EXECUTIVE SERVICE AGREEMENT PINNACLE SYSTEMS LIMITED

(1)

PINNACLE SYSTEMS LIMITED (registered in England with number 3007766) whose registered office is at The Grand Union Office Park, Packet Boat Lane, Uxbridge, Middlesex UB8 2GH (Company); and

(2)

DAVID BARNBY of 10 Farmcote, Hillesley, Gloucestershire GL12 7RP (Executive).

1.

Interpretation

2.

Commencement and duration

2.1

The Executive’s employment will commence on 3 January 2005.

2.2

The Executive warrants and represents to the Company that by entering into this agreement he will not be in breach of any existing or former terms of employment, whether express or implied, or of any other obligation binding on the Executive.

2.3

The Executive’s employment will, unless otherwise terminated in accordance with this agreement, continue until terminated by either party serving at any time not less than six months’ written notice on the other.

2.4

If the Company terminates the Executive’s employment by reason of redundancy or by reason of a Change of Control in the Company, the Executive will additionally be entitled to a payment of one year’s basic salary as set out in clause 7.1 subject to deduction of tax and National Insurance contributions.

2.5

The Executive’s employment will in any event terminate without further notice on the Executive’s 65th birthday.

3.

Payment in lieu of notice

4.

Job description and duties

4.1

The Executive will serve as General Manager, Europe and, subject to the direction of the CEO of the Parent Company (CEO), will carry out the duties specified in Schedule 2, together with such other duties for the Company and any Group Company as the CEO may from time to time require.

4.2

The Executive will:

4.2.1

promptly and competently serve the Company in good faith and promote the interests of the Company and the Group Companies;

4.2.2

give to the CEO or such persons as the CEO may nominate for the purpose, as and when requested, such information regarding the affairs of the Company or any Group Company as he/she or they may reasonably require;

4.2.3

at all times conform to the reasonable directions of the CEO or of anyone duly authorised by him/her;

4.2.4

behave at all times in a fit and proper manner consistent with the high profile and good reputation of the Company and do nothing which may damage such profile or reputation or bring the Company or any Group Company into disrepute; and

4.2.5

at all times exercise reasonable care and skill in the performance of his duties.

4.3

The Executive will not, on behalf of the Company or any Group Company, without the prior written consent of the CEO or the shareholders of the Parent Company:

4.3.1

enter into commitments, contracts or arrangements which are outside the ordinary course of business;

4.3.2

purchase, charge, encumber or sell property or building equipment;

4.3.3

make one-off purchases exceeding the amount of £75,000 (Seventy Five Thousand pounds).

4.3.4

appoint agents or appoint or dismiss employees earning the equivalent of £50,000 (fifty thousand pounds) or more per annum;

4.3.5

enter guarantees or other securities or enter into long-term obligations, with the exception of entering into purchasing and supply contracts;

4.3.6

agree, alter or terminate leasing, renting, licensing or similar long-term contracts, which bind the Company or any Group Company for more than two years or whereby capital expenditure of more than £75,000 (seventy five thousand pounds) is incurred;

4.3.7

purchase, alter, sell, or give up participation of or in other companies;

4.3.8

invest or allocate monies other than in accordance with the annual finance budget;

4.3.9

set up companies or purchase options or rights of pre-emption in shares in return for payment;

4.3.10

reach settlements or issue claims if they exceed £20,000 (twenty thousand pounds) in any individual case;

4.3.11

enter into agreements regarding the participation of employees in the business results; or

4.3.12

grant loans to employees or enter into pension commitments.

4.4

The whole of the Executive’s working time, attention and abilities will be devoted to the business and affairs of the Company and of any relevant Group Company.

5.

Job location

5.1

The Executive’s employment will be based at the Company’s office at 99 Rue Pierre, Semard Chantillon, France or such other place as the Company may reasonably require. The Executive may work from a home office (the address of such home office to be notified to the Company from time to time) if the demands of the business allow. The Company will provide the Executive with necessary equipment for his home office which will remain Company property.

5.2

The Executive will undertake such worldwide travel as the Company may reasonably require and as may be necessary for the proper performance of his duties.

5.3

The Executive will be required to work outside the United Kingdom for consecutive periods of more than one month. The terms and conditions set out in this agreement apply to that work and will continue to apply on his return to the United Kingdom.

6.

Hours of work

6.1

The hours of work of the Executive will be the Company’s normal office hours of 9.00 a.m. to 5.30 p.m. Monday to Friday inclusive, together with such additional hours as may be required to properly perform his duties. The Executive will not be entitled to extra remuneration for work performed outside normal office hours.

6.2

The Executive agrees that the 48 hour working week limit in Regulation 4(1) Working Time Regulations 1998 will not apply to his employment with the Company. If the Executive wishes to withdraw his consent to disapplying the 48 hours limit, he will give not less than three months’ written notice to the Company.

7.

Remuneration and benefits

7.1

The Company will pay to the Executive a basic salary of £156,000 (one hundred and fifty six thousand pounds) per annum which will accrue from day to day and be payable by equal monthly instalments in arrears by the last day of each month by direct credit transfer to the Executive’s nominated bank account. Such salary will be subject to deductions for National Insurance contributions. As the Executive is not resident in the United Kingdom, he will be responsible for accounting for income tax in France and will be providing copies of all documents in this respect to the Company.

7.2

The Executive will fully indemnify and keep indemnified the Company and any Group Company against any demand for tax, including, without limitation, income tax and employee national insurance/social security contributions, which may become payable, arising from the payments and the arrangement set out in this agreement (excluding those national insurance contributions already deducted at source) whether in the United Kingdom or abroad and any interest penalties, costs, damages or expenses which the Company or any Group Company may incur in connection with such demand.

7.3

The Executive’s salary will be reviewed annually at the beginning of the year in the light of Company performance and the Executive’s contribution to it. The Executive agrees that the undertaking of a salary review does not confer a right to an increase in salary. The first review will take place in the year 2005.

7.4

Beginning on the Commencement Date, the Company will include the Executive in its executive compensation plan as approved annually by the compensation committee of the Parent’s Company’s

7.5

The Executive will also be entitled to:

7.5.1

membership covering the Executive and his spouse and any children under the age of 21 years in a private medical care scheme reasonably acceptable to the Company and selected on the basis of competitive price quotations from private medical insurance providers. While the Executive’s employment is based in France, such scheme will only cover gaps in state reimbursement of medical expenses.;

7.5.2

travel insurance for business travel;

7.5.3

participate in any permanent health insurance scheme from time to time operated by the Company, subject to compliance by the Executive with the requirements and the terms and conditions of such scheme. The Executive agrees that upon termination of this agreement any entitlement to compensation that the Executive may have in respect of termination will not include any element to reflect the loss of the opportunity to receive payments under any permanent health insurance scheme; and

7.5.4

death in service insurance cover of four times the Executive’s annual basic salary.

7.6

The Company will have no liability to pay any benefit to the Executive under any scheme referred to in clauses 7.5.1 and 7.5.3 unless it receives payment of the benefit from the insurers of the benefits under the scheme.

7.7

The Executive will receive US$50,000 (fifty thousand US dollars) per annum as a housing, school, car and/or travel allowance to be allocated as required by the Executive. This allowance will be paid annually by the last day of the last month of the Company’s financial year by direct credit transfer to an bank account nominated by the Executive. The first payment will be made in June 2005 (pro rata for the period January to June 2005) which is the last month of the Company’s financial year 2004/2005.

7.8

The Executive authorises the Company to deduct from any salary or other payment, including any payment on termination of employment, in respect of any sums properly due from the Executive to the

8.

Stocks

8.1

The Company intends to grant to the Executive 200,000 stock options in relation to Parent Company shares which will vest over a four year period, subject to approval by the board of directors of the Parent Company and in accordance with a stock option plan to be notified to the Executive.

8.2

From 1 May 2005, the Executive will be entitled to participate in the Parent Company’s stock purchase plan, subject to the rules and regulations of such plan.

9.

Additional payment

9.1

The Company will make an additional payment to the Executive of seven per cent of the Executive’s annual basic salary under clause 7.1 plus an additional £6,000 (six thousand pounds) per annum. This payment will be made annually by the last day of the last month of the Company’s financial year by direct credit transfer to a bank account nominated by the Executive. The first payment will be made in June 2005 (pro rata for the period January to June 2005) which is the last month of the Company’s financial year 2004/2005.

9.2

No contracting out certificate is in force for the Executive’s employment under this agreement.

10.

Expenses

11.

Sickness

11.1

The Executive must, if at any time prevented from working by illness or accident, immediately inform the CEO. If the incapacity continues for more than seven days, including non working days, the Executive must send to the Company a certificate of sickness signed by a registered medical practitioner on the eighth day of incapacity and weekly from then on.

11.2

Subject to due certification in accordance with clause 11.1, the Executive will be entitled to receive full salary, inclusive of any statutory sick pay, for the first 13 weeks of incapacity and half salary, inclusive of any statutory sick pay, for the next 13 weeks of incapacity either continuously or in any 12 month period less any payments received by the Executive in respect of sickness benefit and any permanent health insurance in respect of the period concerned.

11.3

Subject to clause 11.2 and any continuing statutory sick pay entitlement, the Executive will not be entitled to receive any further remuneration during periods of absence due to illness or incapacity and any payment during such period in excess of such entitlement will be at the discretion of the Company.

11.4

At any time required by the Company, the Executive agrees to undergo, at the expense of the Company, a medical examination by a medical adviser nominated by the Company and the Executive consents to the medical adviser disclosing the results of the examination to the Company.

12.

Holidays

12.1

In addition to statutory and public holidays recognised in France, the Executive will be entitled to 20 working days’ holiday in every calendar year to be taken at such times as are convenient to the Company and are approved by the CEO.

12.2

Holiday entitlement accrues at the rate of 1/12th of the annual entitlement for each completed month of service in any year.