare and file with the SEC
the registration statement in accordance with Section 2(a) 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 shall request acceleration of effectiveness of such registration
statement by the SEC no later than forty-eight (48) hours after receiving notice
from the SEC that it will not review the registration statement or that any SEC
comments have been resolved to the satisfaction of the SEC) and to keep such
registration statement effective until the earliest to occur of (A) the date on
which all Registrable Securities included within such registration statement
have been sold or (B) the one-year anniversary of the Closing Date; provided,
however, that the Company shall not be obligated to have the registration
statement declared effective by the SEC until after it shall have publicly
released its earnings for the quarter ended June 30, 2003; (ii) prepare and file
with the SEC such amendments to such registration statement and amendments or
supplements to the prospectus used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities registered by such registration statement;
(iii) furnish to Parent 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, and such other documents, as Parent
may reasonably request in order to effect the offering and resale of the
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 effective; (iv) register or qualify the Registrable Securities covered by
such registration statement under the securities or blue sky laws of such
jurisdictions as Parent shall reasonably request (provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdiction where it has not been qualified or is not otherwise subject to
a general consent for service of process), and do any and all other acts or
things which may be necessary or advisable to enable Parent to consummate the
public sale or other disposition of such Registrable Securities in such
jurisdictions; and (v) notify Parent, 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.

3. S-3 Eligibility. As of the date hereof, the Company meets the
"Registrant Requirements" for eligibility to use Form S-3 as set forth in
Section I. A. of the General Instructions to Form S-3.

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4. Suspension of Prospectus. Under any registration statement
filed pursuant to Section 2 hereof, the Company may restrict disposition of
Registrable Securities, and Parent will not be able to dispose of such
Registrable Securities, if the Company shall have delivered a notice in writing
to Parent stating that a delay in the disposition of such Registrable Securities
is necessary because the Company, in its reasonable judgment, has determined in
good faith that such sales would require public disclosure by the Company of
material nonpublic information that is not included in such registration
statement and that immediate disclosure of such information would be materially
detrimental to the Company. In the event of the delivery of the notice described
above by the Company, the Company shall use its reasonable 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 the
Company 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. Such right to delay sales of Registrable Securities shall not be
exercised by the Company more than two times in any four (4) month period and
shall not exceed sixty (60) days in the aggregate (during the period the
registration statement is otherwise required to remain effective specified in
Section 2(b) above) and no longer than thirty (30) days as to any single delay.
The provisions set forth in this Section 4 shall have no adverse effect upon,
nor compromise, the rights of Parent under Section 2.12(a)(iii) of the
Agreement.

5. Expenses. All of the out-of-pocket expenses incurred in
connection with any registration of Registrable Securities pursuant to this
Declaration, including, without limitation, all SEC, Nasdaq National Market and
blue sky registration and filing fees, printing expenses, transfer agents' and
registrars' fees and the reasonable fees and disbursements of the Company's
outside counsel and independent accountants shall be paid by the Company. The
Company shall not be responsible for any legal fees or any selling expenses of
Parent incurred in connection with the registration or, subject to Section 6
hereof, the resale of Registrable Securities pursuant to this Declaration
(including, without limitation, any broker's fees or commissions); provided that
nothing in this Section 5 shall have an adverse effect upon, nor compromise, the
rights of Parent under Section 2.12(d) of the Agreement. Notwithstanding the
foregoing, in the event that at the Company's election the resale of the
Registrable Securities occurs in a registration conducted as a firm commitment
underwritten offering, the Company shall also pay the underwritten discounts and
commissions of any Registrable Securities of Parent if it participates therein.

6. Sale Without Registration. The Holder of a certificate
representing Registrable Securities required to bear the legend in substantially
the form set forth in Section 3.17 of the Agreement by acceptance thereof agrees
to comply in all respects with the provisions of this Section 6. Prior to any
proposed sale or 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: (i) such information as is reasonably necessary in order to
establish that such transfer may be made without registration under the
Securities Act; and (ii) 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), upon request and at the expense of the Company, a customary
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;

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provided, however, that, notwithstanding anything to the contrary herein, the
Company shall not be required to incur any expense in connection with a written
opinion of legal counsel required for a "section 4(1-1/2)" private resale of
Registrable Securities (other than a "section 4(1-1/2)" private resale in
connection with a Private Sale pursuant to Section 2.12 of the Agreement);
provided, further, that nothing contained in this Section 6 shall relieve the
Company from complying with any request for registration, qualification or
compliance made pursuant to the other provisions of Section 2 of this Agreement.

7. Indemnification. In the event of any offering registered
pursuant to this Declaration:

(a) the Company will indemnify Parent, each of its
officers, directors and partners and Parent's legal counsel, and each person
controlling Parent within the meaning of Section 15 of the Securities Act (each,
a "Seller Indemnified Party"), with respect to which registration, qualification
or compliance has been effected pursuant to this Declaration, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on 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 any violation by the Company of any
rule or regulation promulgated under the Securities Act, or state securities
laws, or common law, applicable to the Company in connection with any such
registration, qualification or compliance, and will reimburse each Seller
Indemnified Party for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable to any Seller Indemnified Party to the extent that any such claim, loss,
damage, liability or expense arises out of or is based in any untrue statement
or omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished by any Seller Indemnified Party
to the Company in an instrument duly executed by such Seller Indemnified Party
and stated to be specifically for use therein.

(b) Parent will indemnify the Company, each of its
directors and officers who has signed any registration statement made effective
pursuant to the obligations hereunder and its legal counsel and independent
accountants (each, a "Company Indemnified Party"), against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or 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 each Company Indemnified Party 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

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Parent and stated to be specifically for use therein; provided, however, that
the obligations of Parent hereunder shall be limited to an amount equal to the
gross proceeds (after deducting reasonable commissions) received by Parent of
Registrable Securities sold as contemplated herein.

(c) If the indemnification provided for in this Section 7
is for any reason not available to a party entitled to indemnification under
this Section 7 (the "Indemnified Party") with respect to any loss, liability,
claim, damage, or expense referred to therein as a result of a judicial
determination that such indemnification may not be enforced, in such case
notwithstanding this Declaration to the contrary, the party required to provide
indemnification (the "Indemnifying Party"), in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or the alleged untrue statement of a material fact or the
omission or the alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation and provided, further that the
liability of Parent or any permitted transferee of the registration rights
granted hereunder this Section 7(c) shall not exceed the proceeds from the
offering received by Parent or any permitted transferee of the registration
rights granted hereunder, prior to deduction of any commissions, transfer taxes
or other selling expenses incurred with respect to such sale.

(d) Each Indemnified Party shall give notice to the
Indemnifying Party promptly after such Indemnified Party has written notice of
any claim or potential claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or
potential 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 compared 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.

(e) The obligations of Parent and Company under this
Section 7 shall survive the completion of any offering of Registrable Securities
in a registration statement under this Declaration and otherwise.

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8. Limitation on Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities pursuant to this
Declaration may not be assigned by Parent unless such a transfer is (a) to an
Affiliate (as defined pursuant to Rule 144 of the Securities Act) and such
assignment includes all of the Registrable Securities then held by the
transferor or (b) in connection with a Private Sale (as defined in the
Agreement) of Registrable Securities pursuant to Section 2.12 of the Agreement.
Prior to a permitted transfer of registration rights under this Declaration,
Parent must furnish the Company with written notice of the name and address of
such proposed 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 the Company by which such
transferee assumes all of the obligations and liabilities of its transferor
hereunder and agrees itself to be bound hereby. No transfer of registration
rights under this Declaration shall be permitted if immediately following such
transfer the disposition of such Registrable Securities by the transferee is not
restricted under the Securities Act.

9. Termination of Registration Rights. The registration rights
set forth in this Agreement shall terminate with respect to the Company Common
Stock issued pursuant to the Agreement (and the right to transfer such shares of
the Company Common Stock pursuant to the registration statement under which such
shares of the Company Common Stock were registered shall terminate) immediately
upon the earliest to occur of (i) the date on which such shares cease to be
Registrable Securities, (ii) the one (1) year anniversary of the issuance of
such shares pursuant to the Agreement and (iii) the date that all parties hereto
agree in writing to so terminate this Agreement; provided, however, that no such
termination shall affect (i) any liability of the Company for any prior breach
of the registration rights of the Holders set forth herein or (ii) the
indemnification obligations of the Company and of a Holder pursuant to Section 7
of this Agreement.

10. Information. Parent shall furnish to the Company such
information regarding Parent, the Registrable Securities held by Parent and the
distribution proposed by Parent as the Company may reasonably request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to in this Declaration.

11. Reports Under Exchange Act. Subject to Section 2 of this
Agreement, the Company agrees to:

(a) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and

(b) furnish to Parent, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, or that it qualifies as
a registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), and (ii) a copy of the most recent annual or quarterly
report of the Company.

12. Amendment of Registration Rights. The registration rights
granted hereunder may not be amended without the mutual written consent of
Parent and the Company.

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13. Governing Law. This Declaration shall be governed in all
respects by and construed in accordance with the laws of the State of
California.

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EXECUTION COPY

IN WITNESS WHEREOF, this Declaration of Registration Rights is executed
as of the date first above written.

PINNACLE SYSTEMS, INC.

By: /s/ Arthur D. Chadwick
---------------------------------
Arthur D. Chadwick
Vice President of Finance and
Chief Financial Officer

SCM MICROSYSTEMS, INC.

By: Robert Schneider
---------------------------------
Name: Robert Schneider
Title: CEO

[SIGNATURE PAGE TO DECLARATION OF REGISTRATION RIGHTS]