REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made effective
as of March 29, 2000, between PINNACLE SYSTEMS,  INC., a California  corporation
("Pinnacle"),  DAVID ENGELKE,  BRYAN ENGELKE (Messrs.  Engelke being referred to
collectively as the  "Shareholders"  and individually as a  "Shareholder"),  the
sole  shareholders of Digital Editing  Services,  Inc., a Delaware  corporation,
pursuant to the Agreement and Plan of Merger, (the "Merger Agreement").

                                    RECITALS

         A. Pursuant to the terms of the Merger Agreement,  Pinnacle shall issue
to the  Shareholders  287,752  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 DES.

         B. Section 5.2 of the Merger  Agreement  provides for the execution and
delivery  of this  Agreement  at the  closing of the  transactions  contemplated
thereby.

         NOW, THEREFORE,  in consideration of the  representations,  warranties,
covenants and conditions herein and in the Merger 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 June 27, 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 161,861
Pinnacle  Shares  issued to such  Holder  pursuant  to Section 1.3 of the Merger
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.


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                 (f) The term "Earnout Registrable  Securities" means all of the
shares issued in connection  with any Earnout Payment to such Holder pursuant to
Section  1.7 of the Merger  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.

                 (g) 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).

                 (h) 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.

                 (i) 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.

                 (j) The term "Registrable Securities" means all of the Pinnacle
Shares  issued to any  Holder  pursuant  to  Sections  1.3 and 1.7 of the Merger
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.

                 (k)  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.

                 (l) 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.

                 (m) 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 Merger  Agreement.  Capitalized  terms not otherwise defined herein
have the meanings given to them in the Merger 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) Earnout  Registration.  In  addition,  within 30
days  following the issuance and delivery of Earnout  Registrable  Securities to
one or more  Holders  pursuant to Section 1.7 of the Merger  Agreement,  if any,
Pinnacle  shall file a  Registration  Statement on Form S-3 under the Securities
Act covering such 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
90 days of the issuance of such Earnout Registrable  Securities and to keep such
Registration  Statement  effective  until the sooner to occur of (A) the date on
which all Earnout  Registrable  Securities  included  within  such  Registration
Statement have been sold or (B) the first anniversary of the date of issuance of
such 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 Merger 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.

                 (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


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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


<PAGE>


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).

         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).


<PAGE>


                 (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.

                 (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


<PAGE>


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 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").


<PAGE>


                 (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.

                 (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


<PAGE>


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  5.3 of the  Merger  Agreement  (or 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


<PAGE>


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.

         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 Merger  Agreement.  In the


<PAGE>


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.


<PAGE>



         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/ Arthur D. Chadwick
                                          --------------------------------------
                                          Arthur D. Chadwick,  Vice  President,
                                          Finance and Chief Financial Officer




 "THE SHAREHOLDERS"                        /s/ David Engelke
                                          --------------------------------------
                                           DAVID ENGELKE


                                           /s/ Bryan Engelke
                                          --------------------------------------
                                           BRYAN ENGELKE