Document:

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                                                                     Exhibit 4.8

                           EDGEWATER TECHNOLOGY, INC.

                        2000 EMPLOYEE STOCK OPTION PLAN

SECTION 1.  PURPOSE.  The Plan authorizes the Committee to provide to certain
Employees and Consultants of the Corporation and its Subsidiaries, who are in a
position to contribute materially to the long-term success of the Corporation,
with grants of restricted stock and options to acquire common stock, par value
$.01 per share, of the Corporation in accordance with the terms specified
herein. The Corporation believes that this incentive program will cause those
persons to increase their interest in the Corporation's welfare, and aid in
attracting and retaining Employees and Consultants of outstanding ability.

SECTION 2.  DEFINITIONS.  Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth in
this Section:

       (a) "Board" shall mean the Board of Directors of the Corporation.

       (b) "Cause" shall mean, except to the extent specified otherwise by the
     Committee, a finding of the Committee that the Grantee (i) has breached his
     or her employment or service contract with the Corporation or its
     Subsidiaries, (ii) has engaged in disloyalty to the Corporation or its
     Subsidiaries, including, without limitation, fraud, embezzlement, theft,
     commission of a felony or proven dishonesty in the course of his or her
     employment or service, (iii) has disclosed trade secrets or confidential
     information of the Corporation or its Subsidiaries to persons not entitled
     to receive such information, (iv) has breached any noncompetition or
     nonsolicitation agreement between the Corporation or its Subsidiaries and
     the Grantee, or (v) has engaged in such other behavior detrimental to the
     interests of the Corporation or its Subsidiaries as the Committee
     determines.

       (c) A "Change in Control" shall be deemed to have occurred if:

                    (i) any person, other than the Corporation or an employee
       benefit plan of the Corporation, acquires, directly or indirectly, the
       beneficial ownership of any voting security of the Corporation and
       immediately after such acquisition such person is, directly or
       indirectly, the beneficial owner of voting securities representing 50% or
       more of the total voting power of the then-outstanding voting securities
       of the Corporation;

                    (ii) the individuals (A) who, as of the adoption of this
       Plan, constitute the Board (the "Original Directors") or (B) who
       thereafter are elected to the Board and whose election, or nomination for
       election, to the Board was approved by a vote of at least two-thirds
       (2/3) of the Original Directors then still in office (such directors
       becoming "Additional Original Directors" immediately following their
       election) or (C) who are elected to the Board and whose election, or
       nomination

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       for election, to the Board was approved by a vote of at least two-thirds
       (2/3) of the Original Directors and Additional Original Directors then
       still in office (such directors also becoming "Additional Original
       Directors" immediately following their election), cease for any reason to
       constitute a majority of the members of the Board;

           (iii) the stockholders of the Corporation shall approve a merger,
       consolidation, recapitalization, or reorganization of the Corporation, a
       reverse stock split of outstanding voting securities, or consummation of
       any such transaction if stockholder approval is not sought or obtained,
       other than any such transaction which would result in at least 75% of the
       total voting power represented by the voting securities of the surviving
       entity outstanding immediately after such transaction being beneficially
       owned by at least 75% of the holders of outstanding voting securities of
       the Corporation immediately prior to the transaction, with the voting
       power of each such continuing holder relative to other such continuing
       holders not substantially altered in the transaction; or

           (iv)  the stockholders of the Corporation shall approve a plan of
       complete liquidation of the Corporation.

           (v)   the Corporation or any of its Subsidiaries enter into an
       agreement for the sale or disposition of 50% or more of the stock or
       assets of Edgewater Technology (Delaware), Inc.

       (d) "Code" shall mean the Internal Revenue Code of 1986, as it may be
     amended from time to time.

       (e) "Committee" shall mean the Board, or any committee of two or more
     Directors that may be designated by the Board to administer the Plan.  The
     Committee may be comprised of "non-employee directors" within the meaning
     of Rule 16b-3 under the Exchange Act.

       (f) "Consultant" shall mean (i) any person who is engaged to perform bona
     fide services for the Corporation or its Subsidiaries, other than as an
     Employee or director, where the services are not in connection with the
     offer and sale of securities in a capital-raising transaction and the
     consultant does not directly or indirectly promote or maintain a market for
     the Corporation's securities, or (ii) any person who has agreed to become a
     consultant within the meaning of clause (i).

       (g) "Corporation" shall mean Edgewater Technology, Inc., a Delaware
     corporation.

       (h) "Director" shall mean any member of the Board.

       (i) "Employee" shall mean (i) any employee of the Corporation or its
     Subsidiaries, or (ii) any person who has agreed to become an employee
     within the meaning of clause (i); excluding, however, any employee who is
     also an officer or

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     director of the Corporation. For purposes of this Section 2(i), an officer
     shall be any employee of the Corporation who holds the title of Vice
     President or greater, or any other individual who the Board designates as
     an officer of the Corporation.

       (j) "Exchange Act" shall mean the Securities Exchange Act of 1934 as it
     may be amended from time to time.

       (k) "Fair Market Value" of the Stock on a given date shall be based upon:
     (i) if the Stock is listed on a national securities exchange or quoted in
     an interdealer quotation system, the last sales price or, if unavailable,
     the average of the closing bid and asked prices per share of the Stock on
     such date (or, if there was no trading or quotation in the Stock on such
     date, on the next preceding date on which there was trading or quotation)
     as provided by one of such organizations; or (ii) if the Stock is not
     listed on a national securities exchange or quoted in an interdealer
     quotation system, as determined by the Committee in good faith in its sole
     discretion.

       (l) "Grant" shall mean a grant of an Option pursuant to Section 6 or
     Restricted Stock pursuant to Section 9.

       (m) "Grantee" shall mean a person granted an Option or Restricted Stock
     under the Plan.

       (n) "1933 Act" shall mean the Securities Act of 1933, as amended.

       (o) "Option" shall mean an option granted pursuant to Section 6 of the
     Plan to purchase shares of Stock that is not an incentive stock option as
     described in Code Section 422.

       (p) "Plan" shall mean this Edgewater Technology, Inc. 2000 Employee Stock
     Option Plan as set forth herein and as amended from time to time.

       (q) "Restricted Stock" shall mean restricted stock granted pursuant to
     Section 9 of the Plan.

       (r) "Stock" shall mean shares of the common stock par value $.01 per
     share of the Corporation.

       (s) "Stock Option Agreement" shall mean a written agreement between the
     Corporation and the Grantee, or a certificate accepted by the Grantee,
     evidencing the grant of an Option hereunder and containing such terms and
     conditions, not inconsistent with the Plan, as the Committee shall approve.

       (t) "Subsidiary" shall mean (i) any company (whether a corporation,
     partnership, joint venture or other entity) in which the Corporation owns,
     directly or indirectly, a majority of the shares of capital stock or other
     equity interest, or (ii) any entity which the Committee reasonably expects
     to become a subsidiary within the meaning of clause (i).

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SECTION 3.  SHARES OF STOCK SUBJECT TO THE PLAN.  Subject to adjustment as
described in Section 10, the total amount of Stock that may be subject to
Grants, determined immediately after the grant, shall not exceed four million
(4,000,000) shares Stock.  For purposes of the foregoing limits, shares subject
to Grants shall not be deemed delivered if such grants are forfeited, expire or
otherwise terminate without delivery of shares to the Grantee.  Any shares of
Stock delivered pursuant to a Grant may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

SECTION 4.  ADMINISTRATION OF THE PLAN.  The Plan shall be administered by the
Committee.  Subject to the express provisions of the Plan, the Committee shall
have the authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
Stock Option Agreements and Restricted Stock grants thereunder and to make all
other determinations necessary or advisable for the administration of the Plan.
Any controversy or claim arising out of or related to this Plan or the grants
thereunder shall be determined unilaterally by, and at the sole discretion of,
the Committee.  Any action of the Committee with respect to the Plan shall be
final, conclusive, and binding on all persons, including the Corporation,
Subsidiaries of the Corporation, Grantees and any person claiming any rights
under the Plan from or through any Grantee and stockholders.  The express grant
of any specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee.  The Committee may delegate to officers or managers of the
Corporation or any Subsidiary the authority, subject to such terms as the
Committee shall determine, to perform administrative functions to the extent
permitted under Rule 16b-3, if applicable, and other applicable law.

SECTION 5.  TYPES OF OPTIONS.  Options granted under the Plan shall be options
to purchase shares of the Stock that are not incentive stock options as
described in Code Section 422.

SECTION 6.  GRANT OF OPTIONS TO EMPLOYEES AND CONSULTANTS.

       (a) Employees and Consultants of the Corporation and its Subsidiaries
     shall be eligible to receive Options under the Plan.

       (b) The exercise price per share of Stock subject to an Option shall be
     determined by the Committee and specified in the Stock Option Agreement.
     The exercise price may be equal to, greater than, or less than the Fair
     Market Value of a share of Stock on the date the Option is granted.

       (c) The term of each Option shall be determined by the Committee and
     specified in a Stock Option Agreement, provided that no Option shall be
     exercisable more than ten years from the date such Option is granted.

       (d) The Committee shall determine and designate from time to time
     Employees or Consultants who are to be granted Options, and shall specify
     in the Stock Option Agreement the nature of each Option granted and the
     number of shares of Stock subject to each such Option.

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       (e) The Committee shall determine whether any Option shall become
     exercisable in one or more installments and specify the installment dates
     in the Stock Option Agreement.  The Committee may also specify in the Stock
     Option Agreement such other provisions, not inconsistent with the terms of
     this Plan, as it may deem desirable.  The Committee shall determine the
     extent to which Options shall become exercisable upon a Change in Control,
     unless otherwise specified in the Stock Option Agreement.

       (f) The Committee may, at any time, grant new or additional options to
     any eligible Employee or Consultant who has previously received Options
     under this Plan, or options under other plans, whether such prior Options
     or other options are still outstanding, have been exercised previously in
     whole or in part, or have been canceled.  The exercise price of such new or
     additional Options may be established by the Committee without regard to
     such previously granted Options or other options.

       (g) The Committee may provide that Options granted to persons who may be
     non-exempt employees under the Fair Labor Standards Act of 1938, as
     amended, shall have an exercise price not less than 85% of the Fair Market
     Value of the Stock on the date of grant, and may not be exercisable for at
     least six months after the date of grant (except that such Options may
     become exercisable, as determined by the Committee, upon the Grantee's
     death, disability or retirement, or upon a Change in Control or other
     circumstances permitted by applicable regulations).

SECTION 7.  EXERCISE OF OPTIONS.

          (a) Unless otherwise determined by the Committee, in the event that a
     Grantee is a "covered employee" as described in Code Section 162(m)(3), an
     Option shall not be exercisable by such Grantee in any taxable year to the
     extent that the exercise of such Option would cause the Grantee's total
     compensation to exceed the limits for deductible compensation under Code
     Section 162(m) for the taxable year. However, in no event may the Grantee
     be prohibited from exercising the Option by reason of this Section 7(a)
     later than nine years from the date such option is granted.

       (b) Except as provided pursuant to Section 8, no Option shall be
     exercised unless at the time of such exercise the Grantee is then: (A) an
     Employee (determined with reference to Section 2(i)(i) only); or (B) a
     Consultant (determined with reference to Section 2(f)(i) only) of the
     Corporation or a Subsidiary (determined with reference to Section 2(t)(i)
     only).

       (c) A Grantee or other permitted holder shall exercise an Option by
     delivery of written notice to the Corporation setting forth the number of
     shares with respect to which the Option is to be exercised, together with
     cash, certified check, bank draft, wire transfer, or postal or express
     money order payable to the order of the Corporation for an amount equal to
     the Option price of such shares and any income tax which may be required to
     be withheld as determined by the Committee pursuant to Section 12.  The
     Committee may, in its sole discretion, permit a Grantee to pay all or a
     portion of the

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     exercise price by delivery of Stock held by the Grantee longer than six
     months or other property (including notes or other contractual obligations
     of Grantees to make payment on a deferred basis to the extent permitted by
     applicable law), or payment through a broker in accordance with procedures
     permitted by Regulation T of the Federal Reserve Board.

       (d) Notwithstanding the foregoing, an Option shall become exercisable in
     accordance with such terms and conditions as may be determined by the
     Committee and specified in the Stock Option Agreement.

SECTION 8.  EXERCISE OF OPTIONS UPON TERMINATION.

       (a) Unless otherwise determined by the Committee, upon termination of a
     Grantee's employment with the Corporation and its Subsidiaries for any
     reason other than Cause, death, disability or retirement, such Grantee may
     exercise any Options during the three-month period following such
     termination of employment, but only to the extent such Option was
     exercisable immediately prior to such termination of employment.

       (b) Unless otherwise determined by the Committee, upon termination of a
     Grantee's employment with the Corporation and its Subsidiaries on account
     of death or disability, such Grantee may exercise any Options during the
     one year period following such termination of employment, but only to the
     extent such Option was exercisable immediately prior to such termination of
     employment.

       (c) Unless otherwise determined by the Committee, upon termination of a
     Grantee's employment with the Corporation and its Subsidiaries on account
     of retirement after attainment of age 65, such Grantee may exercise any
     Options in accordance with the original Option term following such
     termination of employment, but only to the extent such Option was
     exercisable immediately prior to such termination of employment.

       (d) If the Committee determines that such termination is for Cause, all
     Options held by the Grantee shall immediately terminate. In addition, all
     Options granted on the basis of clause (ii) of Section 2(f), Section 2(i)
     or Section 2(t) shall immediately terminate if the Committee determines, in
     its sole discretion, that the Consultant, Employee, or Subsidiary, as the
     case may be, will not become a Consultant, Employee or Subsidiary within
     the meaning of clause (i) of such Sections.

       (e) Unless otherwise determined by the Committee and specified in the
     Stock Option Agreement, in no event shall any Option be exercisable for
     more than the maximum number of shares that the Grantee was entitled to
     purchase at the date of termination of the relationship with the
     Corporation and its Subsidiaries.  In no event shall any Option be
     exercisable later than the date of expiration of the Option term.

       (f) Subject to the provisions of Section 6(e), the sale of any Subsidiary
     shall be treated as a termination of employment with respect to any Grantee
     employed by such Subsidiary.

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       (g) Subject to the foregoing, in the event of death, Options may be
     exercised by a Grantee's legal representative.  Options transferred
     pursuant to Section 13 may also be exercised by a permitted holder.

SECTION 9.  RESTRICTED STOCK.  The Committee may issue or transfer shares of
Stock to an Employee or Consultant under a Restricted Stock grant, upon such
terms as the Committee deems appropriate.  The following provisions are
applicable to Restricted Stock grants:

       (a) Shares of Stock issued or transferred pursuant to Restricted Stock
     grants may be issued or transferred for consideration or for no
     consideration, and subject to restrictions or no restrictions, as
     determined by the Committee.  The Committee may, but shall not be required
     to, establish conditions under which restrictions on Restricted Stock
     grants shall lapse over a period of time or according to such other
     criteria as the Committee deems appropriate, including, without limitation,
     restrictions based upon the achievement of specific performance goals.  The
     period of time during which the Restricted Stock grants will remain subject
     to restrictions will be designated in the Grant as the "Restriction
     Period."

       (b) The Committee shall determine the number of shares of Stock to be
     issued or transferred pursuant to a Restricted Stock grant and the
     restrictions applicable to such shares.

       (c) If the Grantee ceases to be employed by, or provide service to, the
     Corporation and its Subsidiaries during a period designated in the
     Restricted Stock grant as the Restriction Period, or if other specified
     conditions are not met, the Restricted Stock grant shall terminate as to
     all shares covered by the Grant as to which the restrictions have not
     lapsed, and those shares of Stock must be immediately returned to the
     Corporation.  The Committee may, however, provide for complete or partial
     exceptions to this requirement as it deems appropriate.

       (d) During the Restriction Period, a Grantee may not sell, assign,
     transfer, pledge or otherwise dispose of the shares of Restricted Stock.
     Each certificate for a share of a Restricted Stock grant shall contain a
     legend giving appropriate notice of the restrictions in the Grant.  The
     Grantee shall be entitled to have the legend removed from the stock
     certificate covering the shares subject to restrictions when all
     restrictions on such shares have lapsed.  The Committee may determine that
     the Corporation will not issue certificates for Restricted Stock grants
     until all restrictions on such shares have lapsed, or that the Corporation
     will retain possession of certificates for shares of Restricted Stock
     grants until all restrictions on such shares have lapsed.

       (e) Unless the Committee determines otherwise, during the Restriction
     Period, the Grantee shall not have the right to vote shares subject to
     Restricted Stock grants and shall not receive any dividends or other
     distributions paid on such shares.

       (f) All restrictions imposed on Restricted Stock grants shall lapse upon
     the expiration of the applicable Restriction Period and the satisfaction of
     all conditions

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     imposed by the Committee. The Committee may determine, as to any or all
     Restricted Stock grants, that the restrictions shall lapse without regard
     to any Restriction Period.

SECTION 10.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION.  In the event any
dividend or other distribution (whether in the form of cash, Stock, or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event affects the Stock such that an adjustment
is appropriate in order to prevent dilution or enlargement of the rights of
Grantees under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of shares of Stock
deemed to be available thereafter for Grants, (ii) the number and kind of shares
of Stock that may be delivered or deliverable in respect of outstanding Grants,
and (iii) the exercise price.  If deemed appropriate, the Committee may make
provision for a cash payment with respect to any conditions of, and the criteria
included in, Grants (including, without limitation, cash payments in exchange
for Grants or substitution of Grants using stock of a successor or other entity)
in recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence) affecting the Corporation or any
Subsidiary or the financial statements of the Corporation or any Subsidiary, or
in response to changes in applicable laws, regulations, or accounting
principles.

SECTION 11.  RESTRICTIONS ON ISSUING SHARES.  The Corporation shall not be
obligated to deliver Stock upon the exercise or settlement of any Grant or take
other actions under the Plan until the Corporation shall have determined that
applicable federal and state laws, rules, and regulations have been complied
with and such approvals of any regulatory or governmental agency have been
obtained and contractual obligations to which the Grant may be subject have been
satisfied.  The Corporation, in its discretion, may postpone the issuance or
delivery of Stock under any Grant until completion of such stock exchange
listing or registration or qualification of such Stock or other required action
under any federal or state law, rule, or regulation as the Corporation may
consider appropriate, and may require any Grantee to make such representations
and furnish such information as it may consider appropriate in connection with
the issuance or delivery of Stock under the Plan.

SECTION 12.  TAX WITHHOLDING.  To the extent required by applicable federal,
state, local or foreign law, a Grantee shall make arrangements satisfactory to
the Corporation for the satisfaction of any withholding tax obligations that
arise by reason of an Option exercise, vesting of Restricted Stock or any sale
of shares.  The Corporation shall not be required to issue shares until such
obligations are satisfied.  The Committee may permit these obligations to be
satisfied by having the Corporation withhold the minimum applicable amounts from
a portion of the shares of the stock that otherwise would be issued to the
Grantee, or to the extent permitted, by tendering shares previously acquired.
The Committee may also, upon the request of a Grantee desiring to exercise an
Option, direct the Corporation to lend the Grantee an amount necessary to pay
any federal and state income tax withholding requirements in connection with
such exercise.

SECTION 13.  TRANSFERABILITY.

       (a) Except as provided below, no Grant shall be subject to anticipation,
     sale, assignment, pledge, encumbrance, charge or transfer except by will or
     the laws of descent

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     and distribution, and an Option shall be exercisable during the Grantee's
     lifetime only by the Grantee.

       (b) Notwithstanding the foregoing, the Committee may provide, in a Stock
     Option Agreement, that the Grantee may transfer Options to family members
     or other persons or entities according to such terms as the Committee may
     determine; provided that the Grantee receives no consideration for the
     transfer of the Option and the transferred Option shall continue to be
     subject to the same terms and conditions as were applicable to the Option
     immediately before the transfer.

SECTION 14.  NON-COMPETITION.  If the Grantee breaches any non-competition
agreement in effect with the Corporation or its Subsidiaries, all of the
Grantee's outstanding Grants shall immediately terminate, and the Corporation
may require that the Grantee pay to the Corporation or its Subsidiaries (in
Stock or cash) an amount equal to any gain arising from the exercise of Options
or the lapse of restrictions on Restricted Stock during the forfeiture period.
The forfeiture period is the period beginning on the date that is six months
before the Grantee's termination of employment or service with the Corporation
and its Subsidiaries and ending upon the termination of such non-competition
agreement.  In the case of an Option, the gain to be reimbursed is the amount by
which the Fair Market Value of the Stock on the date of the Committee's
determination (or the date of any earlier sale or other disposition of the Stock
covered by the Option, if greater) exceeds the exercise price of the Option.  In
the case of a Restricted Stock grant, the gain to be reimbursed is the product
of (i) the Fair Market Value of the Stock, and (ii) the fraction of the
Restricted Stock grant in respect to which restrictions have lapsed, as of the
date of the Committee's determination (or the date of any earlier sale or other
disposition of the Stock subject to the Restricted Stock Grant, if greater).

SECTION 15.  GENERAL PROVISIONS.

       (a) Each Grant shall be evidenced by a Grant instrument.  The terms and
     provisions of such instruments may vary among Grantees and among different
     Grants granted to the same Grantee.

       (b) A Grant in any year shall not give the Grantee any right to similar
     grants in future years, any right to continue such Grantee's employment
     relationship with the Corporation or its Subsidiaries, or, until such
     unrestricted share certificates are issued, any rights as a stockholder of
     the Corporation.  All Grantees shall remain subject to discharge to the
     same extent as if the Plan were not in effect.

       (c) No Grantee, and no beneficiary or other persons claiming under or
     through the Grantee shall have any right, title or interest by reason of
     any Grant to any particular assets of the Corporation or its Subsidiaries,
     or any shares of Stock allocated or reserved for the purposes of the Plan
     or subject to any Grant except as set forth herein.  The Corporation shall
     not be required to establish any fund or make any other segregation of
     assets to assure the payment of any Grant.

                                       9.
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       (d) The issuance of shares of Stock to Grantees, their legal
     representatives or other permitted holders shall be subject to any
     applicable taxes and other laws or regulations of the United States or of
     any state having jurisdiction thereof.

SECTION 16.  AMENDMENT OR TERMINATION.  The Board may, at any time, alter,
amend, suspend, discontinue or terminate this Plan; provided, however, that no
such action shall materially impair the rights of Grantees to Grants previously
granted hereunder and, provided further, however, that any shareholder approval
necessary or desirable in order to comply with other applicable law or
regulation shall be obtained in the manner required therein.  The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Grant theretofore granted and any Agreement relating thereto;
provided, however, that, without the consent of an affected Grantee, no such
action may materially impair the rights of such Grantee under such Grant.  Upon
termination of an Option the Committee may (i) require that Grantees surrender
their outstanding Options in exchange for a payment by the Corporation, in cash
or Stock as determined by the Committee, in an amount equal to the amount by
which the then Fair Market Value of the shares of Stock subject to the Grantee's
unexercised Options exceeds the exercise price of the Options, or (ii) after
giving Grantees an opportunity to exercise their outstanding Options, terminate
any or all unexercised at such time as the Committee deems appropriate.

SECTION 17.  EFFECTIVE DATE OF PLAN.  This Plan is effective upon its initial
adoption by the Board and shall continue in effect until terminated by the
Board.

                                 - - - - - - - - - - - - - -

This Plan was approved by the Board on August 31, 2000.

                                      10.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

<PAGE>

                  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.

                                      -2-

<PAGE>

                                   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.

                                      -3-

<PAGE>

             (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).

                                      -4-

<PAGE>

         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.

                                      -5-
<PAGE>

             (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

                                      -6-

<PAGE>

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.

                                   -7-
<PAGE>

             (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

                                      -8-

<PAGE>

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.

                                      -9-

<PAGE>

         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.

                                      -10-

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

"THE SHAREHOLDERS"
                               -------------------------------------------------
                               DAVID ENGELKE

                               -------------------------------------------------
                               SETH M. HABERMAN

                               -------------------------------------------------
                               SIMON V. HABERMAN

                                      -11-

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