Exhibit 4.3

                             PINNACLE SYSTEMS, INC.

                       1996 SUPPLEMENTAL STOCK OPTION PLAN

                             (As amended July, 2000)

         1. Purposes of the Plan. The purposes of this Supplemental Stock Option
Plan are:

                  o    to attract and retain the best  available  personnel  for
                       positions of substantial responsibility,

                  o    to  provide   additional   incentive  to  Employees   and
                       Consultants, and

                  o    to promote the success of the Company's business.

         Options granted under the Plan will be Nonstatutory Stock Options.

         2. Definitions. As used herein, the following definitions shall apply:

                  (a)  "Administrator"  means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.

                  (b) "Applicable  Laws" means the requirements  relating to the
administration  of stock option  plans under U. S. state  corporate  laws,  U.S.
federal and state  securities  laws,  the Code,  any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable  laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

                  (c) "Board" means the Board of Directors of the Company.

                  (d)  "Code"  means  the  Internal  Revenue  Code of  1986,  as
amended.

                  (e)  "Committee"  means a committee of Directors  appointed by
the Board in accordance with Section 4 of the

                  Plan.  (f)  "Common  Stock"  means  the  Common  Stock  of the
Company.

                  (g)  "Company"  means  Pinnacle  Systems,  Inc.,  a California
corporation.

                  (h)  "Consultant"  means any  person,  including  an  advisor,
engaged by the  Company or a Parent or  Subsidiary  to render  services  to such
entity.

                  (i) "Director" means a member of the Board.

                  (j)  "Disability"  means  total and  permanent  disability  as
defined in Section 22(e)(3) of the Code.


<PAGE>


                  (k) "Employee" means any person, excluding Officers,  employed
by the Company or any Parent or  Subsidiary of the Company.  A Service  Provider
shall  not  cease  to be an  Employee  in the case of (i) any  leave of  absence
approved by the Company or (ii)  transfers  between  locations of the Company or
between the Company,  its Parent,  any  Subsidiary,  or any  successor.  Neither
service as a Director  nor payment of a director's  fee by the Company  shall be
sufficient to constitute "employment" by the Company.

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

                  (m) "Fair Market  Value" means,  as of any date,  the value of
Common Stock determined as follows:

                           (i) If the Common Stock is listed on any  established
stock exchange or a national  market system,  including  without  limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market  Value  shall be the closing  sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of  determination,  as reported in
The  Wall  Street  Journal  or such  other  source  as the  Administrator  deems
reliable;

                           (ii) If the  Common  Stock is  regularly  quoted by a
recognized  securities  dealer but  selling  prices are not  reported,  the Fair
Market  Value of a Share of Common  Stock shall be the mean between the high bid
and low asked prices for the Common  Stock on the last market  trading day prior
to the day of  determination,  as reported  in The Wall  Street  Journal or such
other source as the Administrator deems reliable;

                           (iii) In the absence of an established market for the
Common  Stock,  the Fair Market Value shall be  determined  in good faith by the
Administrator.

                  (n)  "Notice of Grant"  means a written or  electronic  notice
evidencing  certain  terms and  conditions of an  individual  Option grant.  The
Notice of Grant is part of the Option Agreement.

                  (o) "Officer"  means a person who is an officer of the Company
within  the  meaning  of  Section  16 of the  Exchange  Act  and the  rules  and
regulations promulgated thereunder.

                  (p)  "Option"  means  a  nonstatutory   stock  option  granted
pursuant  to the Plan,  that is not  intended to qualify as an  incentive  stock
option  within  the  meaning  of  Section  422 of the Code  and the  regulations
promulgated thereunder.

                  (q) "Option  Agreement" means an agreement between the Company
and an Optionee  evidencing  the terms and  conditions of an  individual  Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.

                  (r)  "Option   Exchange   Program"  means  a  program  whereby
outstanding  options  are  surrendered  in  exchange  for  options  with a lower
exercise price.

                  (s)  "Optioned  Stock"  means the Common  Stock  subject to an
Option.

                  (t)  "Optionee"  means  the  holder of an  outstanding  Option
granted under the Plan.

                  (u)  "Parent"  means a "parent  corporation,"  whether  now or
hereafter existing, as defined in Section 424(e) of the Code.


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                  (v) "Plan" means this 1996 Supplemental Stock Option Plan.

                  (w) "Service  Provider" means an Employee or Consultant who is
not also a Director or Officer.

                  (x) "Share" means a share of the Common Stock,  as adjusted in
accordance with Section 12 of the Plan.

                  (y) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.

         3. Stock Subject to the Plan.  Subject to the  provisions of Section 12
of the Plan,  the maximum  aggregate  number of Shares which may be optioned and
sold under the Plan is  11,800,000  Shares.  The Shares may be  authorized,  but
unissued, or reacquired Common Stock.

         If an Option  expires  or becomes  unexercisable  without  having  been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased  Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).

         4. Administration of the Plan.

                  (a) The Plan shall be  administered  by (A) the Board or (B) a
Committee, which committee shall be constituted to satisfy Applicable Laws.

                  (b) Powers of the Administrator.  Subject to the provisions of
the  Plan,  and in the  case of a  Committee,  subject  to the  specific  duties
delegated  by the Board to such  Committee,  the  Administrator  shall  have the
authority, in its discretion:

                           (i) to determine  the Fair Market Value of the Common
Stock;

                           (ii) to select the Service  Providers to whom Options
may be granted hereunder;

                           (iii) to determine whether and to what extent Options
are granted hereunder;

                           (iv) to  determine  the  number  of  shares of Common
Stock to be covered by each Option granted hereunder;


                           (v) to approve  forms of agreement  for use under the
Plan;

                           (vi) to  determine  the  terms  and  conditions,  not
inconsistent  with the terms of the Plan, of any award granted  hereunder.  Such
terms and conditions  include,  but are not limited to, the exercise price,  the
time or times when Options may be exercised  (which may be based on  performance
criteria),  any vesting acceleration or waiver of forfeiture  restrictions,  and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto,  based in each case on such factors as the  Administrator,  in
its sole discretion, shall determine;

                           (vii) to reduce the  exercise  price of any Option to
the then  current Fair Market Value if the Fair Market Value of the Common Stock
covered  by such  Option  shall  have  declined  since the date the  Option  was
granted;

                           (viii) to institute an Option Exchange Program;


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<PAGE>


                           (ix) to construe and  interpret the terms of the Plan
and awards granted pursuant to the Plan;

                           (x)  to  prescribe,   amend  and  rescind  rules  and
regulations  relating to the Plan,  including rules and regulations  relating to
sub-plans  established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

                           (xi) to  modify  or amend  each  Option  (subject  to
Section 14(b) of the Plan), including the discretionary  authority to extend the
post-termination  exercisability  period of  Options  longer  than is  otherwise
provided for in the Plan;

                           (xii) to authorize any person to execute on behalf of
the  Company  any  instrument  required  to  effect  the  grant of an  Option or
previously granted by the Administrator;

                           (xiii)  to  determine  the  terms  and   restrictions
applicable to Options;

                           (xiv) to allow  Optionees to satisfy  withholding tax
obligations  by  electing  to have the  Company  withhold  from the Shares to be
issued upon exercise of an Option or Stock  Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld  shall be  determined on the date that
the  amount of tax to be  withheld  is to be  determined.  All  elections  by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable; and

                           (xv)  to  make  all   other   determinations   deemed
necessary or advisable for administering the Plan.

                  (c) Effect of Administrator's  Decision.  The  Administrator's
decisions,  determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

         5. Eligibility.  Options may be granted to Service Providers other than
Officers  (except as set forth  herein)  and  Directors.  Officers  shall not be
eligible to receive Options under this Plan; provided, however, that Options may
be  granted  to an  Officer  not  previously  employed  by  the  Company,  as an
inducement  essential to the individual's  entering into an employment  contract
with the Company.

         6.  Limitation.  Neither the Plan nor any Option  shall  confer upon an
Optionee any right with respect to continuing the Optionee's  relationship  as a
Service Provider with the Company,  nor shall they interfere in any way with the
Optionee's  right or the Company's  right to terminate such  relationship at any
time, with or without cause.

         7. Term of Plan.  The Plan shall become  effective upon its adoption by
the  Board.  It shall  continue  in effect  for ten (10)  years,  unless  sooner
terminated under Section 14 of the Plan.

         8.  Term of  Option.  The term of each  Option  shall be  stated in the
Option Agreement.

         9. Option Exercise Price and Consideration.

                  (a)  Exercise  Price.  The per  share  exercise  price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator.


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<PAGE>


                  (b) Waiting Period and Exercise  Dates.  At the time an Option
is granted,  the Administrator  shall fix the period within which the Option may
be exercised and shall determine any conditions  which must be satisfied  before
the Option may be exercised.

                  (c) Form of Consideration.  The Administrator  shall determine
the acceptable  form of  consideration  for exercising an Option,  including the
method of payment. Such consideration may consist entirely of:

                           (i) cash;

                           (ii) check;

                           (iii) promissory note;

                           (iv)  other  Shares  which  (A) in the case of Shares
acquired  upon  exercise of an option,  have been owned by the Optionee for more
than six months on the date of  surrender,  and (B) have a Fair Market  Value on
the date of surrender equal to the aggregate  exercise price of the Shares as to
which said Option shall be exercised;

                           (v)  consideration  received by the  Company  under a
cashless  exercise  program  implemented  by the Company in connection  with the
Plan;

                           (vi)  a  reduction  in  the  amount  of  any  Company
liability  to  the  Optionee,   including  any  liability  attributable  to  the
Optionee's participation in any Company-sponsored  deferred compensation program
or arrangement;

                           (vii) such other  consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Laws; or

                           (viii) any  combination  of the foregoing  methods of
payment.

         10. Exercise of Option.

                  (a)  Procedure  for  Exercise;  Rights as a  Shareholder.  Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such  conditions as determined by the  Administrator
and set forth in the  Option  Agreement.  An Option may not be  exercised  for a
fraction of a Share.

                           An Option shall be deemed  exercised when the Company
receives:  (i) written or electronic  notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment  for the Shares  with  respect to which the  Option is  exercised.  Full
payment may consist of any consideration and method of payment authorized by the
Administrator  and permitted by the Option Agreement and the Plan. Shares issued
upon  exercise of an Option  shall be issued in the name of the  Optionee or, if
requested  by the  Optionee,  in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate  entry on the books
of the Company or of a duly authorized transfer agent of the Company),  no right
to vote or receive  dividends or any other rights as a  shareholder  shall exist
with respect to the Optioned Stock,  notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares  promptly  after the
Option is exercised.  No  adjustment  will be made for a


                                      -5-
<PAGE>


dividend  or other  right  for which  the  record  date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan.

                           Exercising an Option in any manner shall decrease the
number of Shares  thereafter  available,  both for  purposes of the Plan and for
sale  under the  Option,  by the  number  of  Shares  as to which the  Option is
exercised.

                  (b) Termination of Relationship as a Service  Provider.  If an
Optionee ceases to be a Service  Provider,  other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option  Agreement,  and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified  time in the Option  Agreement,  the Option  shall
remain  exercisable for three (3) months  following the Optionee's  termination.
If, on the date of  termination,  the  Optionee  is not  vested as to his or her
entire Option,  the Shares  covered by the unvested  portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option  within the time  specified  by the  Administrator,  the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

                  (c)  Disability  of  Optionee.  If an Optionee  ceases to be a
Service  Provider as a result of the  Optionee's  Disability,  the  Optionee may
exercise  his or her Option  within such period of time as is  specified  in the
Option Agreement,  to the extent the Option is vested on the date of termination
(but in no event  later than the  expiration  of the term of such  Option as set
forth in the Option Agreement). In the absence of a specified time in the Option
Agreement,  the Option shall remain exercisable for twelve (12) months following
the Optionee's termination.  If, on the date of termination, the Optionee is not
vested as to his or her  entire  Option,  the  Shares  covered  by the  unvested
portion of the Option  shall  revert to the Plan.  If,  after  termination,  the
Optionee does not exercise his or her Option within the time  specified  herein,
the Option shall  terminate,  and the Shares covered by such Option shall revert
to the Plan.

                  (d) Death of  Optionee.  If an  Optionee  dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option  Agreement  (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person  who  acquires  the  right to  exercise  the  Option by  bequest  or
inheritance,  but only to the  extent  that the  Option is vested on the date of
death.  In the absence of a specified time in the Option  Agreement,  the Option
shall  remain  exercisable  for twelve  (12)  months  following  the  Optionee's
termination.  If, at the time of death,  the Optionee is not vested as to his or
her entire  Option,  the Shares  covered by the  unvested  portion of the Option
shall  immediately  revert to the  Plan.  The  Option  may be  exercised  by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or  distribution.  If the Option is not so exercised  within the time  specified
herein, the Option shall terminate,  and the Shares covered by such Option shall
revert to the Plan.

                  (e) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option  previously  granted based
on  such  terms  and  conditions  as  the  Administrator   shall  establish  and
communicate to the Optionee at the time that such offer is made.

         11.  Non-Transferability of Options. Unless determined otherwise by the
Administrator,  an  Option  may not be sold,  pledged,  assigned,  hypothecated,
transferred,  or disposed of in any manner  other than by will or by the laws of
descent  or  distribution  and may be  exercised,  during  the  lifetime  of the
Optionee,   only  by  the  Optionee.   If  the  Administrator  makes  an  Option
transferable,  such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.


                                      -6-
<PAGE>


         12. Adjustments Upon Changes in Capitalization,  Dissolution, Merger or
Asset Sale.

                  (a) Changes in Capitalization.  Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding  Option, and the number of shares of Common Stock which have
been  authorized for issuance under the Plan but as to which no Options have yet
been  granted  or which  have been  returned  to the Plan upon  cancellation  or
expiration of an Option,  as well as the price per share of Common Stock covered
by each such  outstanding  Option,  shall be  proportionately  adjusted  for any
increase or decrease in the number of issued  shares of Common  Stock  resulting
from a  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification  of the Common Stock,  or any other increase or decrease in the
number  of  issued  shares  of  Common  Stock   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

                  (b) Dissolution or  Liquidation.  In the event of the proposed
dissolution or liquidation of the Company,  the Administrator  shall notify each
Optionee as soon as  practicable  prior to the  effective  date of such proposed
transaction.  The Administrator in its discretion may provide for an Optionee to
have the right to exercise  his or her Option  until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the  Option  would not  otherwise  be  exercisable.  In  addition,  the
Administrator  may provide that any Company  repurchase option applicable to any
Shares  purchased  upon exercise of an Option shall lapse as to all such Shares,
provided the proposed  dissolution or liquidation takes place at the time and in
the manner contemplated.  To the extent it has not been previously exercised, an
Option will terminate  immediately  prior to the  consummation  of such proposed
action.

                  (c)  Merger  or Asset  Sale.  In the  event of a merger of the
Company with or into another  corporation,  or the sale of substantially  all of
the  assets of the  Company,  each  outstanding  Option  shall be  assumed or an
equivalent option or right substituted by the successor  corporation or a Parent
or  Subsidiary  of the  successor  corporation.  In the event that the successor
corporation  refuses to assume or substitute for the Option,  the Optionee shall
fully  vest in and  have the  right  to  exercise  the  Option  as to all of the
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable.  If an Option  becomes  fully  vested  and  exercisable  in lieu of
assumption  or  substitution  in the  event of a merger or sale of  assets,  the
Administrator  shall notify the Optionee in writing or  electronically  that the
Option shall be fully vested and  exercisable  for a period of fifteen (15) days
from the date of such notice, and the Option shall terminate upon the expiration
of such  period.  For the  purposes  of this  paragraph,  the  Option  shall  be
considered  assumed if,  following  the merger or sale of assets,  the option or
right  confers  the right to  purchase  or  receive,  for each Share of Optioned
Stock,  immediately  prior to the  merger or sale of assets,  the  consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common  Stock for each Share held on the  effective
date of the transaction (and if holders were offered a choice of  consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets is not solely  common stock of the successor  corporation  or its
Parent,  the Administrator  may, with the consent of the successor  corporation,
provide for the  consideration  to be received  upon the exercise of the Option,
for each Share of  Optioned  Stock to be solely  common  stock of the  successor
corporation  or  its  Parent  equal  in  fair  market  value  to the  per  share
consideration  received  by  holders  of Common  Stock in the  merger or sale of
assets.

         13.  Date of Grant.  The date of grant of an Option  shall be,  for all
purposes,  the date on which the Administrator makes the determination  granting
such Option,  or such other later date as is  determined  by the


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Administrator.  Notice of the  determination  shall be provided to each Optionee
within a reasonable time after the date of such grant.

         14. Amendment and Termination of the Plan.

                  (a)  Amendment  and  Termination.  The  Board  may at any time
amend,  alter,  suspend  or  terminate  the Plan.

                  (b)  Effect  of  Amendment  or   Termination.   No  amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee,  unless  mutually  agreed  otherwise  between  the  Optionee  and  the
Administrator, which agreement must be in writing and signed by the Optionee and
the  Company.  Termination  of the Plan  shall not  affect  the  Administrator's
ability to exercise the powers  granted to it hereunder  with respect to options
granted under the Plan prior to the date of such termination.

15.      Conditions Upon Issuance of Shares.

                  (a) Legal  Compliance.  Shares shall not be issued pursuant to
the  exercise of an Option  unless the  exercise of such Option and the issuance
and  delivery of such Shares  shall  comply  with  Applicable  Laws and shall be
further  subject to the approval of counsel for the Company with respect to such
compliance.

                  (b) Investment Representations. As a condition to the exercise
of an Option the  Company  may  require  the person  exercising  such  Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased  only for  investment  and without any  present  intention  to sell or
distribute  such Shares if, in the opinion of counsel  for the  Company,  such a
representation is required.

         16.  Inability  to Obtain  Authority.  The  inability of the Company to
obtain authority from any regulatory body having  jurisdiction,  which authority
is deemed by the  Company's  counsel to be necessary to the lawful  issuance and
sale of any Shares  hereunder,  shall  relieve the Company of any  liability  in
respect of the failure to issue or sell such  Shares as to which such  requisite
authority shall not have been obtained.

         17. Reservation of Shares.  The Company,  during the term of this Plan,
will at all times reserve and keep  available  such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.


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<PAGE>



                       1996 SUPPLEMENTAL STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         Unless  otherwise  defined herein,  the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I.       NOTICE OF STOCK OPTION GRANT

         [Optionee's Name and Address]

         You have  been  granted  an  option  to  purchase  Common  Stock of the
Company,  subject  to the  terms  and  conditions  of the Plan  and this  Option
Agreement, as follows:

         Grant Number
                                                     ---------------------------

         Date of Grant
                                                     ---------------------------

         Vesting Commencement Date
                                                     ---------------------------

         Exercise Price per Share                    $
                                                      --------------------------

         Total Number of Shares Granted
                                                     ---------------------------

         Total Exercise Price                        $
                                                      --------------------------

         Type of Option:                             Nonstatutory Stock Option

         Term/Expiration Date:
                                                     ---------------------------

         Vesting Schedule:

         Subject to the  Optionee  continuing  to be a Service  Provider on such
dates,  this Option shall vest and become  exercisable  in  accordance  with the
following schedule:

         25% of the Shares  subject to the Option shall vest twelve months after
the Vesting  Commencement  Date,  and 1/48th of the Shares subject to the Option
shall vest upon the last day of each month thereafter,  beginning with the first
full quarter after the one year anniversary of the Vesting Commencement Date.

         Termination Period:

         This Option may be exercised for three (3) months after Optionee ceases
to be a Service  Provider.  Upon the death or Disability  of the Optionee,  this
Option may be exercised  for such longer  period as provided in the Plan.  In no
event  shall this Option be  exercised  later than the  Term/Expiration  Date as
provided above.


<PAGE>


II.      AGREEMENT

         1. Grant of Option. The Plan Administrator of the Company hereby grants
to the  Optionee  named  in the  Notice  of  Grant  attached  as  Part I of this
Agreement  (the  "Optionee")  an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the  "Exercise  Price"),  subject to the terms and
conditions of the Plan,  which is incorporated  herein by reference.  Subject to
Section  14(b) of the Plan,  in the event of a  conflict  between  the terms and
conditions of the Plan and the terms and  conditions  of this Option  Agreement,
the terms and conditions of the Plan shall prevail.

         2. Exercise of Option.

                  (a) Right to Exercise.  This Option is exercisable  during its
term in accordance with the Vesting  Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.

                  (b) Method of Exercise. This Option is exercisable by delivery
of an  exercise  notice,  in the  form  attached  as  Exhibit  A (the  "Exercise
Notice"),  which shall state the election to exercise the Option,  the number of
Shares  in  respect  of which  the  Option is being  exercised  (the  "Exercised
Shares"),  and such other  representations  and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed  by the Optionee and  delivered to the  Secretary of the Company.  The
Exercise Notice shall be accompanied by payment of the aggregate  Exercise Price
as to all  Exercised  Shares.  This Option shall be deemed to be exercised  upon
receipt by the Company of such fully  executed  Exercise  Notice  accompanied by
such aggregate Exercise Price.

                  No Shares  shall be issued  pursuant  to the  exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming
such  compliance,  for  income  tax  purposes  the  Exercised  Shares  shall  be
considered  transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.

         3. Method of Payment.  Payment of the aggregate Exercise Price shall be
by any of the  following,  or a  combination  thereof,  at the  election  of the
Optionee:

                  (a)      cash; or

                  (b)      check; or

                  (c)      promissory note; or

                  (d)  consideration  received by the  Company  under a cashless
exercise program implemented by the Company in connection with the Plan; or

                  (e)  surrender of other Shares which (i) in the case of Shares
acquired  upon  exercise of an option,  have been owned by the Optionee for more
than six (6) months on the date of surrender,  and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate  Exercise Price of the Exercised
Shares; or

                  (f) a reduction in the amount of any Company  liability to the
Optionee,  including any liability attributable to the Optionee's  participation
in any Company-sponsored deferred compensation program or arrangement; or


                                      -2-
<PAGE>


                  (g) such other  consideration  and  method of payment  for the
issuance of Shares to the extent permitted by Applicable Laws.

         4. Non-Transferability of Option. This Option may not be transferred in
any manner  otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this  Option  Agreement  shall be  binding  upon the  executors,
administrators, heirs, successors and assigns of the Optionee.

         5. Term of Option.  This Option may be  exercised  only within the term
set out in the Notice of Grant,  and may be  exercised  during such term only in
accordance with the Plan and the terms of this Option Agreement.

         6. Tax Consequences.  Some of the federal tax consequences  relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE,  AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE  OPTIONEE  SHOULD  CONSULT A TAX ADVISER  BEFORE  EXERCISING  THIS OPTION OR
DISPOSING OF THE SHARES.

                  (a)  Exercising  the Option.  The Optionee  may incur  regular
federal  income tax  liability  upon  exercise of an NSO. The  Optionee  will be
treated as having received  compensation  income (taxable at ordinary income tax
rates) equal to the excess,  if any, of the Fair Market  Value of the  Exercised
Shares on the date of  exercise  over their  aggregate  Exercise  Price.  If the
Optionee is an Employee or a former  Employee,  the Company  will be required to
withhold  from his or her  compensation  or collect from Optionee and pay to the
applicable  taxing  authorities  an amount in cash equal to a percentage of this
compensation  income  at the time of  exercise,  and may  refuse  to  honor  the
exercise  and  refuse to  deliver  Shares if such  withholding  amounts  are not
delivered at the time of exercise.

                  (b)  Disposition  of Shares.  If the Optionee holds NSO Shares
for at least one year,  any gain realized on  disposition  of the Shares will be
treated as long-term capital gain for federal income tax purposes.

         7. Entire Agreement;  Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with  respect to the subject  matter  hereof and  supersede in their
entirety all prior  undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof,  and may not be modified  adversely to the
Optionee's  interest  except by means of a writing  signed  by the  Company  and
Optionee.  This agreement is governed by the internal  substantive laws, but not
the choice of law rules, of California.

         8. NO GUARANTEE OF CONTINUED SERVICE.  OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES  PURSUANT TO THE  VESTING  SCHEDULE  HEREOF IS EARNED
ONLY BY  CONTINUING  AS A SERVICE  PROVIDER AT THE WILL OF THE COMPANY  (AND NOT
THROUGH THE ACT OF BEING HIRED,  BEING  GRANTED AN OPTION OR  PURCHASING  SHARES
HEREUNDER).  OPTIONEE FURTHER  ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT,  THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT  CONSTITUTE  AN EXPRESS OR IMPLIED  PROMISE  OF  CONTINUED  ENGAGEMENT  AS A
SERVICE  PROVIDER FOR THE VESTING PERIOD,  FOR ANY PERIOD,  OR AT ALL, AND SHALL
NOT  INTERFERE  WITH  OPTIONEE'S  RIGHT  OR THE  COMPANY'S  RIGHT  TO  TERMINATE
OPTIONEE'S  RELATIONSHIP  AS A SERVICE  PROVIDER  AT ANY TIME,  WITH OR  WITHOUT
CAUSE.


                                      -3-
<PAGE>


         By your  signature and the  signature of the  Company's  representative
below,  you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement.  Optionee has
reviewed  the Plan and  this  Option  Agreement  in their  entirety,  has had an
opportunity  to obtain the  advice of counsel  prior to  executing  this  Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding,  conclusive and final all decisions
or  interpretations of the Administrator upon any questions relating to the Plan
and Option  Agreement.  Optionee  further  agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE:                                  PINNACLE SYSTEMS, INC.


-----------------------------------        -------------------------------------
Signature                                  By


-----------------------------------        -------------------------------------
Print Name                                 Title


-----------------------------------
Residence Address


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


                                      -4-
<PAGE>

                                    EXHIBIT A

                       1996 SUPPLEMENTAL STOCK OPTION PLAN

                                 EXERCISE NOTICE

Pinnacle Systems, Inc.
280 N. Bernardo Avenue
Mountain View, CA 94043
Attention: Secretary

         1. Exercise of Option. Effective as of today, ________________,  199__,
the undersigned  ("Purchaser") hereby elects to purchase  ______________  shares
(the  "Shares") of the Common Stock of Pinnacle  Systems,  Inc. (the  "Company")
under and pursuant to the 1996  Supplemental  Stock Option Plan (the "Plan") and
the Stock Option Agreement dated, 19___ (the "Option  Agreement").  The purchase
price for the Shares shall be $, as required by the Option Agreement.

         2. Delivery of Payment.  Purchaser herewith delivers to the Company the
full purchase price for the Shares.

         3. Representations of Purchaser.  Purchaser acknowledges that Purchaser
has received,  read and understood the Plan and the Option  Agreement and agrees
to abide by and be bound by their terms and conditions.

         4. Rights as  Shareholder.  Until the  issuance  (as  evidenced  by the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the  Company) of the Shares,  no right to vote or receive  dividends or
any other  rights as a  shareholder  shall  exist with  respect to the  Optioned
Stock,  notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as  practicable  after exercise of the Option.
No  adjustment  will be made for a dividend  or other right for which the record
date is prior to the date of  issuance,  except as provided in Section 13 of the
Plan.

         5. Tax  Consultation.  Purchaser  understands that Purchaser may suffer
adverse tax  consequences as a result of Purchaser's  purchase or disposition of
the Shares.  Purchaser  represents  that  Purchaser has  consulted  with any tax
consultants  Purchaser  deems  advisable  in  connection  with the  purchase  or
disposition  of the Shares and that  Purchaser is not relying on the Company for
any tax advice.

         6. Entire  Agreement;  Governing Law. The Plan and Option Agreement are
incorporated  herein  by  reference.  This  Agreement,  the Plan and the  Option
Agreement  constitute  the entire  agreement  of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements  of the  Company and  Purchaser  with  respect to the subject  matter
hereof, and may not be modified adversely to the Purchaser's  interest except by
means of a writing  signed by the  Company  and  Purchaser.  This  agreement  is
governed by the internal  substantive  laws, but not the choice of law rules, of
California.


<PAGE>




Submitted by:                                 Accepted by:

OPTIONEE:                                     PINNACLE SYSTEMS, INC.


-----------------------------------           ----------------------------------
Signature                                     By


-----------------------------------           ----------------------------------
Print Name                                    Title


                                              ----------------------------------
                                              Date Received



Address:                                      Address:
-------                                       -------


                                              280 N. Bernardo Avenue
-----------------------------------           Mountain View, CA  94043


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


                                      -2-