Document:

<PAGE>

                                                                   EXHIBIT 10.22

                           STOCK PURCHASE AGREEMENT

          This Stock Purchase Agreement (this "Agreement") is made as of
November 9, 2000 by and among Global Payments Inc., a Georgia corporation (the
"Company"), Canadian Imperial Bank of Commerce, a bank governed by the Bank Act
(Canada) (the "Investor"), and, acting as guarantor of the Company's obligations
hereunder, National Data Corporation, a Delaware corporation ("NDC").

          WHEREAS, the Company, through its wholly-owned subsidiary, National
Data Payment Systems, a New York corporation ("NDPS"), operates, among other
things, a Merchant Business (as defined in the Asset Purchase Agreement, dated
as of the date hereof, between NDPS and the Investor (the "Asset Purchase
Agreement")) pursuant to agreements between the Investor and certain Merchants
(as defined in the Asset Purchase Agreement);

          WHEREAS, the Investor desires to sell and transfer, and NDPS desires
to purchase and assume, certain assets and liabilities related to the Investor's
Merchant Business and to enter into certain other agreements in connection
therewith, all on the terms and subject to the conditions set forth in the Asset
Purchase Agreement; and

          WHEREAS, the Asset Purchase Agreement requires, as a condition to
closing, that the Company and the Investor enter into this Agreement.

          NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, the parties hereto agree as follows:

                                   SECTION 1
                                   ---------

                                  DEFINITIONS
                                  -----------

          1.1.  Definitions. Unless otherwise defined herein, capitalized terms
          -----------------
used in this Agreement that are defined in the Asset Purchase Agreement shall
have the meanings given such terms in the Asset Purchase Agreement. The
following terms shall have the following meanings:

          "Closing" has the meaning set forth in Section 3.1.

          "Closing Date" has the meaning set forth in Section 3.1.

          "Common Stock" has the meaning set forth in Section 4.6(a).

          "Company Material Adverse Effect" means, for the purposes of this
     Agreement, a material adverse effect, singly or in the aggregate taking
     into account all representations containing a Company Material Adverse
     Effect qualifier, which could result in a loss of 20% or more in annual
     revenue, a 20% or more increase in expenses or a 20% or more reduction in
     the value of the assets of the Company from the revenue, expense and asset
     values, respectively, set forth on the financial statements of the Company
     for the twelve
<PAGE>

     months ended May 31, 2000 (as set forth in the Form 10 Filing) or that
     would otherwise be reasonably expected to result in a material limitation
     on the Company's ability to perform its obligations under any of the
     Operative Documents.

          "Company SEC Documents" has the meaning set forth in Section 4.7(a).

          "Company's Knowledge" or other references to the "Knowledge of the
     Company" or words of similar import shall mean the actual knowledge after
     reasonable inquiry of Paul R. Garcia, Thomas M. Dunn, James Kelly, Barry
     Lawson, Suellyn Tornay and Vincent Perrelli, or any person who has assumed
     any of the duties and responsibilities of the any of the foregoing
     individuals prior to the time the applicable representation or warranty is
     being made.

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

          "Financial Statements" means the balance sheets, statements of income,
     statements of changes in the Investor's equity in division and statements
     of cash flows of the Investor in respect of the Merchant Business as at and
     for the fiscal year ending October 31, 1999 and the nine-month period
     ending July 31, 2000 and the accompanying statements of income for the year
     then ended.

          "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
     1976, as amended.

          "Initial Transferred Shares" has the meaning set forth in Section
     2.1(a).

          "Investor Material Adverse Effect" means, for the purposes of this
     Agreement, a material adverse effect, singly or in the aggregate taking
     into account all representations containing an Investor Material Adverse
     Effect qualifier, which could result in a loss of 5% or more in annual
     revenue, a 3% or more increase in annual expenses, or a 3% or more
     reduction in the value of the applicable assets, from the revenues, expense
     and asset values, respectively, set forth on the Financial Statements or
     would otherwise be reasonably expected to result in a material limitation
     on the Investor's ability to perform its obligations under any of the
     Operative Documents.

          "Purchase Price" has the meaning set forth in Section 2.1.

          "Remaining Transferred Shares" has the meaning set forth in Section
     2.1(b).

          "SEC" means the United States Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Transferred Shares" has the meaning set forth in Section 2.1.

          "Voting Securities" means at any time (i) shares of any class of
     capital stock or other securities of the Company which are then entitled to
     vote generally in the election of Directors and not solely upon the
     occurrence and during the continuation of certain

                                       2
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     specified events, and (ii) securities of the Company convertible into, or
     exchangeable or exercisable for, the securities described in clause (i),
     and options, warrants or other rights to acquire such securities
     (regardless of whether such securities, options, warrants or other rights
     are then exercisable or convertible).

                                   SECTION 2
                                   ---------

                          PURCHASE AND SALE OF STOCK
                          --------------------------

          2.1.  Purchase and Sale of Common Stock. Subject to the terms and
          ---------------------------------------
conditions hereof, the Company hereby agrees to issue and sell to the Investor,
and the Investor agrees to purchase from the Company, that number of shares of
Common Stock equal to 26.25% of the total number of shares of Common Stock
outstanding on a diluted basis (as determined in accordance with GAAP) on the
Closing Date after giving effect to such purchase (the "Transferred Shares"),
for a purchase price equal to the Cash Amount (the "Purchase Price"). The
delivery of the Transferred Shares shall occur as follows:

          (a)   on the Closing Date, the Company shall deliver that number of
shares of Common Stock equal to 26.25% of the total number of shares of Common
Stock issued and outstanding after giving effect to the purchase (the "Initial
Transferred Shares"); and

          (b)   no later than 60 days following the Closing Date, the Company
shall deliver that number of additional shares of Common Stock equal to the
difference between (i) 26.25% of the total number of shares of Common Stock
outstanding on a diluted basis (as determined in accordance with GAAP) after
giving effect to the issuance of the Initial Transferred Shares and calculated
as of the Closing Date and (ii) the Initial Transferred Shares.

                                   SECTION 3
                                   ---------

                                    CLOSING
                                    -------

          3.1.  Closing.  The closing of the sale and purchase of the
          -------------
Transferred Shares (the "Closing"), shall take place on the same date as the
closing of the transactions contemplated in the Asset Purchase Agreement (the
"Closing Date"). The Closing shall take place at the offices of Simpson Thacher
& Bartlett, 425 Lexington Avenue, New York, New York, or at such other location
as the parties hereto agree. The Company and the Investor agree to use their
Commercially Reasonable Efforts to consummate the Closing on the terms and
subject to the conditions set forth in this Agreement. At the Closing, subject
to the terms and conditions hereof:

          (a)   the Company shall deliver to the Investor a certificate
representing the Transferred Shares; and

          (b)   the Investor shall satisfy the Purchase Price by delivering to
(and endorsing in favor of, if required) the Company the same form of
consideration received by the Investor from NDPS in satisfaction of the Cash
Amount pursuant to Section 4.1(a)(i) of the Asset Purchase Agreement.

                                       3
<PAGE>

                                   SECTION 4
                                   ---------

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                 ---------------------------------------------

          The Company represents and warrants as follows to the Investor and
acknowledges and confirms that the Investor is relying upon the following
representations and warranties in connection with the purchase by the Investor
of the Transferred Shares.

          4.1.  Organization. The Company is a corporation duly organized and
          ------------------
validly existing under the Laws of the State of Georgia. The Company has all
requisite corporate power to own and to carry on its business as now being
conducted and is duly qualified, licensed or registered to carry on its business
in the jurisdictions in which the ownership of its property or the conduct of
its business makes such qualification necessary or where the Company owns or
leases any material properties or assets or conducts any material business,
except jurisdictions in which the failure to be so qualified, licensed or
registered would not, individually or in the aggregate, have or reasonably be
expected to result in a Company Material Adverse Effect.

          4.2.  Authority. The Company has the corporate power and authority to
          ---------------
enter into and perform its obligations under this Agreement and each of the
other Operative Documents to which it is a party and to effect the transactions
contemplated hereby and thereby. The execution, delivery and performance of the
Operative Documents to which it is a party have been approved by all requisite
corporate action on the part of the Company, and, assuming this Agreement
constitutes the legally valid and binding agreement of the Investor, this
Agreement constitutes (and each other Operative Document to which the Company is
a party, when executed and delivered, will constitute) a legally valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject only to any limitation under applicable Laws relating to bankruptcy,
insolvency, reorganization, moratorium and other similar Laws relating to or
affecting creditors' rights generally and the discretion that a court may
exercise in the granting of equitable remedies (whether considered in a
proceeding in equity or at law).

          4.3.  Legal Proceedings. Except as set forth on Schedule 4.3, there
          -----------------------                         ------------
are no actions, suits or proceedings pending or, to the Knowledge of the
Company, threatened against the Company that are reasonably likely to be
adversely determined and that, if adversely determined, would have a Company
Material Adverse Effect.

          4.4.  No Violations. Except as set forth in Schedule 4.4, the
          -------------------                         ------------
execution, delivery and performance by the Company of this Agreement and the
other Operative Documents to which it is a party will not (i) violate, conflict
with, result in a breach of or constitute a default under (with or without
notice or lapse of time or both) any agreement, indenture, mortgage or lease to
which the Company is a party or by which the Company or its properties are
bound; (ii) constitute a violation by the Company of any Laws, (iii) violate,
conflict with or allow any other Person to exercise any rights under any of the
terms or provisions of its constituting documents or by-laws or any contracts or
instruments to which it is a party or to which any of its assets or properties
are subject, (iv) violate any order, judgment, injunction or decree of any
court, arbitrator or Governmental Entity against or binding upon the Company,
and/or (v) result in a breach of, or cause the termination or revocation of, any
Authorization held by the Company that is necessary to the ownership of its
properties or the operation of its businesses, other than, in

                                       4
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each of the preceding clauses (i) through (vi), such violations, conflicts,
breaches, defaults or exercise of rights as would not reasonably be expected to
have, either individually or in the aggregate, a Company Material Adverse
Effect.

          4.5.  Compliance with Laws. Except as set forth in Schedule 4.5, the
          --------------------------                         ------------
Company is not in violation of any Law or any Association Rules (as defined in
the Marketing Alliance Agreement) or Clearing System Rules (as defined in the
Marketing Alliance Agreement) applicable to its business or properties in each
jurisdiction in which the Company carries on business or will carry on business
pursuant to the Operative Documents at the time it commences to carry on such
business, other than violations which, individually or in the aggregate, would
not reasonably be expected to result in a Company Material Adverse Effect.
Within the past twelve months and except as set forth on Schedule 4.5, neither
                                                         ------------
the Company nor NDPS nor any of their respective Affiliates has received notice
from any Network Organization or Card Association that the Company or NDPS or
any of their respective Affiliates is not in compliance with any Association
Rules or Clearing System Rules and has not received notice of the assessment of
any fines or penalties due from the Company or NDPS or any of their respective
Affiliates to a Card Association or Network Organization.

          4.6.  Capitalization and Related Matters.
          ----------------------------------------

          (a)  The authorized capital stock of the Company consists of (i)
200,000,000 shares of common stock, no par value (the "Common Stock") and (ii)
5,000,000 shares of preferred stock, no par value; none of which are issued or
outstanding.  All issued and outstanding shares have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with applicable federal and state securities Law and not in violation
of the preemptive rights of any Person.  Except as set forth on Schedule 4.6
                                                                ------------
attached hereto, there are no options, warrants, conversion rights, preemptive
rights, rights of first refusal, or similar rights presently outstanding to
purchase or otherwise acquire from the Company any of the Company's securities.

          (b)  The Transferred Shares to be issued pursuant to the terms of this
Agreement have been duly authorized and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable.  The
Transferred Shares will be issued free and clear of any Liens, are not and will
not be subject to any preemptive rights, rights of first refusal or restrictions
on transfer, except as set forth in the Investor Rights Agreement and except for
restrictions on transfer under applicable Canadian, United States federal and
state securities Laws.

          (c)  As of November 8, 2000, the authorized capital stock of NDC
consists of (i) 200,000,000 shares of common stock, no par value, of which
32,956,215 shares are issued and outstanding, and (ii) 1,000,000 shares of
preferred stock, none of which are issued or outstanding.  All issued and
outstanding shares have been duly authorized and validly issued, are fully paid
and nonassessable and have been issued in compliance with applicable federal and
state securities Law and not in violation of the preemptive rights of any
Person.

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<PAGE>
          4.7.  SEC Filings; Financial Statements; Absence of Certain Changes.
          -------------------------------------------------------------------

          (a)  The Company has timely filed all reports, statements and
documents required to be filed by it with the SEC since September 8, 2000,
including without limitation the Form 10 Filing (collectively, the "Company SEC
Documents"), each of which complied in all material respects with the applicable
requirements of the Securities Act and the rules and regulations promulgated
thereunder, or the Exchange Act and the rules and regulations promulgated
thereunder, each as in effect on the date so filed.  The Company has heretofore
delivered or made available to the Investor or (in the case of any such document
not yet filed with the SEC) promptly will deliver or make available to the
Investor, in the form filed with the SEC (including any amendments thereto),
true and complete copies of the Company SEC Documents.  None of such Company SEC
Documents (including but not limited to any financial statements or schedules
included or incorporated by reference therein) contained when filed (or, if
amended or superseded by a filing prior to the Closing Date, then on the date of
such amending or superseding filing), any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

          (b)  Each of the audited and unaudited pro forma financial statements
of the Company (including any related notes thereto) included in the Company SEC
Documents, complies or, if not yet filed, will comply as to form in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; has been or, if not yet
filed, will have been prepared in accordance with GAAP (except, in the case of
unaudited quarterly statements, as permitted by Form 10-Q under the Exchange
Act) applied on a consistent basis throughout the periods involved (except as
may be disclosed in the notes thereto) and fairly presents or, if not yet filed,
will fairly present the pro forma financial position and historical combined
results of operations and changes in cash flows of the Company as of the
respective dates or for the respective periods reflected therein (subject, in
the case of unaudited quarterly statements, to normal recurring adjustments that
are not material).

          (c)  Except as and to the extent set forth on Schedule 4.7(c) or the
                                                        ---------------
combined balance sheet of the Company at August 31, 2000, including the notes
thereto, included in the Company SEC Documents, the Company has no liabilities,
debts, claims or obligations of any nature (whether accrued, absolute, direct or
indirect, contingent or otherwise, whether due or about to become due) which
would be required to be reflected on a balance sheet or in the notes thereto
prepared in accordance with GAAP, and there is no existing condition or set of
circumstances which would reasonably be expected, individually or in the
aggregate, to result in such a liability, in each case except for (i)
liabilities, debts, claims or obligations incurred in the Ordinary Course since
August 31, 2000, (ii) liabilities incurred pursuant to the terms of or as
contemplated by this Agreement, and (iii) liabilities, debts, claims and
obligations that would not, individually or in the aggregate, have or reasonably
be expected to have a Company Material Adverse Effect.

          4.8.  Authorizations. Except as set forth on Schedule 4.8 and except
          --------------------                         ------------
as would not reasonably be expected to have a Company Material Adverse Effect,
no Authorization is required to be obtained or made by or with respect to the
Company in connection with the execution, delivery or performance by the Company
of the Operative Documents or the consummation of the transactions contemplated
hereby or thereby. Except as set forth on

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<PAGE>

Schedule 4.8 and except as would not reasonably be expected to have a Company
------------
Material Adverse Effect, all Authorizations necessary for the conduct by the
Company of its businesses have been issued or granted to the Company and all
such Authorizations are in full force and effect.

          4.9.  Material Adverse Changes. Since August 31, 2000, no event has
          ------------------------------
occurred or circumstances exist which has had or could reasonably be expected to
result in a Company Material Adverse Effect.

          4.10. No Brokers' or Other Fees. Except with respect to Goldman, Sachs
          -------------------------------
& Co., no broker, finder or investment banker is entitled to any fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Company.

          4.11. Offering Valid. Assuming the accuracy of the representations of
          --------------------
the Investor contained in Section 6 hereof, the offer, sale and issuance of the
Transferred Shares will be exempt from the registration requirements of the
Securities Act and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable United States state securities Laws.

                                   SECTION 5
                                   ---------

                         CERTAIN ADDITIONAL AGREEMENTS
                         -----------------------------

          5.1.  Guarantee. From the date hereof until the Distribution Date, NDC
          ---------------
hereby guarantees full and timely performance by the Company of the Company's
obligations under this Agreement.

          5.2.  Calculation of the Remaining Transferred Shares. Concurrently
          -----------------------------------------------------
with the delivery of the Remaining Transferred Shares pursuant to Section 2.1,
the Company shall execute and deliver a certificate of a senior officer of the
Company setting forth the capitalization of the Company on a diluted basis (as
determined in accordance with GAAP) on such date and the calculation used by the
Company to determine the Remaining Transferred Shares to be issued pursuant to
the terms of this Agreement, which certificate shall be satisfactory to the
Investor.

                                   SECTION 6
                                   ---------

                REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
                ----------------------------------------------

          The Investor represents and warrants as follows to the Company and
acknowledges and confirms that the Company is relying upon the following
representations and warranties in connection with the sale by the Company of the
Transferred Shares.

          6.1.  Investment Representations. The Investor acknowledges that the
          --------------------------------
Transferred Shares have not been registered under the Securities Act or under
any state securities Laws. The Investor (a) is acquiring the Transferred Shares
for investment for its own account,

                                       7
<PAGE>

not as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof, (b) is an "accredited investor" within the
meaning of Regulation D, Rule 501(a), promulgated by the SEC, and (c)
acknowledges that the Transferred Shares must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from the
registration requirements of the Securities Act is available.

          6.2.  Organization. The Investor is a bank governed by the Bank Act
          ------------------
(Canada). The Investor has all requisite corporate power to own and to carry on
its business as now being conducted and is duly qualified, licensed or
registered to carry on its business in the jurisdictions in which the ownership
of its property or the conduct of its business makes such qualification
necessary or where the Investor owns or leases any material properties or assets
or conducts any material business, except jurisdictions in which the failure to
be so qualified, licensed or registered would not, individually or in the
aggregate, have or reasonably be expected to result in an Investor Material
Adverse Effect.

          6.3.  Authority. The Investor has the corporate power and authority to
          ---------------
enter into and perform its obligations under this Agreement and each of the
other Operative Documents to which it is a party and to effect the transactions
contemplated hereby and thereby. The execution, delivery and performance of the
Operative Documents to which it is a party have been approved by all requisite
corporate action on the part of the Investor, and, assuming this Agreement
constitutes the legally valid and binding agreement of the Company, this
Agreement constitutes (and each other Operative Document, when executed and
delivered pursuant hereto, will constitute) a legally valid and binding
obligation of the Investor, enforceable in accordance with its terms, subject
only to any limitation under applicable Laws relating to bankruptcy, insolvency,
reorganization, moratorium and other similar Laws relating to or affecting
creditors' rights generally and the discretion that a court may exercise in the
granting of equitable remedies (whether considered in a proceeding in equity or
at law).

          6.4.  No Violations. The execution, delivery and performance by the
          -------------------
Investor of this Agreement and the other Operative Documents will not (i)
violate, conflict with, result in a breach of or constitute a default under
(with or without notice or lapse of time or both) any agreement, indenture,
mortgage or lease to which the Investor is a party or by which the Investor or
its properties are bound; (ii) constitute a violation by the Investor of any
Laws, (iii) violate, conflict with or allow any other Person to exercise any
rights under any of the terms or provisions of its constituting documents or by-
laws or any contracts or instruments to which it is a party or pursuant to which
any of its assets or properties are subject, (iv) violate any order, judgment,
injunction or decree of any court, arbitrator or Governmental Entity against or
binding upon the Investor, and/or (v) result in a breach of, or cause the
termination or revocation of, any Authorization held by the Investor that is
necessary to the ownership of its properties or the operation of its businesses,
other than, in each of the preceding clauses (i) through (v), such violations,
conflicts, breaches, defaults or exercise of rights as would not reasonably be
expected to have, either individually or in the aggregate, an Investor Material
Adverse Effect.

          6.5.  Authorizations. Except as set forth on Schedule 6.5 and except
          --------------------                         ------------
as would not reasonably be expected to have an Investor Material Adverse Effect,
no Authorization is required to be obtained or made by or with respect to the
Investor in connection with the execution, delivery or performance by the
Investor of the Operative Documents or the

                                       8
<PAGE>

consummation of the transactions contemplated hereby or thereby. Except as set
forth on Schedule 6.5 and except as would not reasonably be expected to have an
         ------------
Investor Material Adverse Effect, all Authorizations necessary for the conduct
by the Investor of its businesses have been issued or granted to the Investor
and all such Authorizations are in full force and effect.

          6.6.  No Brokers' or Other Fees. Except with respect to CIBC World
          -------------------------------
Markets Corp., no broker, finder or investment banker is entitled to any fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Investor.

                                   SECTION 7
                                   ---------

              CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING
              ---------------------------------------------------

          The obligation of the Investor to consummate the Closing is subject to
the fulfillment at or before the Closing of each of the following conditions:

          7.1.  Representations and Warranties. The representations and
          ------------------------------------
warranties of the Company contained in this Agreement and the Operative
Documents shall be true and correct (in all material respects, in the case of
those representations and warranties which are not by their express terms
qualified by reference to materiality) on and as of the Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date, except that any representations and warranties that
are made as of a specified date shall be true and correct (in all material
respects, in the case of those representations and warranties which are not by
their express terms qualified by reference to materiality) as of such date, and
the Company shall have executed and delivered a certificate of a senior officer
of the Company to such effect. The receipt of such certificate and the
consummation of the Closing shall not constitute a waiver by the Investor of any
of the representations and warranties of the Company that are contained in this
Agreement or in any of the other Operative Documents.

          7.2.  Performance. The Company and its Affiliates shall have fulfilled
          -----------------
or complied with all covenants contained in this Agreement and in any other
Operative Document to be fulfilled or complied with by it or such Affiliate,
respectively, at or prior to the Closing, except where the failure to so fulfill
or comply would not reasonably be expected to have a Company Material Adverse
Effect, and the Company shall have executed and delivered a certificate of a
senior officer to that effect. The receipt of such certificate and the
consummation of the Closing shall not constitute a waiver by the Investor of the
covenants of the Company that are contained in this Agreement or in any of the
Operative Documents.

          7.3.  Legal Investment. On the Closing Date, there shall not be in
          ----------------------
effect any Law directing that the purchase and sale of the Transferred Shares
and the other transactions contemplated by this Agreement or any of the other
Operative Documents not be consummated or which has the effect of rendering it
unlawful to consummate such transactions.

          7.4.  Proceedings and Litigation. No action shall have been commenced
          --------------------------------
by any Governmental Entity against any party hereto seeking to restrain or delay
the purchase and sale

                                       9
<PAGE>

of the Transferred Shares or the other transactions contemplated by this
Agreement or any of the other Operative Documents.

          7.5.  Blue Sky Compliance. The Company shall have complied with, and
          -------------------------
the offer and sale of the Transferred Shares pursuant to this Agreement shall be
effective under all United States federal or state or Canadian provincial
securities or blue sky Laws applicable thereto.

          7.6.  Operative Documents. The Investor and an Affiliate of the
          -------------------------
Company shall have entered into the Asset Purchase Agreement, the Marketing
Alliance Agreement, the General Conveyance Agreement, the Transition Agreement,
the Investor Rights Agreement, the Trademark License Agreement and the Credit
Facility.

          7.7.  Bank Regulatory Approvals. The Investor shall have received all
          -------------------------------
consents and approvals required under the Bank Act (Canada) and the Bank Holding
Company Act of 1956, as amended, and any required waiting periods under the HSR
Act shall have expired or been terminated, without the imposition of any
conditions that either party, in its reasonable discretion, considers unduly
burdensome.

          7.8.  Competition Act and Investment Canada Act. (a) Each of the
          -----------------------------------------------
Investor and the Company shall have filed all notices and information required
under Part IX of the Competition Act (Canada) and satisfied any request for
additional information thereunder and the applicable waiting periods shall have
expired without the Commissioner of Competition having notified the Company that
he intends to apply to the Competition Tribunal for an order under Sections 92,
100 or 104 of the Competition Act (Canada) in respect of the transactions
contemplated herein, or the parties shall have received an Advance Ruling
Certificate ("ARC") pursuant to the Competition Act (Canada) from the Commission
of Competition; (b) no proceedings shall have been taken or threatened to be
taken under the merger provisions of Part VIII or under Section 45 of the Act in
respect of the transactions contemplated herein; and (c) Investment Canada shall
have provided a receipt to the Company pursuant to the Investment Canada Act or
the Company shall have received evidence, satisfactory to it, indicating that
the acquisition of the Assets Sold and the Merchant Business is not a reviewable
transaction or, if it is a reviewable transaction, the Minister shall have been
satisfied or deemed to have been satisfied that such acquisition is likely to be
a net benefit to Canada.

          7.9.  Consummation of the Asset Purchase. All the conditions to
          ----------------------------------------
closing set forth in Sections 10.2 and 10.3 of the Asset Purchase Agreement
shall have been satisfied and the transactions contemplated in the Asset
Purchase Agreement shall have been consummated substantially on the terms set
forth therein.

          7.10. Calculation of the Initial Transferred Shares. The Company shall
          ---------------------------------------------------
have executed and delivered a certificate of a senior officer of the Company
setting forth the total number of shares of capital stock of the Company issued
and outstanding on the Closing Date after giving effect to the Closing and the
calculation used by the Company to determine the Initial Transferred Shares to
be issued pursuant to the terms of this Agreement, which certificate shall be
satisfactory to the Investor.

                                       10
<PAGE>

                                   SECTION 8
                                   ---------

              CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
              --------------------------------------------------

          The obligation of the Company to consummate the Closing is subject to
the fulfillment at or before the Closing of each of the following conditions:

          8.1.  Representations and Warranties. The representations and
          ------------------------------------
warranties of the Investor contained in this Agreement shall be true and correct
(in all material respects, in the case of those representations and warranties
which are not by their express terms qualified by reference to materiality) on
and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date,
except that any representations and warranties that are made as of a specified
date shall be true and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified by
reference to materiality) as of such date, and the Investor shall have executed
and delivered a certificate of a senior officer to such effect. The receipt of
such certificate and the consummation of the Closing shall not constitute a
waiver by the Company of any of the representations and warranties of the
Investor that are contained in this Agreement or in any of the other Operative
Documents.

          8.2.  Performance. The Investor shall have fulfilled or complied with
          -----------------
all covenants contained in this Agreement and in any other Operative Document,
respectively, to be fulfilled or complied with by it at or prior to the Closing,
except where the failure to so fulfill or comply would not reasonably be
expected to have a Company Material Adverse Effect, and the Investor shall have
executed and delivered a certificate of a senior officer of the Investor to that
effect. The receipt of such certificate and the consummation of the Closing
shall not constitute a waiver by the Company of the covenants of the Investor
that are contained in this Agreement or in any of the other Operative Documents.

          8.3.  Legal Investment. On the Closing Date, there shall not be in
          ----------------------
effect any Law directing that the purchase and sale of the Transferred Shares
and the other transactions contemplated by this Agreement or any of the other
Operative Documents not be consummated or which has the effect of rendering it
unlawful to consummate such transactions.

          8.4.  Proceedings and Litigation. No action shall have been commenced
          --------------------------------
by any Governmental Authority against any party hereto seeking to restrain or
delay the purchase and sale of the Transferred Shares or the other transactions
contemplated by this Agreement or any of the other Operative Documents.

          8.5.  Blue Sky Compliance. The offer and sale of the Transferred
          -------------------------
Shares pursuant to this Agreement shall be effective under all United States
federal or state or Canadian provincial securities or blue sky Laws applicable
thereto.

          8.6.  Operative Documents. The Investor and an Affiliate of the
          -------------------------
Company shall have entered into the Asset Purchase Agreement, the Marketing
Alliance Agreement, the Transition Agreement, the Investor Rights Agreement and
the Trademark License Agreement.

                                       11
<PAGE>

          8.7.  Bank Regulatory Approvals. The Investor shall have received all
          -------------------------------
consents and approvals required under the Bank Act (Canada) and the Bank Holding
Company Act of 1956, as amended, and any required waiting periods under the HSR
Act shall have expired or been terminated, without the imposition of any
conditions that either party, in its reasonable discretion, considers unduly
burdensome.

          8.8.  Competition Act and Investment Canada Act. (a) Each of the
          -----------------------------------------------
Investor and the Company shall have filed all notices and information required
under Part IX of the Competition Act (Canada) and satisfied any request for
additional information thereunder and the applicable waiting periods shall have
expired without the Commissioner of Competition having notified the Company that
he intends to apply to the Competition Tribunal for an order under Sections 92,
100 or 104 of the Competition Act (Canada) in respect of the transactions
contemplated herein, or the parties shall have received an Advance Ruling
Certificate ("ARC") pursuant to the Competition Act (Canada) from the Commission
of Competition; (b) no proceedings shall have been taken or threatened to be
taken under the merger provisions of Part VIII or under Section 45 of the Act in
respect of the transactions contemplated herein; and (c) Investment Canada shall
have provided a receipt to the Company pursuant to the Investment Canada Act or
the Company shall have received evidence, satisfactory to it, indicating that
the acquisition of the Assets Sold and the Merchant Business is not a reviewable
transaction or, if it is a reviewable transaction, the Minister shall have been
satisfied or deemed to have been satisfied that such acquisition is likely to be
a net benefit to Canada.

          8.9.  Consummation of the Asset Purchase. All the conditions to
          ----------------------------------------
closing set forth in Sections 10.1 and 10.3 of the Asset Purchase Agreement
shall have been satisfied and the transactions contemplated in the Asset
Purchase Agreement shall have been consummated substantially on the terms set
forth therein.

                                   SECTION 9
                                   ---------

                                 MISCELLANEOUS
                                 -------------

          9.1.  Limitation of Claims. Notwithstanding anything to the contrary
          --------------------------
herein, (a) neither the Company nor the Investor shall be entitled to recover
from the other party for any claims for indemnity or damages with respect to any
inaccuracy or breach of any representations or warranties unless and until the
total of all such claims exceeds $500,000 and then only for the amount by which
such claims exceed such amount; (b) in no event shall such recovery exceed
Cdn.$150,000,000 in the aggregate; and (c) in no event shall the Investor or the
Company recover more than once with respect to any inaccuracy or breach of the
same or similar representations or warranties in this Agreement and the Asset
Purchase Agreement with regard to the same event, circumstance or occurrence.

          9.2.  Expenses. Except as otherwise specifically provided in this
          --------------
Agreement, all parties shall pay their own costs and expenses in connection with
this Agreement and the transactions contemplated hereby, including, but not by
way of limitation, all attorney's fees, accounting fees and other expenses.

                                       12
<PAGE>

          9.3.  Notices. All notices, demands and other communications hereunder
          -------------
shall be sent as set forth below, shall be in writing, and shall be delivered in
person; deposited in regular mail, sent via national overnight carrier; or sent
via facsimile as long as the sending party has telephone confirmation that the
entire facsimile was actually received by the receiving party.

                (i) If to the Investor to:

                c/o CIBC World Markets Inc.
                BCE Place, 8th Floor
                161 Bay Street
                Toronto ON M5J 2S8
                Attention:  Executive Vice President, Card Products, Collections
                and Merchant Card Services
                Facsimile No.: (416) 784-6868

                with a copy to:

                Canadian Imperial Bank of Commerce
                Legal and Compliance Division
                199 Bay Street
                Commerce Court West
                15th Floor
                Toronto, Ontario M5L 1A2
                Attention:  Associate General Counsel
                Facsimile No.: (416) 304-2860

                and to:

                Simpson Thacher & Bartlett
                425 Lexington Avenue
                New York, New York 10017
                Attention:  Lee Meyerson, Esq.
                Facsimile No.: (212) 455-2502

                (ii) If to the Company, to:

                National Data Payment Systems, Inc.
                #2 National Data Plaza
                Atlanta, Georgia 30329-2010
                Attention: Office of the Corporate Secretary
                Facsimile No.: (404) 728-2990

                with a copy to:

                National Data Payment Systems, Inc.
                #2 National Data Plaza
                Atlanta, Georgia 30329-2010

                                       13
<PAGE>

                Attention:  Paul R. Garcia, Chief Executive Officer
                Facsimile No.: (404) 728-3412

The persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
Section 9.2.  Any notice, demand or other communication given pursuant to the
provisions of this Section 9.2 shall be deemed to have been given on the date
actually delivered.

          9.4.  Third Party Beneficiaries. Except as provided in Section 9.6,
          -------------------------------
neither party to this Agreement intends this Agreement to benefit or create any
right or cause of action in or on behalf of any Person other than the Company,
the Investor or NDC.

          9.5.  Independent Contractors. Nothing contained in this Agreement or
          -----------------------------
any other Operative Document shall be construed as constituting a partnership,
joint venture or agency between the Company and the Investor. Rather, the
parties shall be deemed independent contractors for all purposes.

          9.6.  Successors and Assigns. All terms and provisions of this
          ----------------------------
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and permitted assigns. This
Agreement and the rights, privileges, duties and obligations of the parties
hereto may not be assigned or delegated by either party without the written
consent of the other party; provided, however, that no such consent shall be
required for the assignment (or designation of performance) by either party of
its rights, privileges, duties and obligations hereunder to a Person
controlling, controlled by or under common control with such party (it being
understood that no such assignment (or designation of performance) shall relieve
the assigning party of its duties or obligations hereunder).

          9.7.  Amendments and Waivers. This Agreement, any of the instruments
          ----------------------------
referred to herein and any of the provisions hereof or thereof shall not be
amended, modified or waived in any fashion except by an instrument in writing
signed by the parties hereto or thereto. No delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

          9.8.  Severability of Provisions. If any provision of this Agreement,
          --------------------------------
or the application of any such provision to any Person or circumstance, shall be
held invalid by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such provision to Persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.

          9.9.  Counterparts. This Agreement may be executed in one or more
          ------------------
counterparts, all of which taken together shall constitute one instrument.

                                       14
<PAGE>

          9.10. Governing Law. This Agreement shall be governed by and construed
          -------------------
in accordance with the Laws of the State of New York applicable to contracts
made and to be performed therein. The Company and the Investor hereby agree to
submit to the jurisdiction of the courts of the State of New York, the courts of
the United States of America for the Southern District of New York, and
appellate courts from any thereof in any action or proceeding arising out of or
relating to this Agreement. The parties hereto irrevocably and unconditionally
waive trial by jury in any legal action or proceeding in relation to this
Agreement and for any counterclaim therein.

          9.11. Captions. The captions contained in this Agreement are for
          --------------
convenience of reference only and do not form a part of this Agreement.

          9.12. Entire Agreement. The making, execution and delivery of this
          ----------------------
Agreement by the parties hereto have been induced by no representations,
statements, warranties or agreements other than those herein expressly set
forth. This Agreement and the other written instruments specifically referred to
herein embody the entire understanding of the parties and there are no further
or other representations, warranties, agreements or understandings, written or
oral, in effect between the parties relating to the subject matter hereof. The
Schedules attached to this Agreement shall, for all purposes of this Agreement,
form an integral part of it.

          9.13. Joint Announcement; Confidentiality. Except as required by Law
          -----------------------------------------
or by any stock exchange, the Company and the Investor agree not to publicly
disclose the transactions contemplated by this Agreement, provided, however,
that promptly after the date hereof, after prior consultation with each other as
to the substance and form of the public disclosure of the transactions
contemplated by this Agreement, the Company and the Investor shall make
individual announcements or a joint announcement of the execution of, and the
transactions provided for under, this Agreement. Notwithstanding the foregoing,
after the Closing, and subject to the confidential provisions set out in any of
the Operative Documents, nothing herein shall prevent either party from
disclosing, either publicly or otherwise, that the transaction contemplated
herein took place, provided that any such disclosure does not contain any
information regarding any term or condition of this Agreement or any Operative
Document which has not been previously disclosed pursuant to a mutually agreed
press release or which has not been approved for disclosure by the other party.

          9.14. Gender and Number. Any reference in this Agreement or any other
          -----------------------
Operative Document to gender includes all genders and words importing the
singular number only shall include the plural and vice versa.

          9.15. Currency. All references in this Agreement or any other
          --------------
Operative Document to dollars, unless otherwise specifically indicated, are
expressed in United States dollars.

          9.16. Time of the Essence. Time shall be of the essence of this
          -------------------------
Agreement.

          9.17. Headings. The section headings of this Agreement are for
          --------------
convenience and shall not by themselves determine the interpretation of this
Agreement.

                                       15
<PAGE>

          9.18. Survival of Warranties. The representations and warranties of
          ----------------------------
the parties contained in or made pursuant to this Agreement shall survive for a
period of one year from the date of the Closing.

          9.19. Additional Agreements of the Parties. Each of the parties, as
          ------------------------------------------
promptly as practicable after the execution of this Agreement, will (i) make, or
cause to be made, all such filings and submissions under all Laws applicable to
it, as may be required for it to consummate the purchase and sale of the
Transferred Shares in accordance with the terms of this Agreement, (ii) use its
Commercially Reasonable Efforts to obtain, or to cause to be obtained, all
Authorizations necessary or advisable to be obtained by it in order to
consummate such transfer, and (iii) use its Commercially Reasonable Efforts to
take, or to cause to be taken, all other actions which are necessary or
advisable in order for it to fulfill its obligations under this Agreement. The
parties will coordinate and cooperate with one another in exchanging such
information and supplying such assistance as may be reasonably requested by each
in connection with the foregoing including, without limitation, providing each
other with all notices and information supplied to or filed with any
Governmental Entity (except for notices and information which the Company or the
Investor, in each case acting reasonably, considers highly confidential and
sensitive which may be filed on a confidential basis), and all notices and
correspondence received from any Governmental Entity.

          9.20. Termination. This Agreement shall be terminated and the
          -----------------
transactions contemplated hereby abandoned at any time prior to the Closing upon
the earlier to occur of:

          (a)  the mutual consent of the Company and the Investor; or

          (b)  termination of the Asset Purchase Agreement in accordance with
the provisions of Article XI thereof.

                                       16
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above set forth.

                         GLOBAL PAYMENTS INC.

                         By:  /s/
                             ----------------------------------------
                             Name:
                             Title:

                         CANADIAN IMPERIAL BANK OF COMMERCE

                         By:  /s/
                             ----------------------------------------
                             Name:  Richard E. Venn
                             Title:  Senior Executive Vice President

                         By:  /s/
                             ----------------------------------------
                             Name:  David Marshall
                             Title:  Vice Chairman

                         With respect to Sections 4.6(c) and 5.1 only:

                         NATIONAL DATA CORPORATION

                         By:  /s/
                             ----------------------------------------
                             Name:
                             Title:

                                       17
<PAGE>

                               Table of Contents

                                                                            Page

                             SECTION 1 DEFINITIONS

1.1.  Definitions..........................................................   1

                     SECTION 2 PURCHASE AND SALE OF STOCK

2.1.  Purchase and Sale of Common Stock....................................   3

                               SECTION 3 CLOSING

3.1.  Closing..............................................................   3

            SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

4.1.  Organization.........................................................   4
4.2.  Authority............................................................   4
4.3.  Legal Proceedings....................................................   4
4.4.  No Violations........................................................   4
4.5.  Compliance with Laws.................................................   5
4.6.  Capitalization and Related Matters...................................   5
4.7.  SEC Filings; Financial Statements; Absence of Certain Changes........   6
4.8.  Authorizations.......................................................   6
4.9.  Material Adverse Changes.............................................   7
4.10. No Brokers' or Other Fees............................................   7
4.11. Offering Valid.......................................................   7

                    SECTION 5 CERTAIN ADDITIONAL AGREEMENTS

5.1.  Guarantee............................................................   7
5.2.  Calculation of the Remaining Transferred Shares......................   7

           SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

6.1.  Investment Representations...........................................   8
6.2.  Organization.........................................................   8
6.3.  Authority............................................................   8
6.4.  No Violations........................................................   8
6.5.  Authorizations.......................................................   9
6.6.  No Brokers' or Other Fees............................................   9

         SECTION 7 CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING

7.1.  Representations and Warranties.......................................   9
7.2.  Performance..........................................................   9
7.3.  Legal Investment.....................................................   9
7.4.  Proceedings and Litigation...........................................  10
7.5.  Blue Sky Compliance..................................................  10
7.6.  Operative Documents..................................................  10
7.7.  Bank Regulatory Approvals............................................  10
7.8.  Competition Act and Investment Canada Act............................  10
7.9.  Consummation of the Asset Purchase...................................  10
7.10. Calculation of the Initial Transferred Shares........................  10

         SECTION 8 CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING

8.1.  Representations and Warranties.......................................  11
8.2.  Performance..........................................................  11
8.3.  Legal Investment.....................................................  11
<PAGE>

8.4.  Proceedings and Litigation...........................................  11
8.5.  Blue Sky Compliance..................................................  11
8.6.  Operative Documents..................................................  12
8.7.  Bank Regulatory Approvals............................................  12
8.8.  Competition Act and Investment Canada Act............................  12
8.9.  Consummation of the Asset Purchase...................................  12

                            SECTION 9 MISCELLANEOUS

9.1.  Limitation of Claims.................................................  12
9.2.  Expenses.............................................................  12
9.3.  Notices..............................................................  13
9.4.  Third Party Beneficiaries............................................  14
9.5.  Independent Contractors..............................................  14
9.6.  Successors and Assigns...............................................  14
9.7.  Amendments and Waivers...............................................  14
9.8.  Severability of Provisions...........................................  14
9.9.  Counterparts.........................................................  15
9.10. Governing Law........................................................  15
9.11. Captions.............................................................  15
9.12. Entire Agreement.....................................................  15
9.13. Joint Announcement; Confidentiality..................................  15
9.14. Gender and Number....................................................  15
9.15. Currency.............................................................  15
9.16. Time of the Essence..................................................  15
9.17. Headings.............................................................  16
9.18. Survival of Warranties...............................................  16
9.19. Additional Agreements of the Parties.................................  16
9.20. Termination..........................................................  16

                                       2Exhibit 4.2

                             PINNACLE SYSTEMS, INC.

                             1996 STOCK OPTION PLAN

                             (As amended July 2000)

         1. Purposes of the Plan. The purposes of this Plan are:

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

                  o to provide additional incentive to Employees,  Directors and
                    Consultants, and

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

         Options  granted  under  the Plan may be  Incentive  Stock  Options  or
Nonstatutory  Stock Options,  as determined by the  Administrator at the time of
grant.

         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.

                  (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,  including  Officers  and
Directors, 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.
For purposes of Incentive  Stock Options,  no such leave may exceed ninety days,
unless  reemployment  upon  expiration of such leave is guaranteed by statute or
contract.  If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option  held by the  Optionee  shall cease to be treated as an  Incentive  Stock
Option and shall be treated for tax  purposes as a  Nonstatutory  Stock  Option.
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)  "Incentive  Stock  Option"  means an Option  intended  to
qualify as an incentive  stock  option  within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

                  (o)  "Nonstatutory  Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

                  (p)  "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.

                  (q) "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.

                  (r)  "Option"  means a stock  option  granted  pursuant to the
Plan.

                  (s) "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.

                                      -2-
<PAGE>

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

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

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

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

                  (x) "Plan" means this 1996 Stock Option Plan.

                  (y) "Rule  16b-3"  means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3,  as in effect when  discretion is being  exercised with
respect to the Plan.

                  (z)  "Service   Provider"  means  an  Employee,   Director  or
Consultant.

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

                  (bb) "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  5,740,000  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); provided, however, that Shares that have actually been issued under
the Plan shall not be  returned to the Plan and shall not become  available  for
future distribution under the Plan.

         4. Administration of the Plan.

                 (a) Procedure.

                           (i) Multiple  Administrative  Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.

                           (ii)   Section   162(m).   To  the  extent  that  the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based  compensation" within the meaning of Section 162(m) of the
Code,  the Plan shall be  administered  by a Committee  of two or more  "outside
directors" within the meaning of Section 162(m) of the Code.

                           (iii) Rule 16b-3. To the extent  desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder  shall be structured to satisfy the  requirements  for exemption under
Rule 16b-3.

                                      -3-
<PAGE>

                           (iv) Other  Administration.  Other  than as  provided
above, 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;

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

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

                           (iv) to approve  forms of Agreement for use under the
Plan;

                           (v)  to  determine  the  terms  and  conditions,  not
inconsistent with the terms of the Plan, of any Option 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;

                           (vi) Reserved;

                           (vii) Reserved;

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

                           (ix)  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;

                           (x) to  modify  or  amend  each  Option  (subject  to
Section 14(c) 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;

                           (xi) 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  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;

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

                                      -4-
<PAGE>

                           (xiii)  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.

                  (d) Option Exchange Program.  The Administrator  shall have no
authority to institute an Option Exchange Program.

         5.  Eligibility.  Nonstatutory  Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

         6. Limitations.

                  (a) Each Option shall be designated in the Option Agreement as
either an  Incentive  Stock  Option or a  Nonstatutory  Stock  Option.  However,
notwithstanding  such designation,  to the extent that the aggregate Fair Market
Value  of  the  Shares  with  respect  to  which  Incentive  Stock  Options  are
exercisable  for the first time by the Optionee  during any calendar year (under
all plans of the Company and any Parent or Subsidiary)  exceeds  $100,000,  such
Options shall be treated as  Nonstatutory  Stock  Options.  For purposes of this
Section 6(a),  Incentive  Stock Options shall be taken into account in the order
in which  they  were  granted.  The Fair  Market  Value of the  Shares  shall be
determined as of the time the Option with respect to such Shares is granted.

                  (b)  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.

                  (c)  The  following  limitations  shall  apply  to  grants  of
Options:

                           (i) No  Service  Provider  shall be  granted,  in any
fiscal year of the Company, Options to purchase more than 800,000 Shares.

                           (ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional  400,000
Shares  which shall not be counted  against  the limits set forth in  subsection
6(c)(i) above.

                           (iii) The  foregoing  limitations  shall be  adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12.

                           (iv) If an Option is canceled in the same fiscal year
of the  Company  in  which  it was  granted  (other  than in  connection  with a
transaction  described  in Section  12),  the  canceled  Option  will be counted
against  the  limits  set  forth in  subsections  (i) and (ii)  above.  For this
purpose, if the exercise price of an Option is reduced,  the transaction will be
treated as a cancellation of the Option and the grant of a new Option.

         7. Term of Plan.  Subject  to  Section  18 of the Plan,  the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 14 of the Plan.

                                      -5-
<PAGE>

         8.  Term of  Option.  The term of each  Option  shall be  stated in the
Option  Agreement.  In the case of an Incentive Stock Option,  the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option granted
to an Optionee  who, at the time the  Incentive  Stock  Option is granted,  owns
stock  representing  more  than ten  percent  (10%) of the  voting  power of all
classes of stock of the  Company or any  Parent or  Subsidiary,  the term of the
Incentive  Stock  Option  shall be five (5) years from the date of grant or such
shorter term as may be provided 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, subject to the following:

                           (i) In the case of an Incentive Stock Option

                                    (1) granted to an Employee  who, at the time
the Incentive  Stock Option is granted,  owns stock  representing  more than ten
percent  (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                                    (2)  granted to any  Employee  other than an
Employee  described in paragraph (A) immediately  above,  the per Share exercise
price shall be no less than 100% of the Fair Market  Value per Share on the date
of grant.

                           (ii) In the case of a Nonstatutory  Stock Option, the
per Share exercise price shall be determined by the Administrator,  but shall be
no less than 100% of the Fair Market Value per Share on the date of grant.

                           (iii)  Notwithstanding the foregoing,  Options may be
granted  with a per Share  exercise  price of less than 100% of the Fair  Market
Value per  Share on the date of grant  pursuant  to a merger or other  corporate
transaction.

                  (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.  In the case of an Incentive Stock Option,  the Administrator
shall determine the acceptable form of consideration at the time of grant.  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

                                      -6-
<PAGE>

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) any  combination  of the  foregoing  methods of
payment; or

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

         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.  Unless  the  Administrator  provides
otherwise,  vesting  of Options  granted  hereunder  shall be tolled  during any
unpaid  leave of  absence.  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 dividend or other right
for which the record date is prior to the date the Shares are issued,  except as
provided in Section 12 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 within such period of
time as is  specified  in the Option  Agreement 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 ninety (90) days  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

                                      -7-
<PAGE>

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  or the  Optionee
suffers  a  Disability  within  ninety  (90)  days of  ceasing  to be a  Service
Provider, 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
one (1) year following 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  or within  ninety (90) days of ceasing to be a Service  Provider,  the
Option may be exercised  until 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 Optionee ceased to be a Service
Provider. If, at the time Optionee ceased to be a Service Provider, 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.

         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,

                                      -8-
<PAGE>

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. 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  subject to the Option  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 subject to the Option,  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  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) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan  amendment to the extent  necessary and desirable to comply
with Applicable Laws.

                  (c)  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

                                       -9-
<PAGE>

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.

         18. Shareholder Approval.  The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such  shareholder  approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -10-
<PAGE>

                             PINNACLE SYSTEMS, INC.

                             1996 STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         Unless  otherwise  defined herein,  the terms defined in the 1996 Stock
Option Plan (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:                         ___ Incentive Stock Option

                                                 ___ Nonstatutory Stock Option

         Term/Expiration Date:                   _________________________

Vesting Schedule:

         This Option may be exercised,  in whole or in part, in accordance  with
the following schedule:

         [25% of the Shares subject to the Option shall vest twelve months after
the  Vesting  Commencement  Date,  and 1/48 of the Shares  subject to the Option
shall vest each month  thereafter,  subject to the Optionee  continuing  to be a
Service Provider on such dates].

         Termination Period:

         This Option may be exercised  for _____  [days/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.

                                      -11-
<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(c) 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.

                  If  designated  in the Notice of Grant as an  Incentive  Stock
Option ("ISO"),  this Option is intended to qualify as an Incentive Stock Option
under  Section  422 of the Code.  However,  if this  Option is intended to be an
Incentive Stock Option,  to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

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

                  (d)  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.

                                      -12-
<PAGE>

         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.

                           (i) Nonstatutory Stock Option. The Optionee may incur
regular  federal  income tax liability upon exercise of a 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.

                           (ii) Incentive Stock Option. If this Option qualifies
as an ISO, the Optionee will have no regular  federal  income tax liability upon
its  exercise,  although  the excess,  if any,  of the Fair Market  Value of the
Exercised  Shares on the date of exercise over their  aggregate  Exercise  Price
will be treated as an  adjustment  to  alternative  minimum  taxable  income for
federal tax purposes and may subject the Optionee to alternative  minimum tax in
the year of exercise.  In the event that the  Optionee  ceases to be an Employee
but remains a Service Provider,  any Incentive Stock Option of the Optionee that
remains unexercised shall cease to qualify as an Incentive Stock Option and will
be treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.

                  (b) Disposition of Shares.

                           (i) NSO.  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.

                           (ii) ISO.  If the  Optionee  holds ISO  Shares for at
least one year  after  exercise  and two years  after the grant  date,  any gain
realized on disposition of the Shares will be treated as long-term  capital gain
for federal income tax purposes.  If the Optionee  disposes of ISO Shares within
one year after  exercise or two years after the grant date, any gain realized on
such  disposition  will be treated as  compensation  income (taxable at ordinary
income  rates) to the  extent of the  excess,  if any,  of the lesser of (A) the
difference  between the Fair Market Value of the Shares  acquired on the date of
exercise and the aggregate  Exercise  Price,  or (B) the difference  between the
sale price of such Shares and the aggregate  Exercise Price. Any additional gain
will be taxed as capital gain,  short-term or long-term  depending on the period
that the ISO Shares were held.

                                      -13-
<PAGE>

                  (c) Notice of Disqualifying  Disposition of ISO Shares. If the
Optionee sells or otherwise  disposes of any of the Shares acquired  pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately  notify the Company
in  writing  of such  disposition.  The  Optionee  agrees  that he or she may be
subject to income tax  withholding  by the  Company on the  compensation  income
recognized  from such early  disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

         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 [state].

         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.

         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

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

                                      -14-
<PAGE>

                                CONSENT OF SPOUSE

         The  undersigned  spouse of Optionee  has read and hereby  approves the
terms and conditions of the Plan and this Option Agreement.  In consideration of
the  Company's  granting  his or her spouse the right to purchase  Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably  bound by the  terms  and  conditions  of the  Plan and this  Option
Agreement  and further  agrees that any  community  property  interest  shall be
similarly bound.  The undersigned  hereby appoints the  undersigned's  spouse as
attorney-in-fact  for the undersigned  with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.

                                                       -------------------------
                                                       Spouse of Optionee

<PAGE>

                                    EXHIBIT A

                             PINNACLE SYSTEMS, INC.

                             1996 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, ________________,  _____,
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 Stock  Option  Plan (the  "Plan") and the Stock
Option Agreement dated, _____ (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 12 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
[state].

<PAGE>

Submitted by:                             Accepted by:

PURCHASER:                                PINNACLE SYSTEMS, INC.

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

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

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

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

__________________________________        280 N. Bernardo Avenue

                                          Mountain View, CA 94043

                                       -2-

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