NEWGEN RESULTS CORP, S-1, 1998-09-02

NEWGEN RESULTS CORP
S-1, 1998-09-02

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NEWGEN RESULTS CORPORATION

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7389 33-0604378
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
</TABLE>

12680 HIGH BLUFF DRIVE, SUITE 300
SAN DIEGO, CALIFORNIA 92130
(619) 481-7545

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------

GERALD L. BENOWITZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NEWGEN RESULTS CORPORATION
12680 HIGH BLUFF DRIVE, SUITE 300
SAN DIEGO, CALIFORNIA 92130
(619) 481-7545

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

COPIES TO:

M. WAINWRIGHT FISHBURN, ESQ. FRANCIS S. CURRIE, ESQ.
LANCE W. BRIDGES, ESQ. NEIL WOLFF, ESQ.
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI
4365 EXECUTIVE DRIVE, SUITE 1100 PROFESSIONAL CORPORATION
SAN DIEGO, CA 92121 650 PAGE MILL ROAD
(619) 550-6000 PALO ALTO, CA 94304
(650) 493-9300

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
------------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C>
Common Stock, $.001 par value......................................................... $46,000,000 $13,750
</TABLE>

(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(o) under the Securities Act of
1933.
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 2, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
SHARES

[LOGO]

COMMON STOCK

Of the shares of Common Stock offered hereby, shares are being
sold by the Company and shares are being sold by the Selling Stockholders.
The Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. See "Principal and Selling Stockholders."

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering price
will be between $ and $ per share. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
The Company has applied to have the Common Stock approved for quotation on the
Nasdaq National Market under the symbol NWGN.
--------------

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.
-------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT (1) COMPANY (2) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share.................. $ $ $ $
Total (3).................. $ $ $ $
</TABLE>

(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.

(2) Before deducting expenses payable by the Company estimated at $725,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to additional shares of Common Stock solely to cover over-allotments,
if any. If all such shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
--------------

The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1998 at the office of the agent of
Hambrecht & Quist LLC in New York, New York.

HAMBRECHT & QUIST

BANCBOSTON ROBERTSON STEPHENS

DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED

, 1998
<PAGE>
THE RESULTS PROGRAM

[Gatefold graphic depicting the phases
of the Company's RESULTS Program
as described in the Prospectus]

Customized, Outsourced Database Management, Direct Marketing and Related
Services
for Automobile Dealership and Manufacturers.
<PAGE>
THE NEWGEN SOLUTION

[Diagram listing the Company's database marketing services and depicting the
relationship between the Company, the automobile dealership and the dealership's
customers.]

Increases Service Customers to Dealerships

Increases Revenue Per Customer

Creates Customer Loyalty

Increases Customer Satisfaction

Differentiates Dealership

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

Newgen Results Corporation and Newgen Results Program are trademarks of the
Company. This prospectus also includes trademarks of companies other than
Newgen.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. THE COMMON STOCK OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS."

THE COMPANY

Newgen is a leading provider of customized, outsourced database management,
direct marketing and related services for the service departments of automobile
dealerships and automobile manufacturers. The Company combines its expertise in
database marketing and customer retention services, its focus on customer
service and its in-depth knowledge of automobile service department operations
to provide highly targeted and customized solutions to automobile dealerships
and manufacturers. The Company's RESULTS Program employs efficient and
cost-effective technology to enable dealerships to increase their number of
customers as well as revenues per customer. In addition, the Company's services
improve the operations and processes of a dealership's service department
thereby differentiating a dealership from its competition and promoting
increased customer satisfaction and loyalty. The Company has increased its
dealership customer base from 1,285 as of December 31, 1997, to 1,623 as of June
30, 1998. The Company's revenues have grown at a compound annual growth rate of
170% to $26.4 million in 1997 from $3.6 million in 1995.

Historically, automobile dealerships have focused on sales of automobiles,
viewing the benefits of retaining customers for future service related revenue
as being secondary. Despite declining market share of service related spending
by consumers at dealerships, the percentage of dealership profits generated from
the service department has increased from approximately 16% in 1985 to
approximately 55% in 1996. Thus, dealerships and automobile manufacturers
increasingly are realizing that the service department represents an important
component of dealership profitability. Traditionally, dealerships have promoted
their services through the use of general mass media advertisements, bulk mail
coupons or generic reminder notices. Dealerships are now focusing on their core
competencies of selling and fixing automobiles and outsourcing to experts the
development and implementation of complex processes that support their business
objectives.

Newgen's RESULTS Program is a customized, direct marketing campaign
involving direct mailing and outbound teleservice follow-up to promote
automobile service business from within an automobile dealership's customer
base. Company studies have indicated that dealership customers solicited by the
Company will visit a dealership more than three times as often and spend more
than two and one-half times as much over the course of a year as customers with
similar demographic characteristics not solicited by the Company. The Company
implements its RESULTS Program on behalf of automobile dealerships using
dealership customer and transaction data which is processed and purified to
ensure the data is current and relevant. The Company enhances data provided by
dealerships, combining it with maintenance schedule databases and the Company's
own proprietary databases and algorithms to develop customized solicitations
targeting service visits. The Company's closed-loop system tracks every customer
and enables the Company to provide feedback to dealerships. As a result,
approximately 25% to 30% of dealership customers solicited by Newgen return to
the dealership for vehicle service. This contrasts with response rates for
direct mail marketing campaigns, which typically range between 1% and 3%.

The Company also leverages its expertise in the service department
operations of automobile dealerships by providing consulting services to
dealerships. Newgen's Consulting Division develops and implements new techniques
and programs that enable dealerships to grow their businesses and streamline
inefficient processes. These techniques are then marketed to the Company's
entire dealership base. The Company is also investing significant resources in
developing new and innovative service offerings. The Company has recently
introduced two targeted direct marketing programs: Welcome Home, which is
designed to recapture dealership customers who have defected; and Around the
Wheel, which is designed to increase the sales of brakes and tires at Ford
dealerships.

The Company maintains relationships with leading automobile manufacturers,
including Ford Motor Company. Key elements of the Ford relationship include: (i)
marketing programs developed jointly by the Company and Ford for deployment to
Ford dealerships nationwide; (ii) private labeling by Ford of the Company's
database marketing services; (iii) a consulting engagement involving Ford
dealerships; and (iv) field support involving visits to dealerships accompanied
by a Ford representative. Ford also has acted as a key reference account in the
Company's efforts to develop relationships with other manufacturers.

The Company's strategy for growth is to provide services to more automobile
dealerships, increase the number of active names per dealership, offer a broad
range of customized direct marketing services to automobile dealerships and
leverage its data management capabilities to provide data extraction and data
warehousing services.

The Company was incorporated in California in February 1994 and intends to
reincorporate in Delaware prior to the completion of this offering. The
Company's executive offices are located at 12680 High Bluff Drive, Suite 300,
San Diego, California 92130 and its telephone number is (619) 481-7545.

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company................... shares
Common Stock offered by the Selling Stockholders...... shares
Common Stock to be outstanding after the offering..... shares (1)
Use of proceeds....................................... For working capital and other general
corporate purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol................ NWGN
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND SUPPLEMENTAL OPERATING DATA)

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------------- ----------------------
1993 1994 1995 1996 1997 1997 1998
--------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(2):

Total revenues......................... $ 1,592 $ 2,018 $ 3,614 $11,629 $26,414 $10,625 $19,375
Gross profit (loss).................... 62 195 (513) 1,478 6,017 2,236 4,927
Selling, general and administrative
expenses............................. 117 727 2,178 5,396 6,234 2,774 3,747
Net loss............................... $ (55) $ (596) $ (2,811) $ (4,691) $(2,189) $(1,130) $(1,310)
Pro forma net loss per share (3)....... $ (0.41) $ (0.18)
Pro forma shares used in computing net
loss per share (3)................... 5,287 7,176

SUPPLEMENTAL OPERATING DATA:
Number of dealerships.................. 66 177 802 1,285 985 1,623
Number of active names (4)............. 396,213 1,970,738 2,905,484 2,404,147 3,536,125
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1998
----------------------------------------
AS ADJUSTED
ACTUAL PRO FORMA (5) (6)
--------- ------------- --------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents....................................................... $ 2,133 $ 2,133 $
Working capital................................................................. 5,037 5,037
Total assets.................................................................... 13,276 13,276
Short-term obligations.......................................................... 1,422 1,422
Redeemable preferred stock...................................................... 15,360 --
Total stockholders' equity (deficit)............................................ (8,700) 6,660
</TABLE>

SELECTED QUARTERLY RESULTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1997 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues.................................................. $ 4,962 $ 5,663 $ 6,828 $ 8,961 $ 9,274
Gross profit.................................................... 1,045 1,191 1,613 2,168 2,277
Net loss........................................................ $ (531) $ (599) $ (688) $ (371) $ (663)

JUNE 30,
1998
---------
<S> <C>
Total revenues.................................................. $ 10,101
Gross profit.................................................... 2,650
Net loss........................................................ $ (647)
</TABLE>

4
<PAGE>
- ------------------------

(1) Based on the number of shares outstanding at June 30, 1998. Excludes (i)
555,200 shares of Common Stock subject to outstanding options at such date
at a weighted average exercise price of $0.91 per share, (ii) 116,024 shares
of Common Stock issuable upon exercise of outstanding warrants at a weighted
average exercise price of $1.06 per share, and (iii) an aggregate of
1,500,000 shares reserved for future grant under the Company's 1998 Equity
Incentive Plan, Non-Employee Directors' Stock Option Plan and Employee Stock
Purchase Plan. See "Management" and Notes 7 and 12 of Notes to Consolidated
Financial Statements.

(2) The Company was incorporated in February 1994. The periods prior to February
1994 reflect predecessor operations that have been consolidated as entities
under common control. The Company believes that comparison of financial data
for the year ended December 31, 1993 with subsequent periods is not
meaningful to an understanding of the Company's business, financial
condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 1 of
Notes to Consolidated Financial Statements.

(3) See Note 2 of Notes to Consolidated Financial Statements for an explanation
of the determination of shares used in computing pro forma net loss per
share.

(4) Active names are vehicle identification numbers contained in the Company's
purified database corresponding to vehicle owners solicited by the Company
for vehicle maintenance services on a regular basis. The Company invoices
its dealership customers based on the number of active names for each
dealership. The Company did not track the number of active names in 1994.

(5) Gives effect to the conversion of all outstanding shares of Preferred Stock
into 3,408,741 shares of Common Stock upon completion of the offering.

(6) As adjusted to reflect the sale of shares of Common Stock offered by the
Company hereby at an assumed public offering price of $ per share and the
receipt of the estimated proceeds therefrom together with the repayment of
$600,000 of short-term indebtedness from such proceeds. See "Use of
Proceeds" and "Capitalization."

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

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES (I)
THE REINCORPORATION OF THE COMPANY FROM CALIFORNIA TO DELAWARE WHICH WILL BE
EFFECTIVE PRIOR TO THE COMPLETION OF THE OFFERING, (II) THE CONVERSION OF ALL
OUTSTANDING SHARES OF PREFERRED STOCK INTO COMMON STOCK UPON THE COMPLETION OF
THIS OFFERING, (III) THE FILING OF THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION AUTHORIZING A CLASS OF UNDESIGNATED PREFERRED STOCK, TO BE
EFFECTIVE UPON THE COMPLETION OF THIS OFFERING AND (IV) NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE "DESCRIPTION OF CAPITAL STOCK" AND
"UNDERWRITING."

5
<PAGE>
RISK FACTORS

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN
THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE
SET FORTH BELOW AND ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING RISK FACTORS
SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER INFORMATION IN THIS
PROSPECTUS BEFORE PURCHASING THE SHARES OF COMMON STOCK OFFERED HEREBY.

LIMITED OPERATING HISTORY; HISTORY OF LOSSES. The Company was incorporated
in February 1994 and has a limited operating history, which makes the prediction
of future results difficult. The Company incurred net losses of $4.7 million,
$2.2 million and $1.3 million in 1996, 1997 and the six months ended June 30,
1998, respectively, and had a retained deficit of $12.5 million as of June 30,
1998. A substantial portion of these losses is attributable to the development
of the Company's services and the expansion of the Company's sales and marketing
and technology and product development departments, operations and
infrastructure. To the extent such losses continue, the Company's retained
deficit will increase. The Company anticipates that its operating expenses will
increase as it continues to develop and introduce new services and increase its
dealership base. Because the Company is generally unable to reduce expenses in
the short term to compensate for any unexpected revenue shortfall, any such
shortfall will have an immediate adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
the Company will be profitable in any future period, and recent operating
results may not be considered indicative of future financial performance. The
Company is subject to the risks inherent in the operation of a new business
enterprise, and there can be no assurance that the Company will be able to
successfully address these risks. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

FLUCTUATIONS IN RESULTS OF OPERATIONS. The Company has experienced and
expects to continue to experience fluctuations in quarterly and annual revenues,
gross margins and operating results. Historically, these fluctuations have been
due primarily to fluctuations in consulting revenues, which consist of a small
number of significant contracts. For example, in the fourth quarter of 1997,
total revenues increased by $2.1 million to $9.0 million, primarily as a result
of an increase in consulting revenues. Consulting revenues as a percentage of
total revenues for the ten quarterly periods ended June 30, 1998 ranged from 11%
to 32%. The Company's consulting business currently depends entirely on Ford,
and Ford dealerships account for most of the Company's database marketing
services revenues. Sales to Ford and Ford dealerships represented approximately
75% and 82% of the Company's revenues for the year ended December 31, 1997 and
for the six months ended June 30, 1998, respectively. The Company's current
consulting contract with Ford is expected to be completed in June 1999, and
there can be no assurance that the Company will obtain another contract with
Ford or that Ford will not cancel the current contract early. Any changes in the
Company's relationship with Ford may have a material adverse effect on the
Company's business, financial condition and results of operations.

Fluctuations in the Company's results of operations may be caused by various
factors, including but not limited to: (i) the Company's ability to attract and
implement new dealerships; (ii) cancellation of existing contracts; (iii)
changes in the average revenues per dealership; (iv) introduction of new
services; (v) price competition; (vi) the amount and timing of operating costs
and capital expenditures relating to expansion of the Company's business,
operations and infrastructure, including the rewrite of the Company's database
management and customer retention software and upgrades to computer and
telephony technology; (vii) the Company's ability to retain existing personnel
and attract new personnel in a timely and effective manner; (viii) the Company's
ability to effectively manage growth; (ix) increases in costs of services
provided by third parties or the price of paper, toner or postage; and (x) the
cost of labor. For example, gross margin in the fourth quarter of 1996
decreased, in part, due to the establishment of a Customer Satisfaction
Department, and for 1995 the Company experienced a negative gross margin as a
result of immature processes associated with the early introduction of the
RESULTS Program. In addition, the various services offered by the Company have
different gross margins and, as a result, the Company's revenue mix will affect
its total gross margin. Due to all of the foregoing factors, there can be no
assurance that the Company will realize revenue growth or profitability in the
future, and even if so realized, there can be no assurance as to the level of
such operating results. As a result, the Company's annual

6
<PAGE>
or quarterly operating results may fall below the expectations of security
analysts and investors. In such event, the trading price of the Company's Common
Stock will be materially adversely affected.

DEPENDENCE ON RELATIONSHIP WITH FORD MOTOR COMPANY. Sales to Ford or Ford
dealerships represented approximately 75% and 82% of the Company's revenues for
the year ended December 31, 1997 and for the six months ended June 30, 1998,
respectively, and the Company expects that such sales will continue to comprise
a significant percentage of the Company's revenues for the foreseeable future.
Ford also has acted as a key reference for the Company in its solicitation of
Ford dealerships and other manufacturers as new customers. In part, the
Company's relationship with Ford is dependent on the relationships that the
Company has developed with key management personnel at Ford over the course of
several years; the Company expects that it will need to continue to develop
relationships with existing and future Ford management in order to maintain
strong ties with Ford. The Company's relationship with Ford could be damaged if
certain key employees terminate their employment with the Company. The Company
has not entered into a contract with Ford other than a purchase order relating
to the Company's delivery of consulting services, and Ford dealerships are under
no obligation to use the Company's services. Any change in the Company's
relationship with Ford or any change in Ford's recommendation of the Company's
services would have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's performance will
depend on the Company's ability to develop strong relationships with other
automobile manufacturers. The Company's current consulting contract with Ford is
expected to be completed in June 1999 and there can be no assurance that the
Company will obtain another contract with Ford or that the current contract will
not be cancelled early. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

RISKS ASSOCIATED WITH COMPUTER SOFTWARE REWRITE. The Company has
commissioned a substantial rewrite of its enterprise-wide database management
software that it expects to be completed in the first quarter of 1999. The new
software is being developed by Bolder Heuristics Inc. ("BHI"). There can be no
assurance that BHI will complete the software development in a timely manner or
that the software will perform according to design specifications. This new
enterprise-wide system will be complex and may impair the Company's ability to
provide customer service and result in distribution of incorrect data to various
departments throughout the Company. In addition, there can be no assurance that
the Company's current hardware will be sufficient to support the software
rewrite. The introduction of new services by the Company is dependent upon the
development of the new software. Any delays in the successful completion or
implementation of the software could materially adversely affect the Company's
business, financial condition and results of operations. Other risks related to
the software rewrite include the integration of the new software with the
Company's existing systems, the training of technical personnel to use and
enhance the new system, cost overruns associated with development and
implementation of the system, lost productivity associated with testing and
debugging the software, unexpected defects or failures, credits to customers
that may be required in connection with such defects or failures and additional
costs associated with converting to and supporting the software rewrite, any of
which could have a material adverse effect upon the Company's business,
financial condition and results of operations. See "Business--Technology."

RISKS ASSOCIATED WITH THE INTRODUCTION OF NEW SERVICES. The Company's
future growth will depend, in part, on its ability to enhance its existing
services with new features, develop new services that address the changing needs
of its customers and respond to technological advances and emerging industry
practices in a timely and cost-effective manner. Acceptance of the Company's new
services depends on several factors, including dealerships' needs for such
services, demonstration of tangible benefits of the services, pricing and
dealership industry conditions and trends. The Company recently introduced
Around the Wheel, Welcome Home and data extraction and data warehousing
services, and is currently developing an after-visit follow-up program. There
can be no assurance that the Company's customers will accept or contract with
the Company for its new services. In addition, several of the Company's
competitors have substantially greater resources than the Company, which may
allow them to introduce new services or features before the Company or develop
services or features superior to those of the Company. Even if the Company is
able to develop and introduce new services and features in a timely manner, it
may incur substantial costs in deploying such services and features to its

7
<PAGE>
customers, including costs associated with product development, marketing and
additional personnel. A substantial portion of the $961,000 in technology and
product development expenses incurred in the six months ended June 30, 1998
consisted of expenses related to the development of new services. If the Company
is unable to develop and introduce new services and enhance existing services in
a timely or cost-effective manner, the Company's business, financial condition
and results of operations may be materially adversely affected. See
"Business--Growth Strategy" and "--Services."

DIFFICULTY IN SECURING NEW CONTRACTS. The Company's future growth will
depend in part on the Company's ability to secure new service contracts with
automobile dealerships. If the Company is unable to expand its customer base or
successfully market and sell its services to dealerships, it may not be able to
increase its revenues, or its revenues may decline. In general, the Company's
ability to secure new contracts depends upon several factors, including the
effectiveness of the Company's sales and marketing personnel, the ability of
customer satisfaction representatives to deal proactively with issues as they
arise, the establishment of more manufacturer relationships, the ability of the
Company's sales personnel to gain access to decision makers at the dealership,
the perceived value of the Company's services and the Company's reputation among
dealerships. There can be no assurance that the Company will be able to secure
new contracts in the future or that the Company will successfully retain its
existing contracts. The Company is also seeking to develop relationships with
automobile manufacturers as a means of securing service contracts with
dealerships. In the event the Company is unable to develop such relationships,
its ability to secure or retain service contracts with dealerships may be
hindered. There can be no assurance that the Company will develop such
relationships or that the Company's competitors will not use their greater
financial and other resources to preclude or hinder the Company's efforts to
develop such relationships. Failure to increase market penetration would
restrict the future growth of the Company and would have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business--Growth Strategy."

CONTRACT CANCELLATION RIGHTS; ABSENCE OF LONG-TERM CONTRACTS; DEALERSHIP
TURNOVER. The Company's contracts with dealerships are of various durations.
Most of the Company's contracts may be terminated with thirty day notice at any
time after the initial term, typically six months to two years, with no penalty.
There can be no assurance that dealerships will renew contracts or not cancel
contracts early. The response rate to the Company's solicitations may be
affected by various factors, some of which are outside the control of the
Company, including accuracy of the data in the initial download from a
dealership, effectiveness of the database purification, quality of printing and
mailing services by third parties, pricing and quality of dealership service
departments and competition among dealerships and alternative sources for
service. Any actual or perceived ineffectiveness of the Company's services by
dealerships may result in cancellation of the Company's services. The Company
experiences dealership turnover and although the Company has taken measures to
reduce turnover, there can be no assurance that dealership turnover rates will
not increase in the future. The Company's contracts are subject to substantial
risk of cancellation and, as a result, the number of dealerships contracting for
the Company's services at any given time may not be a reliable indicator or
measure of the Company's future revenues. In addition, some of the Company's
operating expenses are relatively fixed and cannot be reduced in the short term
to compensate for unanticipated variations in the number or size of customers
serviced by the Company. As a result, any termination, significant reduction or
modification of its business relationships with any of its significant
dealerships or with a number of smaller dealerships may have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

COMPETITION. The Company operates in a highly competitive business
environment. The Company competes with a variety of companies, including large
national or multi-national companies which have greater financial resources than
the Company and smaller regional or local companies that are involved to varying
degrees in the same business. Through its Service Systems Division, Reynolds &
Reynolds, Co. ("R&R") offers automobile dealerships database management and
customer retention services that compete directly with those of the Company.
Through its automobile dealership services group, Automatic Data Processing,
Inc. ("ADP") competes with the Company by providing customer retention services
similar to those of the Company. The

8
<PAGE>
Company believes that R&R and ADP each have significantly more dealership
customers than the Company. Moreover, both R&R and ADP have significantly
greater financial resources than the Company and both of them actively compete
against the Company for dealership business. For example, R&R has recently
offered a discount on customer retention systems to dealerships that purchase
certain hardware and software, and ADP has in the past offered free services for
up to three months in order to compete on price. In addition, in March 1997, ADP
acquired Picture Perfect Promotions, Inc., a provider of lower margin, direct
marketing services to automotive dealerships and manufacturers that may enhance
ADP's ability to effectively compete. Moore Corporation Limited also delivers
integrated business communications, personalized direct marketing and other
related services. The Company also competes to a limited degree with other small
customer retention service providers and in-house customer retention systems. As
the trend towards dealership consolidation continues, dealerships will be able
to create internal economies of scale, and could choose to satisfy their needs
internally rather than outsourcing. The decision by the Company's potential
customers to internally develop database management and direct marketing
services could have a material adverse effect on the Company's business,
financial condition and results of operations. Factors affecting the competitive
success of the Company's services include knowledge of dealership service
department operations, value of the services offered, manufacturer
relationships, quality and breadth of service, ability to identify, develop and
offer innovative services, ability to overcome difficulties associated with
replacing incumbent service providers, pricing and reputation among dealerships.
R&R and ADP price their services on a per letter basis and the Company prices
its services based on the number of active names in a dealership's database.
Therefore, meaningful price comparisons between services of the Company and its
competitors are difficult. There can be no assurance that dealerships will not
perceive that the Company's services are priced higher than its competitors,
that the Company's competitors will not increase their emphasis on programs
similar to those offered by the Company, that new competitors will not enter the
market, or that dealerships or automobile manufacturers themselves will not
introduce competing programs.

DEPENDENCE ON CERTAIN SUPPLIERS AND THIRD PARTIES. The Company depends on
certain sole source suppliers for delivery of its services. For example, Delta
Mailing, Inc. ("Delta") is currently the only source for the Company's printing
and direct mail needs. From time to time the Company has experienced certain
quality or performance problems with respect to Delta's services. The Company is
evaluating an alternative source for its printing needs. There can be no
assurance that any such alternative source will perform in a satisfactory manner
or that the Company will not experience quality or performance problems from its
printer in the future. In addition, the Company depends on third parties for
access to the data of a portion of its dealership base. For example, Universal
Computer Systems ("UCS") is the Company's sole source for data updates from
dealerships that use UCS dealership-services software and the Company does not
have a fixed-term contract with UCS to obtain such data. The Company obtains
data updates from most other dealerships by interfacing directly with the
dealership's computer system. A change in dealership computer hardware or
software may inhibit the Company's access to dealership data. Any event that
inhibits the Company from accessing dealership data daily, if widespread, could
have a material adverse effect on the Company's business, financial condition or
results of operations. A sudden unexpected loss of services provided by key
suppliers could have an adverse effect on the Company's results of operations
and could damage Company relationships with affected dealerships. The reliance
on sole or limited source vendors involves risks, including performance
shortfalls and limited control over quality and costs. There can be no assurance
that the Company will not experience quality or performance problems with any of
its sole suppliers. Further, a significant increase in the price of one or more
of these services could materially adversely affect the Company's results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

AUTOMOBILE INDUSTRY AND GENERAL ECONOMIC CONDITIONS. The Company's business
depends on both the profitability of automobile dealerships and the volume of
sales of new automobiles, as well as general economic conditions which may
affect the service and maintenance habits of automobile owners. The automobile
industry is highly cyclical and historically has experienced periods of reduced
demand for new automobiles. When automobile sales decline, dealerships have
historically looked for ways to cut costs, including reducing expenditures for
certain marketing and outsourced functions. General economic conditions have a
direct impact on the

9
<PAGE>
demand for new and used automobiles and may affect the service and maintenance
habits of automobile owners. During periods of economic slowdown, automobile
owners may have their vehicles serviced less often and may be less inclined to
have their vehicles serviced at automobile dealerships, which may have a
reputation for being more expensive than other automotive repair shops. The
Company believes that a downturn in new automobile sales or decreased dealership
profitability could result in contract cancellations and reduced revenues from
its ongoing dealership relationships. As a result, the Company's business,
financial condition and results of operations could be materially adversely
affected by reduced demand for new and used automobiles and any corresponding
decrease in dealership profits. In addition, the automobile dealership industry
has been undergoing consolidation. Such a consolidation trend may result in
decreased demand for outsourcing services as megadealers may decide to implement
data management and marketing services in-house. Such behavior could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business-- Industry Overview."

DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL; ABILITY TO HIRE AND RETAIN KEY
PERSONNEL. The continued success of the Company is largely dependent on the
efforts and abilities of its senior management and other key personnel. The
Company has recently hired a Vice President of Marketing and a Chief Information
Officer. These newly hired officers will need time to assimilate into the
Company and there can be no assurance that such officers will perform as
expected. The Company's Executive Vice President has recently assumed the
responsibilities of the former Vice President of Sales, who is no longer
employed by the Company. As part of the restructuring of its Sales Department,
the Company has also recently modified the commission structure for its sales
personnel. There can be no assurance that such modifications will not result in
a loss of productivity or sales personnel in the Company's Sales Department.
Historically, the Company has experienced turnover in its sales personnel and
there can be no assurance that such turnover will decrease. Furthermore, the
Company generally experiences a time lag between the date sales personnel are
hired and the date such personnel become fully productive. In addition, the
Company's relationship with Ford is substantially dependent upon certain key
personnel. Competition for qualified management and technical personnel is
intense. The loss of the Company's key employees, or the Company's inability to
attract or retain other qualified personnel, could have a material adverse
effect on the Company's business, financial condition and results of operations.
With the exception of four key officers, the Company does not have employment
agreements with any of its key employees which are not terminable at will by
such persons and, with the exception of the President of the Company, the
Company has not obtained key man life insurance on any of its officers. The loss
of certain management personnel could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management."

The Company's achievement of its growth strategy will depend in large part
upon the ability of the Company to attract, integrate, train, motivate and
retain key personnel, including new sales and operations personnel. There can be
no assurance that the Company's efforts to expand its employee base will be
successful or that the cost of such efforts will not exceed the revenue
generated. The Company's inability to manage its employee expansion effectively
could have a material adverse effect on the Company's business, financial
condition and results of operations. Competition for key personnel is intense
and the Company competes in the market for such personnel against numerous
companies, including larger, more established companies with significantly
greater financial resources than the Company. There also can be no assurance
that the Company will be successful in attracting and retaining skilled
personnel. The Company's inability to attract and retain key employees could
have a material adverse effect on the Company's business, financial condition
and results of operations.

FLUCTUATIONS IN PAPER AND TONER PRICES; POSTAGE RATE INCREASES. Significant
quantities of paper and toner are used to generate and mail letters in
connection with the Company's services. The price of paper increased
significantly during 1995 and the price of toner increased significantly in
1996. In addition, Delta increased the price of its services in 1998 due to
further increases in toner prices. The Company generally has not been able to
change its prices to its dealerships to compensate for increases in paper and
toner prices. There can be no

10
<PAGE>
assurance that the price of paper or toner will not change in the future.
Furthermore, although the Company has the right under its dealership contracts
to increase the prices of its services in response to increases in postage
rates, for competitive reasons it may choose to absorb any such postage rate
increases rather than pass them on to dealerships. Any significant increase in
paper or toner prices or postage rate increases that are not passed on to
dealerships could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

MANAGEMENT OF GROWTH. The Company has recently experienced a period of
rapid growth which has placed significant demands on the Company's management
systems, operations, internal controls and financial and physical resources. In
order to address such demands, the Company continues to hire new employees,
invest in new equipment and make other capital expenditures. In addition, if the
Company increases the number of services offered to automobile dealerships and
the number of dealerships to which the Company provides services, it will need
to develop further its financial and managerial controls and reporting systems
and procedures. Furthermore, the Company expects that it will need to expand
into additional facilities as it continues to grow. Failure to expand any of the
foregoing areas in an efficient manner and any inability to manage growth
effectively could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH INVESTMENTS OR ACQUISITIONS. The Company may seek to
expand its operations and leverage its technology, database management and
dealership processes expertise by investing in or acquiring businesses or
technologies complementary to its existing operations. While the Company has
made proposals with respect to investments in or acquisitions of other
businesses, it has not made any commitments or entered into any agreements with
respect to any investment in or acquisition of another business. There can be no
assurance that any future acquisition will be completed or that, if completed,
any such acquisition will be effectively assimilated into the Company's
business. Acquisitions involve numerous risks, including, among others, loss of
key personnel of the acquired company, the difficulty associated with
assimilating the personnel, technology and operations of the acquired company,
the potential disruption of the Company's ongoing business, diversion of
management's attention from other business concerns, integration of
geographically diverse operations, maintenance of uniform standards, controls,
procedures and policies, risks of entering markets in which the Company has no
or limited prior experience and impairment of the Company's reputation and
relationships with employees and customers. There can be no assurance that
operational or financial problems will not occur as a result of any acquisition.
In addition, any future acquisitions may result in the issuance of dilutive
equity securities, the incurrence of debt or contingent liabilities and
amortization expenses related to goodwill and other intangible assets, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations.

DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's success and ability to
compete is dependent in part upon proprietary technology. The Company relies
primarily on a combination of copyright and trademark laws, trade secrets,
nondisclosure agreements and technical measures to protect its proprietary
rights. The Company has no patents. The Company typically enters into
confidentiality and proprietary information agreements with its employees and
limits access to and distribution of its software, documentation and other
proprietary information. There can be no assurance that the Company's
confidentiality agreements, confidentiality procedures or other factors will be
adequate to deter misappropriation or independent third-party development of its
technology or to prevent an unauthorized third party from obtaining or using
information that the Company regards as proprietary. There can be no assurance
that the Company's means of protecting its proprietary rights will be adequate
or that the Company's competitors will not independently develop similar
technology. There can be no assurance that the Company's use of the computer
terminal of an individual at each dealership to extract data does not infringe
the proprietary rights of vendors licensing software to these dealerships.
Furthermore, there can be no assurance that third parties will not assert
infringement claims in the future or, if infringement claims are asserted, that
such claims will be resolved in the Company's favor. Any infringement claims
resolved against the Company could have a material adverse effect upon the
Company's

11
<PAGE>
business, financial condition and results of operation. In addition, litigation
may be necessary in the future to protect the Company's trade secrets or other
intellectual property rights or to determine the validity and scope of the
proprietary rights of others. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on the
Company's business, financial condition and results of operation. See
"Business--Services" and "--Technology."

SYSTEM INTERRUPTION AND SECURITY RISKS. The Company's operations are
dependent on its ability to protect its computer systems and databases against
damage or system interruptions from fire, earthquake, power loss,
telecommunications failure, unauthorized entry or other events beyond the
Company's control. The Company receives data from dealerships primarily via
modem and markets its services, in part, telephonically. A significant amount of
the Company's computer equipment is located at a single site in San Diego,
California. There can be no assurance that unanticipated problems will not cause
a significant system outage or data loss. Despite the implementation of security
measures, the Company's infrastructure may also be vulnerable to break-ins,
computer viruses or other disruptions caused by its customers or others. Any
damage to the Company's databases, failure of communication links, security
breach or other loss that causes interruptions in the Company's operations could
have a material adverse effect on the Company's business, financial condition
and results of operations.

REGULATION OF THE TELEMARKETING INDUSTRY. The Company is subject to varying
degrees of federal, state and local telemarketing regulation. The jurisdiction
of the Federal Trade Commission ("FTC") extends to the telemarketing industry,
including the services the Company provides to its customers. The FTC has
promulgated regulations that, among other things, set standards for
telemarketing practices and conduct. Although FTC regulations and other
governmental regulations have not materially restricted the Company's
operations, there can be no assurance that future regulations adopted by the FTC
or other regulatory bodies will not have a material adverse effect on the
Company. Changes in, or the failure by the Company to comply with, applicable
domestic and international regulations could have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company believes that its telemarketing activities are currently in compliance
with FTC regulations. However, there can be no assurance that violations will
not occur in the future as a result of human error, equipment failure or other
causes. The media often publicizes perceived non-compliance with consumer
protection regulations and violations of notions of fair dealing with consumers.
Any such publicity is potentially damaging to the Company's reputation, its
client relationships and consumer acceptance and loyalty. See
"Business--Telemarketing Regulations."

FUTURE CAPITAL NEEDS. Various elements of the Company's growth strategies,
including its plans to increase the number of dealerships it services, increase
the number of active names per dealership, introduce new services and offer more
customized data management services will require additional capital. There can
be no assurance that funds will be available to the Company on satisfactory
terms, if at all, when needed. Any additional equity capital raised by the
Company is likely to have a dilutive effect on the stockholders of the Company.
If adequate funds are not available to the Company on acceptable terms, it may
be required to scale back its operations or delay or eliminate implementation of
its growth strategies, any of which may have a material adverse effect on the
Company's business, financial condition and results of operations. See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION. Currently, the Company
provides services to automobile dealerships in Canada. The Company may expand
its database management, customized direct marketing services and teleservices
to automobile dealerships in other foreign markets. To date, the Company has had
limited experience providing its services outside the United States and there
can be no assurance that the Company will be successful in introducing or
marketing its services abroad or will not encounter foreign regulation of its
operations. In addition, there are certain risks inherent in doing business in
international markets, such as changes in regulatory requirements, tariffs and
other trade barriers, fluctuations in currency exchange rates, potentially
adverse tax consequences, difficulties in managing or overseeing foreign
operations and cultural differences which may make it difficult to adapt the
Company's services for use in other countries. As a result of these and other
factors, foreign markets for the Company's services may grow more slowly than
the

12
<PAGE>
Company presently anticipates. In addition, there can be no assurance that one
or more of such factors will not have a material adverse effect on the Company's
future international operations and, consequently, on the Company's business,
financial condition and results of operations.

YEAR 2000 COMPLIANCE. The Company uses a significant number of computer
software programs and operating systems in its operations. The use of computer
systems and software products that rely on two-digit date programs to perform
computations and decision-making functions may cause computer systems to
malfunction in the Year 2000 and lead to significant business delays and
disruptions. Year 2000 problems may affect many of the Company's data retrieval,
purification, distribution, financial, administrative and communication
operations. A detailed assessment of all internal computer systems will be
performed and the Company will develop and implement plans to correct potential
Year 2000 problems. Those systems that the Company identifies as being critical
to its business have either been replaced, are being replaced, or are being
corrected through programming modifications. Outside companies such as vendors,
service suppliers and communications providers will be asked to verify their
Year 2000 compliance and test such systems where appropriate. The Company
expects these projects to be successfully completed during 1999. There can be no
assurance, however, that all problems have been foreseen and corrected or that
no material disruption of the Company's business will occur. Potential systems
interruptions and expenditure of significant financial or management resources
to solve any Year 2000 issues may have a material adverse effect on the
Company's business, financial condition and results of operations. Furthermore,
there can be no assurance that the Company's customers and suppliers will be
Year 2000 compliant. Failure of the Company's customers and suppliers to achieve
Year 2000 compliance could result in a reallocation of financial resources to
deal with the issue and reduce customers' ability to utilize the Company's
services, which could have a material adverse effect on the Company's business,
financial condition and results of operation.

BROAD MANAGEMENT DISCRETION OVER USE OF PROCEEDS. The primary purposes of
this offering are to obtain additional working capital, to create a public
market for the Company's Common Stock, to facilitate future access by the
Company to public equity markets and to increase the visibility of the Company.
A significant portion of the anticipated net proceeds to the Company from this
offering has not been designated for specific use. Accordingly, management of
the Company will have broad discretion with respect to the use of these funds.
See "Use of Proceeds."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to this
offering, there has been no public market for the Company's Common Stock. The
initial public offering price will be determined by negotiations between the
Company and the Underwriters and is not necessarily indicative of future market
prices. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. The trading price of the
Company's Common Stock is likely to be highly volatile and subject to wide
fluctuations in response to factors such as actual or anticipated variations in
quarterly operating results, announcements of new services by the Company or its
competitors, disputes or other developments concerning litigation matters,
publicity regarding actual or potential results with respect to new services or
services under development by the Company or its competitors, changes in
recommendations of securities analysts, general market conditions, additions or
departures of key personnel as well as quarterly fluctuations in the Company's
revenues and financial results and other factors, any of which may have a
significant effect on the market price and liquidity of the Common Stock. In
particular, the realization of any of the risks described in these "Risk
Factors" could have a dramatic and material adverse effect on such market price.
In addition, the stock market in recent years has experienced extreme price and
volume fluctuations that have particularly affected the market prices of many
technology companies and that have often been unrelated or disproportionate to
the operating performance of such companies. These fluctuations, as well as
general economic and market conditions, may adversely affect the market price
for the Common Stock.

CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS. Upon completion of this
offering, the Company's principal stockholders, executive officers, directors
and affiliated individuals and entities together will beneficially own
approximately % of the outstanding shares of Common Stock ( % if the
Underwriters' over-allotment option is exercised in full). These stockholders,
acting together, will be able to influence significantly

13
<PAGE>
and possibly control most matters requiring approval by the stockholders of the
Company, including approvals of amendments to the Company's Certificate of
Incorporation, mergers, a sale of all or substantially all of the assets of the
Company, going private transactions and other fundamental transactions. In
addition, the Company's Certificate of Incorporation, as it is proposed to be
amended and restated concurrently with the closing of this offering (the
"Restated Certificate"), does not provide for cumulative voting with respect to
the election of directors. Consequently, the present directors and executive
officers of the Company, together with the Company's principal stockholders,
will be able to control the election of the members of the Board of Directors of
the Company. Such a concentration of ownership could have a material adverse
effect on the price of the Common Stock and may have the effect of delaying or
preventing a change in control of the Company, including transactions in which
stockholders might otherwise receive a premium for their shares over then
current market prices.

ANTI-TAKEOVER PROVISIONS. The Restated Certificate authorizes the Board of
Directors of the Company, without stockholder approval, to issue additional
shares of Common Stock and to fix the rights, preferences and privileges of and
issue up to 2,000,000 shares of Preferred Stock with voting, conversion,
dividend and other rights and preferences that could adversely affect the voting
power or other rights of the holders of Common Stock. The issuance of Preferred
Stock, rights to purchase Preferred Stock or additional shares of Common Stock
may have the effect of delaying or preventing a change in control of the
Company. In addition, the possible issuance of Preferred Stock or additional
shares of Common Stock could discourage a proxy contest, make more difficult the
acquisition of a substantial block of the Company's Common Stock or limit the
price that investors might be willing to pay for shares of the Company's Common
Stock. Further, the Restated Certificate provides that any action required or
permitted to be taken by stockholders of the Company must be effected at a duly
called annual or special meeting of stockholders and may not be effected by
written consent. Special meetings of the stockholders of the Company may be
called only by the Chairman of the Board of Directors, the Chief Executive
Officer of the Company, by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors or by the
holders of 10% of outstanding voting stock of the Company. The Restated
Certificate also provides for staggered terms for the members of the Board of
Directors. These and other provisions contained in the Restated Certificate and
the Company's Bylaws, as well as certain provisions of Delaware law, could delay
or make more difficult certain types of transactions involving an actual or
potential change in control of the Company or its management (including
transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices) and may limit the ability of
stockholders to remove current management of the Company or approve transactions
that stockholders may deem to be in their best interests and, therefore, could
materially adversely affect the price of the Company's Common Stock. See
"Management" and "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of Common
Stock in the public market after the offering or the anticipation of such sales
could have a material adverse effect on then-prevailing market prices. See
"Description of Capital Stock" and "Shares Eligible for Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION. Purchasers of the shares of Common
Stock offered hereby will experience immediate and substantial dilution in net
tangible book value of $ per share, assuming an initial public offering price
of $ per share. Additional dilution will occur upon exercise of outstanding
options. See "Dilution" and "Shares Eligible for Future Sale."

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<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common
Stock offered by the Company hereby at an assumed initial public offering price
of $ per share are estimated to be $ ($ if the Underwriters'
over-allotment option is exercised in full). The principal purposes of this
offering are for capital expenditures in connection with an upgrade to the
Company's computer and telephony technology, for repayment of related party
short-term debt of $600,000, to obtain additional working capital, to create a
public market for the Common Stock of the Company, to facilitate future access
by the Company to public equity markets and to increase the visibility of the
Company. The Company may use a portion of the net proceeds to acquire
businesses, products or technologies, however, it currently has no commitments
or agreements with respect to such transactions. Pending such uses, the net
proceeds will be invested in investment grade interest-bearing securities. The
Company will not receive any proceeds from the sale of Common Stock by the
Selling Stockholders. See "Principal and Selling Stockholders."

DIVIDEND POLICY

To date, the Company has neither declared nor paid any cash dividends on
shares of its Common Stock. The Company currently intends to retain its earnings
for future growth and, therefore, does not anticipate paying any cash dividends
in the foreseeable future.

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<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1998 (i) on an actual basis, (ii) on a pro forma basis after giving effect
to the automatic conversion of all outstanding shares of Preferred Stock into
Common Stock upon the completion of this offering and (iii) as adjusted to give
effect to the receipt by the Company of the estimated net proceeds from the sale
of shares of Common Stock offered hereby at an assumed initial offering
price of $ per share, after deduction of underwriting discounts and
estimated offering expenses payable by the Company. This table should be read in
conjunction with the Consolidated Financial Statements of the Company and the
Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------------
ACTUAL PRO FORMA AS ADJUSTED
--------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term obligations, including current maturities of long-term
obligations................................................................ $ 1,422 $ 1,422 $
--------- ----------- -----------
--------- ----------- -----------
Long-term obligations, less current maturities............................... 954 954
Redeemable Preferred Stock, $.001 par value, 3,460,137 shares authorized,
3,408,741 issued and outstanding, actual; no shares authorized, no shares
issued and outstanding, pro forma and as adjusted.......................... 15,360 -- --
--------- ----------- -----------
Stockholders' equity (deficit):
Preferred Stock, $.001 par value, 39,863 shares authorized, no shares
issued and outstanding, actual; 2,000,000 shares authorized, no shares
issued and outstanding, pro forma and as adjusted........................ -- -- --
Common Stock, $.001 par value, 15,000,000 shares authorized, 3,766,915
shares issued and outstanding, actual; 28,000,000 shares authorized,
7,175,656 shares issued and outstanding, pro forma and shares issued
and outstanding, as adjusted (1)......................................... 4,639 19,999
Deferred compensation...................................................... (794) (794)
Retained deficit........................................................... (12,545) (12,545)
--------- ----------- -----------
Total stockholders' equity (deficit)..................................... (8,700) 6,660
--------- ----------- -----------
Total capitalization................................................... $ 7,614 $ 7,614 $
--------- ----------- -----------
--------- ----------- -----------
</TABLE>

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

(1) Based on the number of shares outstanding at June 30, 1998. Excludes (i)
555,200 shares of Common Stock subject to outstanding options at such date
at a weighted average exercise price of $0.91 per share, (ii) 116,024 shares
of Common Stock issuable upon exercise of outstanding warrants at a weighted
average exercise price of $1.06 per share, and (iii) an aggregate 1,500,000
shares reserved for future grant under the Company's 1998 Equity Incentive
Plan, Non-Employee Stock Option Plan and Employee Stock Purchase Plan. See
"Management" and Notes 7 and 12 of Notes to Consolidated Financial
Statements.

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<PAGE>
DILUTION

As of June 30, 1998, the Company had a pro forma net tangible book value of
approximately $6,660,303 or $0.93 per share of Common Stock. Pro forma net
tangible book value represents the amount of total tangible assets less total
liabilities, divided by the number of shares of Common Stock outstanding,
assuming conversion of all outstanding shares of Preferred Stock into Common
Stock. Without taking into account any other changes in the net tangible book
value after June 30, 1998, other than to give effect to the receipt by the
Company of the net proceeds from the sale of the shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$ per share, the pro forma net tangible book value of the Company as of June
30, 1998 would have been approximately $ or $ per share. This represents
an immediate increase in net tangible book value of $ per share to existing
stockholders and an immediate dilution of $ per share to new investors. The
following table illustrates this per share dilution:

<TABLE>
<CAPTION>
Assumed initial public offering price per share........... $
<S> <C> <C>
Pro forma net tangible book value per share before the
offering.............................................. $ 0.93
Increase per share attributable to new investors........
---------
Pro forma net tangible book value per share after this
offering................................................
---------
Dilution per share to new investors....................... $
---------
---------
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1998,
the differences between existing stockholders and the new investors with respect
to the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders (1)....... 7,175,656 % $ 15,262,493 % $ 2.13
New investors (1)...............
---------- ----- ------------- -----
Total......................... 100.0% $ 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>

The foregoing table excludes (i) 555,200 shares of Common Stock subject to
outstanding options at June 30, 1998 at a weighted average exercise price of
$0.91 per share, (ii) 116,024 shares of Common Stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $1.06 per share and
(iii) an aggregate 1,500,000 shares reserved for future grant under the
Company's 1998 Equity Incentive Plan, Non-Employee Stock Option Plan and
Employee Stock Purchase Plan. To the extent these options or warrants are
excercised or shares granted, there will be further dilution to new investors.
See "Management" and Notes 7 and 12 of Notes to Consolidated Financial
Statements.

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

(1) Sales by the Selling Stockholders in this offering will reduce the number of
shares held by existing stockholders to or approximately % (
shares or approximately % if the Underwriters' over-allotment option is
exercised in full) and will increase the number of shares held by new
investors to or approximately % ( shares or approximately %
if the Underwriters' over-allotment option is exercised in full) of the
total number of shares of Common Stock outstanding after this offering. See
"Principal and Selling Stockholders."

(2) Excludes $3,700,000 of capital contributions related to losses funded by
affiliates. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Note 1 of Notes to Consolidated Financial
Statements.

17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of December 31, 1996
and 1997 and for each of the three years in the period ended December 31, 1997,
and as of June 30, 1998 and for the six months then ended are derived from the
Consolidated Financial Statements of the Company that have been audited by
Arthur Andersen LLP, independent public accountants, which are included
elsewhere in this Prospectus. The consolidated statements of operations data for
the six months ended June 30, 1997 are derived from the Company's unaudited
consolidated financial statements which are included elsewhere in this
Prospectus. The consolidated balance sheet data at December 31, 1995 are derived
from the Company's consolidated financial statements which were also audited by
Arthur Andersen LLP and which are not included herein. The consolidated
statements of operations data for the years ended December 31, 1993 and 1994 and
the consolidated balance sheet data at December 31, 1993, and 1994 are derived
from the Company's unaudited consolidated financial statements not included
herein. The unaudited financial statements reflect all adjustments, consisting
only of normal recurring adjustments, that the Company considers necessary for a
fair presentation of the financial position and results of operations for these
periods.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
----------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND SUPPLEMENTAL OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA: (1)
Revenues:
Database marketing services................. $ -- $ 729 $ 1,824 $ 9,771 $20,974 $ 9,295 $14,220
Consulting services......................... 1,592 1,289 1,790 1,858 5,440 1,330 5,155
----------- --------- --------- --------- --------- --------- ---------
Total revenues............................ 1,592 2,018 3,614 11,629 26,414 10,625 19,375
----------- --------- --------- --------- --------- --------- ---------
Cost of revenues:.............................
Costs of database marketing services........ -- 582 1,673 6,796 14,232 6,237 9,747
Costs of consulting services................ 1,530 1,144 1,798 1,699 4,233 1,240 3,927
Installation costs.......................... -- 97 656 1,656 1,932 912 774
----------- --------- --------- --------- --------- --------- ---------
Total cost of revenues.................... 1,530 1,823 4,127 10,151 20,397 8,389 14,448
----------- --------- --------- --------- --------- --------- ---------
Gross profit (loss)........................... 62 195 (513) 1,478 6,017 2,236 4,927
Operating costs:..............................
Selling, general and administrative
expenses.................................. 117 727 2,178 5,396 6,234 2,774 3,747
Technology and product development.......... -- 54 117 544 937 322 960
Software rewrite cost....................... -- -- -- -- 617 102 1,521
----------- --------- --------- --------- --------- --------- ---------
Total operating costs..................... 117 781 2,295 5,940 7,788 3,198 6,228
----------- --------- --------- --------- --------- --------- ---------
Loss from operations.......................... (55 ) (586) (2,808) (4,462) (1,771) (962) (1,301)
Interest expense, net......................... -- (10) (3) (229) (418) (168) (9)
----------- --------- --------- --------- --------- --------- ---------
Net loss...................................... $ (55 ) $ (596) $ (2,811) $ (4,691) $ (2,189) $ (1,130) $ (1,310)
----------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- ---------
Pro forma net loss per share (2).............. $ (.41) $ $(.18)
--------- ---------
--------- ---------
Pro forma weighted average common shares
outstanding (2)............................. 5,287 7,176
SUPPLEMENTAL OPERATING DATA:
Number of dealerships......................... 66 177 802 1,285 985 1,623
Number of active names (3).................... 396,213 1,970,738 2,905,484 2,404,147 3,536,125
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 9 $ 16 $ -- $ 128 $ 4,630
Working capital................................ 16 69 (15) 484 6,291
Total assets................................... 220 450 1,190 5,492 12,302
Long-term debt, less current maturities........ -- 23 24 1,264 435
Redeemable preferred stock..................... -- -- -- 5,422 14,679
Total stockholders' equity (deficit)........... 185 (296) (477) (4,494) (6,815)

JUNE 30, 1998
-----------------------

<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 2,133
Working capital................................ 5,037
Total assets................................... 13,276
Long-term debt, less current maturities........ 954
Redeemable preferred stock..................... 15,360
Total stockholders' equity (deficit)........... (8,700)
</TABLE>

- ------------------------------
(1) The Company was incorporated in February 1994. The periods prior to February
1994 reflect predecessor operations that have been consolidated as entities
under common control. The Company believes that comparison of financial data
for the year ended December 31, 1993 with subsequent periods is not
meaningful to an understanding of the Company's business, financial
condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 1 of
Notes to Consolidated Financial Statements.

(2) Computed on the basis described in Note 2 of Notes to Consolidated Financial
Statements.

(3) Active names are vehicle identification numbers contained in the Company's
purified database corresponding to vehicle owners solicited by the Company
for vehicle maintenance services on a regular basis. The Company invoices
its dealership customers based on the number of active names for each
dealership. The Company did not track the number of active names in 1994.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
"SELECTED CONSOLIDATED FINANCIAL DATA" AND THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. EXCEPT FOR
THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION IN THIS PROSPECTUS
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS
SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS
WHENEVER THEY APPEAR IN THIS PROSPECTUS. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS INCLUDING THOSE SET FORTH UNDER "RISK FACTORS," AS
WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.

OVERVIEW

The Company generates revenues from database marketing services and
consulting services. Database marketing services revenues consist primarily of
revenues from the Company's customer retention services, including the RESULTS
Program. Database marketing services accounted for 73% and 79% of total revenues
for the six months ended June 30, 1998 and for the year ended December 31, 1997,
respectively. Consulting services revenues consist of revenues from consulting
services provided to automobile dealerships and manufacturers. Consulting
services accounted for 27% and 21% of total revenues for the six months ended
June 30, 1998 and for the year ended December 31, 1997, respectively. The
Company increased its dealership customer base from 1,285 dealerships as of
December 31, 1997 to 1,623 dealerships as of June 30, 1998. The Company's
revenues grew at a compound annual growth rate of 170% to $26.4 million in 1997
from $3.6 million in 1995. See "Risk Factors--Management of Growth."

Revenues for the RESULTS Program are based on the number of active names in
a dealership's database, typically a fixed number determined by the dealership.
The Company generally invoices each of its customers on a monthly basis.
Revenues for the Company's consulting services are based on a per diem rate for
the services provided by the Company's consultants or internal staff in addition
to travel expenses and associated costs incurred by the Consulting Division.
Consulting revenues also include the delivery of pricing books, which help
dealerships accurately determine prices for maintenance packages. Dealerships
are charged a monthly fee for these books, and dealerships receive up to a
maximum of two updates per year. The Company recognizes all of its revenues in
the month during which it performs the related database marketing or consulting
services.

The Company is investing significant resources in the development of other
services that leverage its expertise in the service department operations of
automobile dealerships. For the six months ended June 30, 1998 and for the year
ended December 31, 1997, the Company's technology and product development
expenses were $961,000 and $937,000, respectively, substantially all of which
were related to the development of new services. During the first six months of
1998, the Company conducted customer pilots of two new customer retention
services: Around the Wheel, an extension of the Company's RESULTS Program
designed to increase Ford's dealership's brake and tire sales; and Welcome Home,
a personalized coupon mailer designed to recapture a dealership's lost
customers. Revenues for Around the Wheel are based on the number of active names
in a dealership's database. Revenues for the Company's Welcome Home service are
based upon the number of Welcome Home letters sent during a month. The Company
began to introduce these services to its

19
<PAGE>
dealership base in the third quarter of 1998. See "Business--Services," and
"Risk Factors--Risks Associated with Introduction of New Services."

The Company provides database marketing services to dealerships pursuant to
contracts that generally have an initial term of six months to two years. Most
of the Company's customers, however, continue to utilize the Company's services
beyond the expiration of the initial term. In order to minimize the cancellation
of the Company's services, the Company has established a Customer Satisfaction
Department, increased the quality of operations and sought to implement longer
term contracts. See "Business--Services" and "Risk Factors-- Contract
Cancellation Rights; Absence of Long-Term Contracts; Dealership Turnover."

The Company's current consulting engagement with Ford relating to
implementation of the Around the Wheel Program is expected to be completed in
June 1999, and the Company currently has no commitment from Ford for a new
consulting engagement. Although each dealership utilizing the Company's database
marketing services enters into a contract with the Company, collection of
receivables from Ford dealerships is centralized through Ford's accounting
department. As a result, the Company generally receives prompt payment of those
invoices directly from Ford with a minimum amount of collection effort.
Virtually all of the Company's consulting revenues are attributable to Ford. In
addition, most of the Company's database marketing services are attributable to
Ford dealerships. As a result, for the six months ended June 30, 1998, and for
the year ended December 31, 1997, approximately 82% and 75%, respectively, of
the Company's revenues were attributable to Ford or Ford dealerships. See "Risk
Factors--Dependence on Relationship with Ford Motor Company."

Costs of revenues consist of the Company's direct marketing services costs,
consulting costs and installation costs. Costs of direct marketing services
include the printing and mailing of letters, as well as the costs of the
teleservice contacts of dealership customers. All costs of managing and
purifying the dealership's database are also included in the costs of direct
marketing services, as well as the costs of customer service and satisfaction.
The costs of additional services such as Welcome Home and Around the Wheel
include only the direct costs of those services because no additional costs
associated with database management or customer service are incurred. Costs of
consulting include the direct costs of the Company's consulting personnel, as
well as the cost of any independent consultants subcontracted by the Company.
Costs of consulting also include costs of travel and associated costs incurred
by the Company's Consulting Division. Installation costs include the direct
costs of implementing the Company's software at dealerships and costs of the
initial download setup and purification of the dealership's customer database.
These costs are expensed as incurred and represent a one-time charge for each
new dealership the Company adds to its customer base. As a result, these costs
are expected to decrease as a percentage of total revenues as the Company's
direct marketing services revenues increase. Installation costs are presented as
a separate line item to illustrate the Company's investment in implementing new
dealerships. For the purposes of calculating the gross profit associated with
direct marketing services in Management's Discussion and Analysis of Financial
Condition and Results of Operations, installation costs are added to cost of
revenues for direct marketing services. Management believes that this
presentation provides a more accurate reflection of gross profit for database
marketing services.

Operating expenses consist of the fixed costs of the business, such as
selling, general and administrative expenses, technology and product development
costs, and the cost of the software rewrite of the Company's core data
management and customer retention software system. The Company anticipates that
its operating expenses will increase as it continues the development and
introduction of new services and increases its number of dealerships.
Historically, the Company has been able to leverage its operating expenses over
a growing revenue base, and expects that it will continue to do so as it grows.
However, because the Company is generally unable to significantly reduce
expenses in the short term to compensate for any unexpected revenue shortfall,
any such shortfall would have an immediate adverse effect on the Company's
business, results of operations and financial condition. Selling costs include
costs of the Company's internal sales department, as well as one-time
commissions earned by sales representatives. General and administrative costs
include the Company's accounting, payroll and human resources functions, as well
as non-allocated costs, such as professional fees and general corporate
services. Technology and product development costs include the cost of
programming personnel who enhance the current services and develop new services.
The cost of the software rewrite to the Company's core

20
<PAGE>
database management system includes all costs associated with the implementation
of the Company's enterprise-wide software application by a third-party
developer. The costs of the software rewrite are expensed as they are incurred.
As a result, the Company expects that there will be no further costs associated
with the software rewrite subsequent to the completion of the project during the
first quarter of 1999, other than ongoing support that will be provided by the
Company's Technology and Product Development Department. See
"Business--Technology" and "Risk Factors--Risks Associated with Computer
Software Rewrite."

With respect to certain stock option grants in 1997, the Company has
recorded compensation charges of $901,000. These amounts are initially recorded
as deferred compensation and amortized to cost of revenues and selling, general
and administrative expenses over the vesting periods of the options, generally
four to five years. The Company amortized $107,000 of the compensation charges
in the six months ended June 30, 1998. With respect to certain stock option
grants in July 1998, the Company expects to record a deferred compensation
charge of approximately $500,000 in the third quarter of 1998. See Note 7 of
Notes to Consolidated Financial Statements.

As of June 30, 1998, the Company had net operating loss carryforwards for
federal income purposes of approximately $5.8 million, which expire in various
years beginning in 2009. The net deferred asset is fully reserved because of
uncertainty regarding its realizability.

The Company was incorporated in California in February 1994. Certain of the
Company's officers, directors and stockholders were officers, directors and
stockholders of Newgen Services, Inc. and Newgen Services, L.P., which together
provided consulting services and sold computer hardware and software to
automobile dealerships. These entities commenced operations in 1991, and from
inception through December 31, 1993 incurred losses of approximately $7.0
million. Financial data for the Company for the year ended December 31, 1993
consists solely of the consulting operations of Newgen Services, Inc. Financial
data for the Company includes the consulting operations of Newgen Services, Inc.
from its inception until August 1996, at which time the Company assumed the
consulting activities of Newgen Services, Inc. Revenues from Newgen Services,
Inc. included in the Company's results of operations for 1994, 1995 and 1996
were $1.3 million, $1.4 million, and $815,000, respectively. Net income (loss)
from Newgen Services, Inc. included in the Company's results of operations for
1994, 1995 and 1996 were $111,000, $(245,000) and $(14,000) respectively. Prior
to 1996, Newgen Services L.P. funded certain aspects of the Company's operations
which have been reflected in the Company's historical financial data. The
Company believes that, except insofar as Newgen Services, Inc. provided
consulting services to automobile dealerships, comparisons of financial data for
the year ended December 31, 1993 with subsequent periods are not meaningful to
an understanding of the Company's business, financial condition and results of
operations.

21
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationship of certain items from the Company's statement of operations to
revenues:

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
---------------------------------------------------------------
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Database marketing services................................. 50.5% 84.0% 79.4% 87.5% 73.4%
Consulting services......................................... 49.5 16.0 20.6 12.5 26.6
----- ----- ----- ----- -----
Total revenues.......................................... 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----

Cost of revenues:
Cost of database marketing services......................... 46.3 58.4 53.9 58.7 50.3
Cost of consulting services................................. 49.8 14.6 16.0 11.7 20.3
Installation costs.......................................... 18.1 14.2 7.3 8.6 4.0
----- ----- ----- ----- -----
Total cost of revenues.................................. 114.2 87.2 77.2 79.0 74.6
----- ----- ----- ----- -----
Gross profit (loss)........................................... (14.2) 12.8 22.8 21.0 25.4

Operating costs:
Selling, general and administrative expenses................ 60.3 46.4 23.6 26.1 19.3
Technology and product development.......................... 3.2 4.7 3.5 3.0 5.0
Software rewrite cost....................................... -- -- 2.3 1.0 7.8
----- ----- ----- ----- -----
Total operating costs................................... 63.5 51.1 29.4 30.1 32.1
----- ----- ----- ----- -----

Loss from operations.......................................... (77.7) (38.3) (6.6) (9.1) (6.7)
Interest expense, net......................................... (0.1) (2.0) (1.6) (1.6) --
----- ----- ----- ----- -----
Net loss...................................................... (77.8)% (40.3)% (8.2)% (10.7)% (6.7)%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND 1998

REVENUES. Total revenues increased by $8.7 million, or 82%, to $19.4
million in the six months ended June 30, 1998 from $10.6 million in the six
months ended June 30, 1997. Revenues from database marketing services increased
by $4.9 million, or 53%, to $14.2 million in the six months ended June 30, 1998
from $9.3 million in the six months ended June 30, 1997. The increase in
database marketing services revenues was primarily due to the net increase by
the Company of over 600 dealerships, and to a lesser extent, the elimination of
certain discounts and credits due to improved operations. Revenues from
consulting services increased by $3.8 million, or 288%, to $5.2 million in the
six months ended June 30, 1998 from $1.3 million in the six months ended June
30, 1997. The increase in consulting services revenues was primarily due to the
implementation of the Quality Care Maintenance ("QCM") consulting project, which
began in July 1997.

GROSS PROFIT. Gross profit increased by $2.7 million, or 120% to $4.9
million in the six months ended June 30, 1998 from $2.2 million in the six
months ended June 30, 1997. Gross profit from database marketing services
increased by $1.6 million, or 72%, to $3.7 million in the six months ended June
30, 1998 from $2.1 million in the six months ended June 30, 1997. As a
percentage of database marketing services revenues, gross profit from database
marketing services increased to 26% in the six months ended June 30, 1998 from
23% in the six months ended June 30, 1997. This increase was primarily due to
leverage obtained by spreading the Company's installation costs over a larger
revenue base. Gross profit from consulting services increased by $1.1 million to
$1.2 million in the six months ended June 30, 1998 from $89,000 in the six
months ended June 30, 1997. As a percentage of consulting services revenues,
gross profit from consulting services increased to 24% in

22
<PAGE>
the six months ended June 30, 1998 from 7% in the six months ended June 30,
1997. This increase was primarily due to the ability of the Company to fully
utilize its consulting personnel as a result of the QCM project.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased by $973,000, or 35%, to $3.7 million in the six months ended
June 30, 1998 from $2.8 million in the six months ended June 30, 1997. The
dollar increase was due primarily to the establishment of the Marketing
Department and the addition of sales personnel and infrastructure together with
increased deferred compensation charges related to stock options granted in
December 1997. As a percentage of revenues, selling, general and administrative
expenses decreased to 19% in the six months ended June 30, 1998 from 26% in the
six months ended June 30, 1997. This decrease was due primarily to the Company's
ability to leverage its existing infrastructure across a larger revenue base. As
revenues from the Company's RESULTS Program continue to grow, the Company
expects that selling, general and administrative expenses as a percentage of
revenues will continue to decrease in the future.

TECHNOLOGY AND PRODUCT DEVELOPMENT. Technology and product development
expenses increased by $639,000, or 199%, to $961,000 in six months ended June
30, 1998 from $322,000 in the six months ended June 30, 1997. As a percentage of
revenues, technology and product development expenses increased to 5% in the six
months ended June 30, 1998 from 3% in the six months ended June 30, 1997. The
dollar increase and the percentage increase were primarily due to the addition
of technical personnel and related infrastructure in preparation for the
software rewrite, and secondarily to its investment in the development of new
services and the enhancement of its existing services.

SOFTWARE REWRITE. Software rewrite expenses were $1.5 million in the six
months ended June 30, 1998 and $102,000 in the six months ended June 30, 1997.
This increase was primarily due to the Company's rewrite of its core database
management and customer retention software system which commenced late in the
second quarter of 1997. The Company expects that these costs will be eliminated
when the software rewrite is completed in the first quarter of 1999.

INTEREST EXPENSE, NET. Interest expense decreased by $159,000, or 94%, to
$9,000 in the six months ended June 30, 1998 from $168,000 in the six months
ended June 30, 1997. This decrease was primarily due to decreases in the amount
of the Company's indebtedness and increases in interest income.

COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1997

REVENUES. Total revenues increased by $14.8 million, or 127%, to $26.4
million in the year ended December 31, 1997 from $11.6 million in the year ended
December 31, 1996. Revenues from database marketing services increased by $11.2
million, or 115%, to $21.0 million in the year ended December 31, 1997 from $9.8
million in the year ended December 31, 1996. The increase in database marketing
services revenues was primarily due to a net increase of almost 400 dealerships,
due in large part to the addition of dealerships under the QCM Program. To a
lesser extent, such increase was due to the Company's elimination of certain
discounts and credits resulting from improved operations. Revenues from
consulting services increased by $3.6 million, or 193%, to $5.4 million in the
year ended December 31, 1997 from $1.9 million in the year ended December 31,
1996. The increase in consulting services revenues was primarily due to the
implementation of the QCM consulting project, which began in July 1997.

GROSS PROFIT. Total gross profit increased by $4.5 million, or 307%, to
$6.0 million in the year ended December 31, 1997 from $1.5 million in the year
ended December 31, 1996. As a percentage of total revenues, gross profit
increased to 23% in the year ended December 31, 1997 from 13% in the year ended
December 31, 1996. Gross profit from database marketing services increased by
$3.5 million, or 265%, to $4.8 million in the year ended December 31, 1997 from
$1.3 million in the year ended December 31, 1996. As a percentage of database
marketing services revenues, gross profit from database marketing services
increased to 23% in the year ended December 31, 1997 from 14% in the year ended
December 31, 1996. This increase was primarily due to the implementation of
certain technologies to reduce labor costs and the leverage obtained by
spreading the Company's installation costs over a larger revenue base, offset in
part by the establishment of the Company's Customer Satisfaction Department.
Gross profit from consulting services increased by $1.0 million, or 659%, to
$1.2 million in the year ended December 31, 1997 from $159,000 in the year ended
December 31, 1996. As a

23
<PAGE>
percentage of consulting services revenues, gross profit from consulting
services increased to 22% in the year ended December 31, 1997 from 9% in the
year ended December 31, 1996. This increase was primarily due to the ability of
the Company to fully utilize its consulting personnel as a result of the QCM
consulting project in the latter part of 1997.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased by $838,000, or 16%, to $6.2 million in the year ended
December 31, 1997 from $5.4 million in the year ended December 31, 1996. This
dollar increase was primarily due to the addition of sales personnel, increased
rent expense related to the Company's move to larger premises, the addition of a
human resources department, and additional administrative infrastructure. As a
percentage of revenues, selling, general and administrative expenses decreased
to 24% in the year ended December 31, 1997 from 46% in the year ended December
31, 1996. This decrease was primarily due to the Company's ability to leverage
its existing infrastructure across a larger revenue base.

TECHNOLOGY AND PRODUCT DEVELOPMENT. Technology and product development
expenses increased by $393,000, or 72%, to $937,000 in the year ended December
31, 1997 from $544,000 in the year ended December 31, 1996. As a percentage of
revenues, technology and product development expenses decreased to 4% in the
year ended December 31, 1997 from 5% in the year ended December 31, 1996. The
dollar increase was primarily due to adding technical personnel and related
infrastructure in preparation for the software rewrite, and secondarily due to
the enhancement of the Company's existing services.

SOFTWARE REWRITE. Software rewrite expenses were $617,000 in the year ended
December 31, 1997. The Company did not incur software rewrite expenses in the
year ended December 31, 1996. The Company commenced its software rewrite of its
core database management and customer retention software system late in the
second quarter of 1997. The Company expects that these costs will be eliminated
when the rewrite is completed in the first half of 1999.

INTEREST EXPENSE, NET. Interest expense increased by $189,000, or 83%, to
$419,000 in the year ended December 31, 1997 from $229,000 in the year ended
December 31, 1996. This increase was primarily due to increased borrowings under
the Company's line of credit and capital lease obligations related to the
purchase of computing equipment.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1996

REVENUES. Total revenues increased by $8.0 million, or 222%, to $11.6 in
the year ended December 31, 1996 from $3.6 million in the year ended December
31, 1995. Revenues from database marketing services increased by $7.9 million,
or 436%, to $9.8 million in the year ended December 31, 1996 from $1.8 million
in the year ended December 31, 1995. The increase in database marketing services
revenues was primarily due to the net increase by the Company of approximately
600 dealerships. The Company also changed its pricing model to charge its
customers based on the number of active names solicited on behalf of the
dealership. Revenues from consulting services increased by $68,000, or 4%, to
$1.9 million in the year ended December 31, 1997 from $1.8 million in the year
ended December 31, 1996.

GROSS PROFIT. Total gross profit increased by $2.0 million, or 388%, to
$1.5 million in the year ended December 31, 1996 from a gross loss of $(513,000)
in the year ended December 31, 1995. As a percentage of total revenues, gross
profit increased to 13% in the year ended December 31, 1996 from a gross loss of
(14)% in the year ended December 31, 1995. Gross profit from database marketing
services increased by $1.8 million, to $1.3 million in the year ended December
31, 1996 from a gross loss of $(505,000) in the year ended December 31, 1995. As
a percentage of database marketing services revenues, gross profit from database
marketing services increased to 14% in the year ended December 31, 1996 from a
gross loss of (28)% in the year ended December 31, 1995. This increase was
primarily due to the Company's implementation of state-of-the-art print-
on-demand technology, which dramatically reduced letterhead waste. In addition,
the Company was able to add remote installation capabilities, thereby increasing
installation productivity and reducing costs. To a lesser extent, the Company's
ability to leverage its installation costs over a larger revenue base also
increased gross profit from database marketing services. Gross profit from
consulting services increased by $167,000, to

24
<PAGE>
$159,000 in the year ended December 31, 1996 from a gross loss of $(8,000) in
the year ended December 31, 1995. As a percentage of consulting services
revenues, gross profit was 9% in the year ended December 31, 1996.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased by $3.2 million, or 148%, to $5.4 million in the year ended
December 31, 1996 from $2.2 million in the year ended December 31, 1995. As a
percentage of revenues, selling, general and administrative expenses decreased
to 46% in year ended December 31, 1996 from 60% in the year ended December 31,
1995. This decrease was primarily due to the Company's ability to spread its
fixed costs over a larger revenue base.

TECHNOLOGY AND PRODUCT DEVELOPMENT. Technology and product development
increased by $427,000, or 365%, to $544,000 in the year ended December 31, 1996
from $117,000 in the year ended December 31, 1995. As a percentage of revenues,
technology and development expenses increased to 5% in the year ended December
31, 1996 from 3% in the year ended December 31, 1995. This increase was
primarily due to increased personnel expenses.

INTEREST EXPENSE, NET. Interest expense increased to $229,000 in the year
ended December 31, 1996 from $2,000 in the year ended December 31, 1995. This
increase was primarily due to increased borrowings under the Company's line of
credit.

SELECTED QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited statement of operations
data for each of the Company's last ten quarters ended June 30, 1998, as well as
such data expressed as a percentage of the Company's total revenues for the
periods indicated. This data has been derived from the Company's unaudited
financial statements that, in management's opinion, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such information when read in conjunction with the audited
Consolidated Financial Statements of the Company and the Notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30,
1996 1996 1996 1996 1997 1997 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Database marketing services
revenues......................... $ 1,091 $ 1,913 $ 2,893 $ 3,874 $ 4,349 $ 4,946 $ 5,562
Consulting revenues................ 481 437 444 496 613 717 1,266
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues................... 1,572 2,350 3,337 4,370 4,962 5,663 6,828
Gross profit....................... 35 277 522 644 1,045 1,191 1,613
Selling, general and administrative
expenses......................... 893 1,266 1,602 1,635 1,363 1,411 1,559
Net loss........................... $ (993) $ (1,215) $ (1,316) $ (1,167) $ (531) $ (599) $ (688)

PERCENTAGE OF TOTAL REVENUES
-----------------------------------------------------------------------------------------
Gross profit....................... 2.2% 11.8% 15.6% 14.7% 21.1% 21.0% 23.6%
Selling, general and administrative
expenses......................... 56.8 53.9 48.0 37.4 27.5 24.9 22.8
Net loss........................... (63.2)% (51.7)% (39.4)% (26.7)% (10.7)% (10.6)% (10.1)%

DEC. 31, MAR. 31, JUNE 30,
1997 1998 1998
----------- ----------- -----------

<S> <C> <C> <C>
Database marketing services
revenues......................... $ 6,117 $ 6,748 $ 7,472
Consulting revenues................ 2,844 2,526 2,629
----------- ----------- -----------
Total revenues................... 8,961 9,274 10,101
Gross profit....................... 2,168 2,277 2,650
Selling, general and administrative
expenses......................... 1,901 1,854 1,893
Net loss........................... $ (371) $ (663) $ (647)

Gross profit....................... 24.2% 24.6% 26.2%
Selling, general and administrative
expenses......................... 21.2 20.0 18.7
Net loss........................... (4.1)% (7.1)% (6.4)%
</TABLE>

The Company has experienced and expects to continue to experience
fluctuations in quarterly and annual revenues, gross margins and operating
results. Historically, these fluctuations have been due primarily to
fluctuations in consulting revenues, which consist of a small number of
significant contracts. For example, during the fourth quarter of 1997, total
revenues increased by $2.1 million to $9.0 million, primarily as a result of an
increase in consulting revenues. Consulting revenues as a percentage of total
revenues for the ten quarterly periods ended June 30, 1998, ranged from 11% to
32%. The Company's consulting business currently depends entirely on Ford, and
Ford dealerships account for most of the Company's database marketing services
revenues. Sales to Ford and Ford dealerships represented approximately 75% and
82% of the Company's revenues in the year ended December 31, 1997 and the six
months ended June 30, 1998, respectively. The Company's current

25
<PAGE>
consulting contract with Ford is expected to be completed in June 1999, and
there can be no assurance that the Company will obtain another contract with
Ford or that the current contract will not be cancelled early. Any changes in
the Company's relationship with Ford could have a material adverse effect on the
Company.

Fluctuations in the Company's results of operations may be caused by various
factors, including but not limited to: (i) the Company's ability to attract new
dealerships; (ii) cancellation of existing contracts; (iii) changes in the
average revenues per dealership; (iv) introduction of new services; (v) price
competition; (vi) the amount and timing of operating costs and capital
expenditures relating to expansion of the Company's business, operations and
infrastructure, including the rewrite of the Company's database management and
customer retention software and upgrades to computer and telephone technology;
(vii) the Company's ability to retain existing personnel and attract new
personnel in a timely and effective manner; (viii) the Company's ability to
effectively manage growth; (ix) increases in costs of services provided by third
parties or the price of paper, toner and postage; and (x) the cost of labor. For
example, gross margin in the fourth quarter of 1996 decreased, in part, due to
the establishment of a Customer Satisfaction Department, and for 1995 the
Company experienced a negative gross margins as a result of immature processes
associated with the early introduction of the RESULTS Program. In addition, the
various services offered by the Company have different gross margins and, as a
result, the Company's revenue may affect its total gross margin. Due to all of
the foregoing factors, there can be no assurance that the Company will realize
revenue growth or profitability in the future, and even if so realized, there
can be no assurance as to the level of such operating results. Due to the
foregoing factors, the Company's annual or quarterly operating results may fall
below the expectations of security analysts and investors. In such event, the
trading price of the Company's Common Stock would be materially adversely
affected.

LIQUIDITY AND CAPITAL RESOURCES

Since 1995, Newgen has satisfied its cash requirements through borrowings
under its credit facility, which is currently provided by Silicon Valley Bank
(the "Credit Facility"), borrowings from related parties, the issuance of
Preferred Stock, and the financing of capital expenditures. Sales of Preferred
Stock have generated an aggregate of $14.5 million, net of issuance costs. Cash
provided by financing activities in the years ended 1995, 1996, 1997 and the six
months ended June 30, 1998 was $2.5 million, $6.9 million, $7.7 million and
$283,000 respectively.

Cash used in operating activities in the years ended 1995, 1996, 1997 and
the six months ended June 30, 1998 was $2.3 million, $5.5 million, $2.7 million
and $2.3 million, respectively. In each period, cash used in operating
activities was primarily related to the Company's losses from operations and
increases in accounts receivable.

Cash used in investing activities in the years ended 1995, 1996, 1997 and
the six months ended June 30, 1998 was $190,000, $1.3 million, $501,000 and
$527,000, respectively. In each period, cash used in investing activities was
primarily related to purchases of property and equipment in connection with the
Company's growth. The Company has financed its acquisitions of such property and
equipment primarily through operating and capital leases. See Note 10 of Notes
to Consolidated Financial Statements.

The Credit Facility, which is scheduled to mature in March 1999, provides
for borrowings of up to the lesser of $4.5 million and 80% of qualified accounts
receivables, including a $1,000,000 sublimit for securing letters of credit.
Substantially all of the Company's assets are pledged as security under the
Credit Facility and for borrowings from related parties. As of June 30, 1998,
the Company had a letter of credit for $450,000 under the Credit Facility. The
Credit Facility contains certain covenants and restrictions. As of June 30,
1998, the Company was in compliance with all such covenants and restrictions.
The Company also has a lease line of credit for equipment acquisitions with a
leasing company totaling $1.0 million of which $800,000 is available. This line
expires December 31, 1998.

The Company believes that the net proceeds from this offering, together with
available funds, will be sufficient to meet its capital requirements for the
foreseeable future. The Company may also utilize cash to invest in or acquire
complementary businesses. While the Company has made proposals with respect to
investments in or acquisitions of other businesses, it has not made any
commitments or entered into any

26
<PAGE>
agreements with respect to any future acquisitions. The Company may sell
additional equity or debt securities or obtain additional credit facilities. The
sale of additional equity securities could result in additional dilution to the
Company's stockholders and incurring additional debt could result in additional
interest expense.

YEAR 2000

The Company uses a significant number of computer software programs and
operating systems in its operations. The use of computer systems and software
products that rely on two-digit date programs to perform computations and
decision-making functions may cause computer systems to malfunction in the Year
2000 and lead to significant business delays and disruptions. Year 2000 problems
may affect many of the Company's data retrieval, purification, distribution,
financial, administrative and communication operations. A detailed assessment of
all internal computer systems will be performed and the Company will develop and
implement plans to correct potential Year 2000 problems. Those systems that the
Company identifies as being critical to its business have either been replaced,
are being replaced, or are being corrected through programming modifications.
Outside companies such as vendors, service suppliers and communications
providers will be asked to verify their Year 2000 compliance and test such
systems where appropriate. The Company expects these projects to be successfully
completed during 1999. There can be no assurance, however, that all problems
have been foreseen and corrected or that no material disruption of the Company's
business will occur. Potential systems interruptions and expenditure of
significant financial or management resources to solve any Year 2000 issues may
have a material adverse effect on the Company's business, financial condition
and results of operations. Furthermore, there can be no assurance that the
Company's customers and suppliers will be Year 2000 compliant. Failure of the
Company's customers and suppliers to achieve Year 2000 compliance could result
in a reallocation of financial resources to deal with the issue and reduce
customers' ability to utilize the Company's services, which could have a
material adverse effect on the Company's business, financial condition and
results of operation.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE
DEVELOPED OR OBTAINED FOR INTERNAL USE ("SOP 98-1"). This statement provides
guidance on accounting for the costs of computer software developed or obtained
for internal use and identifies characteristics of internal use software as well
as assists in determining when computer software is for internal use. SOP 98-1
is effective for fiscal years beginning after December 15, 1998, with earlier
application permitted. The Company has not determined the impact of the adoption
of this SOP as this SOP is highly dependent upon the nature, timing and extent
of future internal use software development.

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES. This
Statement of Position provides guidance on the financial reporting of start-up
costs and organization costs. It requires that the cost of start-up activities
and organization costs to be expensed as incurred. The SOP is effective for
financial statements for fiscal years beginning after December 15, 1998. The
Company does not expect adoption of this SOP to have a material adverse impact
on the financial statements.

The Company will be required to adopt Statement of Financial Accounting
Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION. Statement 131 superseded SFAS No. 14, FINANCIAL REPORTING FOR
SEGMENTS OF A BUSINESS ENTERPRISE and is effective for years beginning after
December 31, 1997. Statement 131 establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. Statement 131
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. The adoption of Statement 131 will not
affect the results of operations or financial position, but may affect the
disclosure of the segment information that will be disclosed in the Company's
annual financial statements for the year ended December 31, 1998.

27
<PAGE>
BUSINESS

OVERVIEW

Newgen is a leading provider of customized, outsourced database management,
direct marketing and related services for the service departments of automobile
dealerships and manufacturers. The Company combines its expertise in database
marketing and customer retention services, its focus on customer service, and
its in-depth knowledge of automobile service department operations to provide
highly targeted and customized solutions to automobile dealerships and
manufacturers. The Company's RESULTS Program employs efficient and
cost-effective technology to enable dealerships to increase the number of
customers as well as revenues per customer. In addition, the Company's services
improve the operations and processes of the dealership's service department
thereby differentiating the dealership from its competition and creating
increased customer satisfaction and loyalty. The Company increased its
dealership customer base from 1,285 dealerships as of December 31, 1997 to 1,623
dealerships as of June 30, 1998. The Company's revenues grew at a compound
annual growth rate of 170% to $26.4 million in 1997 from $3.6 million in 1995.

INDUSTRY BACKGROUND

Increasing competition has driven businesses to enhance their market
position by strengthening relationships with existing customers and targeting
new markets and customers. In addition, while technological advances have made
information more accessible and less expensive, the marketing costs to reach
customers have increased. As a result, businesses are seeking to utilize their
marketing resources more efficiently and effectively to reach their customers
through the targeted use of information products and data processing services.
Businesses have increasingly elected to outsource key processes to service
providers that are able to apply advanced database systems to capture, process,
and store customer and market information, and use their experience to provide
targeted and effective services.

The automobile industry is relatively mature. Over the past decade, sales of
automobiles by dealerships have not exhibited substantial growth in unit volume.
However, a number of industry and market trends are affecting the structure of
the industry. Over the next five years, the number of automobile dealerships in
the United States is expected to decrease, reflecting the consolidation of the
industry into fewer and larger dealerships. In addition, margins on sales of new
vehicles have decreased due to trends such as the emergence of megadealers and
Internet-based online comparison shopping. According to the National Automobile
Dealers Association ("NADA"), the average dealership realized pre-tax income
margins of only 1.5% in 1996. The Company believes that the emergence of
megadealers resulting from the industry's consolidation, together with emerging
sales and marketing channels such as the Internet, will lead to greater
professionalization of management at dealerships, and correspondingly, more
sophisticated approaches to increase dealership revenues and margins.

Automobile dealerships have historically focused on sales of automobiles and
have viewed the benefits of retaining customers for service related revenue as
being secondary. Customer dissatisfaction with dealership service combined with
increased competition from other service outlets, such as Sears Auto Center or
Jiffy Lube, has caused consumers to avoid returning to dealerships for vehicle
service or maintenance. Based on its experience, the Company believes that
approximately 15% of new vehicle owners currently return to their dealerships
for scheduled maintenance. The Company believes that U.S. consumers spent $250
billion in 1996 to service and repair their vehicles, yet according to NADA,
dealerships provide only $60.8 billion, or 24% of these services. At the same
time, dealership revenues from warranty service have declined due to increased
scrutiny of warranty claims and higher quality manufacturing. As a result,
dealerships must rely more on customer pay labor and parts sales to replace lost
warranty-related service revenues. Dealerships and manufacturers have
increasingly realized that their service departments represent an opportunity
for increased revenues. More importantly, despite declining market share of
service related spending by consumers at dealerships, the percentage of
dealership profits generated from the service department has increased from
approximately 16% in 1985 to approximately 55% in 1996. The Company believes
that in 1996, automobile dealerships and

28
<PAGE>
manufacturers spent $23 billion on advertising promotions and incentives.
Although customer retention and loyalty programs accounted for a relatively
small portion of those expenditures, the Company believes that dealerships and
manufacturers are allocating an increasing proportion of their marketing budgets
to such programs in order to increase service department revenues and dealership
profits.

PERCENTAGE OF DEALERSHIPS' PROFITS GENERATED FROM THE SERVICE DEPARTMENT

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
1985
<S> <C>
Service 16%
Sales & Other 84%
1996
Service 55%
Sales & Other 45%
Source: NADA
</TABLE>

Traditionally, automobile dealerships have promoted their services through
the use of general mass media advertisements, bulk mail coupons or generic
reminder notices. The limitations of these solicitation techniques include the
expense associated with untargeted mailings (such as sending solicitations to
individuals who no longer own their vehicle) and the lack of impact associated
with a generic mailing. In addition, these solicitation techniques allow for
limited gathering and storing data about customers or obtaining customer
feedback. As a result, many dealerships do not have effective methods for
collecting or analyzing data relating to customer retention, know little about
the characteristics of their customers and, thus, are unfocused in marketing to
their customers. Additionally, manufacturers have attempted to support their
dealerships through manufacturer sponsored marketing. However, because
manufacturers neither have the specific information about dealership customers
nor track maintenance activity at the dealerships, they are unable to develop
effective nationwide programs that will encourage customers to return to
dealerships for service.

The proper implementation of a targeted marketing campaign promoting an
automobile service schedule is highly complex. Maintenance schedules vary
immensely from vehicle to vehicle. At a typical Ford dealership, for example,
there may be as many as 2,500 different maintenance schedule permutations based
on the vehicle model, year, engine and other characteristics. Matching the
correct maintenance schedule to each vehicle, while taking into account other
factors such as the owner's driving habits, service history of the car, seasonal
and regional variations, and any special maintenance programs offered by the
dealership, requires complex algorithms and advanced data management systems.
Adding to this complexity, dealerships need to manage and update their databases
of service customers in order to eliminate customers who should not be solicited
and to focus on customers who are most likely to return for service. Ensuring
that the right maintenance reminder gets to the right person at the right time
requires sophisticated database marketing techniques and the use of a system
that continuously updates customer data and monitors the results of the
marketing campaign.

While advances in technology and information processing now permit
dealerships to engage in highly targeted marketing initiatives, these
initiatives are generally dependent upon complex and costly data management
processes. For example, dealerships require sophisticated systems that enable
the purification of databases

29
<PAGE>
that contain old or inaccurate data to effectively target market to customers.
Dealerships are increasingly focusing on their core competencies of selling and
servicing automobiles and outsourcing to experts the development and
implementation of complex processes that support their business objectives.
Thus, automobile dealerships need outsourced services that employ efficient and
cost-effective technology to increase the number of service department customers
per dealership and dealership revenues per customer. Such services will also
improve the operations and processes of the dealership thereby differentiating
the dealership from its competition and creating increased customer satisfaction
and loyalty.

THE NEWGEN SOLUTION

Newgen is a leading provider of customized, outsourced database management,
direct marketing and related services for the service department of automobile
dealerships and manufacturers. The Company combines its expertise in database
marketing and customer retention services, its focus on customer service and its
in-depth knowledge of the automobile service department operations to provide
highly targeted, turnkey solutions to automobile dealerships and manufacturers.
The Company's RESULTS Program is a customized, direct marketing campaign
involving direct mailing and outbound teleservice follow-up to promote
automobile service business from a dealership's customer base. The Company
implements its RESULTS Program on behalf of automobile dealerships using
dealership customer and transaction data which it processes and purifies to
ensure the data is current and relevant. After downloading the dealership's
database into its system, the Company combines it with maintenance schedule
databases and the Company's own proprietary databases and algorithms to develop
customized solicitations targeting service visits. The Company's closed-loop
system tracks every dealership customer and enables the Company to provide
feedback to the dealership. Newgen's services are designed to: (i) attract more
service customers to dealerships from the dealerships' existing or past customer
base; (ii) increase dealership revenues per customer; (iii) promote customer
loyalty; (iv) increase customer satisfaction; (v) differentiate the dealership
from its competition through improved operations and processes; and (vi) provide
dealership customers with the benefits of a safer vehicle and an increased
automobile resale value. Company studies indicate that customers solicited by
the Company will visit a dealership more than three times as often and spend
more than two and one-half times as much over the course of a year than
customers with similar demographic characteristics not solicited by the Company.

The RESULTS Program significantly reduces untargeted solicitations and
unnecessary expenses, thereby increasing a dealership's return on investment
compared with untargeted customer retention programs. The Company's closed-loop
customer retention system identifies the status of each dealership customer to
enable targeted and personalized interaction and follow-up with the customer at
every phase of the process. As a result, approximately 25% to 30% of dealership
customers solicited by Newgen return to the dealership for vehicle service. This
contrasts with response rates for direct mail marketing campaigns, which
typically range between 1% and 3%. Through its teleservice department, Newgen is
able to forward customer concerns to the dealership before customers defect,
thereby increasing customer satisfaction. The Company provides its dealerships
with comprehensive monthly management reports that track maintenance
penetration, response rates and spending habits of solicited customers.
Dealerships can therefore measure the quantifiable financial and customer
retention benefits attributable to Newgen's services. The Company prices its
RESULTS Program based on the number of active names in its database, with
invoices issued at the beginning of each month for the number of names specified
by the dealership, allowing the dealerships to predictably budget for the
Company's services. To ensure its services are current and relevant to
dealerships, the Company has an extensive customer support infrastructure which
includes: (i) assistance in reviewing management reports to enable the
dealership to better understand the benefits of the Company's services; (ii)
advice on customized solicitation such as promotions, coupons and special
targeted programs; (iii) accommodation of customer requests and special needs;
and (iv) regular field visits to dealerships.

Newgen maintains relationships with leading automobile manufacturers,
including Ford Motor Company. Key elements of the Ford relationship include: (i)
marketing programs developed jointly by the Company and Ford for deployment to
Ford dealerships nationwide; (ii) private labeling by Ford of the Company's
database

30
<PAGE>
marketing services as the Quality Care Maintenance Reminder System, which adds
credibility with dealerships and supports the Company's own marketing and
product development efforts; (iii) a consulting engagement which puts the
Company in contact with Ford dealerships; and (iv) field support involving calls
on dealerships accompanied by a Ford representative. Ford also has acted as a
key reference account in the Company's effort to develop relationships with
other manufacturers.

Newgen's Consulting Division leverages its expertise in automobile service
department operations to develop and implement new techniques and programs that
enable dealerships to grow their business, streamline inefficient processes and
more effectively market their services. To date, these services have been
directed primarily to Ford dealerships, although they are applicable to
dealerships of any make of vehicle. Newgen's consulting services enhance the
Company's understanding of dealership needs and processes, and reinforce the
Company's relationship with such dealerships. In addition, the Consulting
Division is a key generator of new service ideas that can be deployed throughout
the Company's dealership base. The Company has recently introduced to its Ford
dealership base its Around the Wheel Program and the Quality Care Maintenance
Program ("QCM") Pricing Center, both of which were developed by the Company's
Consulting Division.

GROWTH STRATEGY

Newgen's objective is to be the leading provider of customized, outsourced
database management, direct marketing and related services for automobile
dealerships and manufacturers. The Company's combination of sophisticated
database management capabilities, scaleable personalized customer service and
in-depth knowledge of automobile service department operations has allowed it to
quickly and effectively penetrate the automobile industry. The Company's growth
strategy consists of the following key elements:

PROVIDE SERVICES TO MORE AUTOMOBILE DEALERSHIPS. The Company has
implemented a strategy to increase its share of the automobile dealership market
by: (i) increasing the size of its direct field sales force; (ii) formalizing
its marketing efforts through the creation of a Marketing Department and the
addition of a Vice President of Marketing; (iii) continuing to expand its field
force of customer satisfaction representatives to service its dealership base;
(iv) seeking to establish additional manufacturer relationships using the Ford
relationship as a model; and (v) lengthening the term of its dealership
contracts. By adding new dealerships and improving dealership retention, the
Company has increased its dealership base from 177 as of December 31, 1995 to
1,623 as of June 30, 1998.

INCREASE THE NUMBER OF ACTIVE NAMES PER AUTOMOBILE DEALERSHIP. The
Company's revenues for the RESULTS Program are based on a monthly fee per active
name in the Company's database. As a result, dealerships generally limit the
number of active names in order to control expenses. Currently, the Company
solicits approximately two-thirds of its purified database. The Company seeks to
increase the number of active names per dealership by demonstrating a tangible
return on investment to the dealership resulting from the Company's programs. As
the Company demonstrates the economic value of its services to its dealership
base, dealerships are likely to increase the number of active names that the
Company solicits. The Company is focused on developing tools and sales
techniques designed to emphasize the tangible financial benefits of its services
in order to encourage dealerships to activate new names.

OFFER A BROAD RANGE OF CUSTOMIZED DIRECT MARKETING SERVICES TO AUTOMOBILE
DEALERSHIPS. The Company intends to cross-sell new services to satisfied
dealerships, as well as to sell broader lines of services to new customers. For
example, the Company has recently introduced two new targeted direct marketing
programs: Welcome Home, which is designed to recapture dealership customers who
have previously defected; and Around the Wheel, which is designed to increase
the sale of brakes and tires at Ford dealerships. The Company is currently
developing several innovative new services and programs, including, for example,
an after-service follow-up program involving teleservice calls to ascertain the
level of satisfaction from a customer's service experience following vehicle
service.

31
<PAGE>
LEVERAGE DATA MANAGEMENT CAPABILITIES. The Company intends to leverage its
expertise and resources in data management by providing data extraction and data
warehousing services. The Company's database contains comprehensive and detailed
information regarding every repair order processed by a dealership since
implementation of the RESULTS Program. Because Newgen is able to extract repair
order information from dealerships on a daily basis, it can provide general
statistical data to manufacturers in a variety of different formats, as well as
to mine the data for trends that could be useful to manufacturers and
dealerships. The Company is working with a major automobile manufacturer to
provide such services. The Company believes that the benefits of such data
management services to manufacturers and dealerships include: (i) creating
manageable information regarding customer and vehicle service patterns; (ii)
provide information that supports customer promotions and recall programs; and
(iii) establishing the foundation for future direct marketing services.

In addition, the Company may seek to expand its operations and leverage its
technology and process expertise by investing in and acquiring businesses or
technologies complementary to its existing operations. There can be no assurance
that any future acquisitions will be completed or that, if completed, any such
acquisitions will be effectively integrated with the Company's operations. See
"Risk Factors--Risks Associated with Investments or Acquisitions."

SERVICES

The Company's services include: (i) the RESULTS Program; (ii) consulting
services; and (iii) recently introduced, expanded direct marketing services. The
Company's services are based on Newgen's expertise in the service department
operations of automobile dealerships, database management and direct marketing
services, and are intended to provide dealerships with a high return on
investment due to improved processes, a greater share of its customers'
automobile service business, increased revenues per customer and improved
customer loyalty and satisfaction. In addition, the Company is actively
developing new services that leverage its expertise in automobile service
department operations.

RESULTS PROGRAM

The Company's RESULTS Program is a customized, direct marketing service
involving direct mailing and outbound teleservice follow-up to promote
automobile service business from a dealership's customer base. The Company
implements its RESULTS Program on behalf of automobile dealerships using
dealership customer and transaction data that it processes and purifies to
ensure that the data is current and relevant. The Company enhances the
dealership's database by combining it with maintenance schedule databases and
the Company's own proprietary databases and algorithms to develop customized
solicitations targeting service visits. The Company's closed-loop customer
retention system tracks the status of each dealership customer to enable
targeted and personalized interaction and follow-up with the customer at every
phase. The Company monitors results daily and provides dealerships with
comprehensive monthly management reports that track maintenance, response rates
and spending habits of solicited customers. Under the RESULTS Program,
dealerships generally achieve a greater share of their customers' service
business, increased revenue per customer, improved relationships with more loyal
and satisfied customers, relevant customer feedback and improved operations and
processes.

DATABASE UPDATING, MAINTENANCE AND INTEGRATION. The Company's RESULTS
Program is based on sophisticated data management. The Company's initial data
download captures the dealership's total customer database, a comprehensive but
inaccurate list. The Company also downloads customer transaction data each time
a dealership customer comes into the dealership, and uses this data to update
the history of the customer or vehicle. This data is compiled in order to
develop a maintenance schedule for each vehicle in the database. In order to
maximize response rates, the Company purifies the initial database by
eliminating dealership employees, fleet customers performing their own
maintenance, dealership trades and database records with incomplete

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names, addresses, or missing or incomplete vehicle identification numbers, or
other vehicles that are inappropriate for dealership servicing (such as a Dodge
purchased at a Toyota dealership). After purifying the dealership's database,
the Company is able to provide the dealership with an analysis of how many of
the dealership's customers have come in for service or purchased new or used
vehicles within the past 6, 12, 18 and 24 months. The dealership uses this data
to decide how many names in the database to make active for solicitation. Active
names are then selected based on a combination of recent interaction with the
dealership and the need for service.

CUSTOM DATA MANAGEMENT. The Company uses the purified, enhanced database
and its industry knowledge and expertise to design and execute a customized
direct marketing campaign for the dealership. After the data is analyzed, it is
then overlaid on other relevant databases such as maintenance schedules or zip
code exclusion tables. The Company consults with dealerships on a customized
program that takes into account maintenance schedules, geography, demographics
and the dealership's service operations. Once the Company's database includes
all of the necessary data, the Company is able to execute its RESULTS Program
and begin to provide direct marketing services.

TARGETED DIRECT MAIL SOLICITATION. The Company sends a personalized letter
on dealership letterhead, tailored to each customer's car make, mileage and
maintenance schedule, indicating that the vehicle is due for service. The letter
describes the suggested service required, as well as dealership contact
information and hours of operation. The RESULTS Program is designed to ensure
that the right message is sent to the right person at the right time. The
Company is able to review the response rate of its direct mail solicitations
through regular transaction downloads from dealerships and then update and
enhance its database, enabling the monitoring of results.

TELESERVICE FOLLOW-UP. If the regular transaction downloads show that the
vehicle owner did not visit the dealership within a specified time after the
personalized letter is sent, a telephone solicitation from Newgen is made on
behalf of the dealership, encouraging the dealership customer to bring the
vehicle to the dealership for service. Ideally, the teleservice representative
speaks directly to the customer, confirms vehicle mileage, explains the type of
service that is due, sets an appointment and, if possible, obtains information
from the customer for feedback to dealerships. If an answering machine is
reached, the teleservice representative leaves a message. Company research has
indicated that the response rate from solicitations by telephone messages is
approximately the same as solicitations by direct telephone contact. If an
appointment is scheduled, the customer's name returns to the database for future
solicitation. If the customer is no longer appropriate for solicitation (for
example, because the customer sold the vehicle or moved away), the name is made
inactive in the database and no longer solicited. If Newgen's teleservice
representatives receive a complaint from a customer, a "customer opportunity"
form is created identifying the reason for the dissatisfaction (for example, the
customer experienced a rude service advisor or the vehicle was not ready when
promised) and this form is immediately sent to the dealership via facsimile.
These forms provide an opportunity for dealerships to salvage fragile customer
relationships and improve customer retention. The Company believes that its
teleservice calls are effective because they are not viewed by the customer as a
solicitation; rather, customers are responsive because the telephone call is
seen as evidence of the dealership's interest in the customer.

CLOSED-LOOP SYSTEM. The RESULTS Program is a closed-loop system that allows
Newgen to know whether a dealership customer has responded to the Company's
direct marketing services and to update the database appropriately throughout
the solicitation process. The Company's closed-loop system is designed to ensure
that all dealership customers experience appropriate and personalized
interaction and follow-up at every phase of the customer retention process by
maintaining the most current record possible for each customer. This system
enables the Company to maintain a current and relevant database and allows it to
more precisely target the dealership customers. As a result, the system is
designed to minimize inappropriate and ineffective solicitations.

COMPREHENSIVE MANAGEMENT REPORTS. Each month the Company produces a set of
comprehensive management reports for each dealership. These reports are sent to
dealerships shortly after the end of the month and

33
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contain specific, quantifiable information about the results of the program. The
information in these reports includes data on customer spending habits, return
on the dealership's investment and database purification. These reports also
contain information on service advisor performance and other relevant feedback
enabling the dealership to improve its operations and processes.

CONSULTING SERVICES

The Company leverages its industry expertise in the service department
operations of automobile dealerships through its Consulting Division. To date,
these services have been directed primarily to Ford dealerships, although the
programs are applicable to manufacturers and dealerships of any make of vehicle.
These services are designed to improve the quality of the dealership's parts and
service department through process improvement methodologies, as well as to
provide dealerships with additional revenue opportunities. The Company employs
15 consultants, supported by 10 internal administrative and technical staff. In
June 1997, the Company initiated a consulting contract for the implementation of
QCM, during which the Company consulted to over 2,700 Ford dealerships. The
Company has privately labeled a version of its RESULTS Program as the Quality
Care Management Reminder System ("QCMRS") to fulfill the requirements of QCM.
During the implementation of QCM, the Company was able to provide services to
each of the 2,700 dealerships.

The Company was recently awarded another contract to help Ford dealerships
increase their tire and brake sales. The Around the Wheel Program is expected to
roll out in over 2,400 Ford dealerships prior to July 1999. The Around the Wheel
Program is designed to increase brake and tire sales to dealership customers
through the inclusion in the regular reminder letters of specialized graphs
showing brake and tire wear. The Company's consultants help dealerships increase
brake and tire sales by teaching effective sales techniques and by improving
distribution channels for these products. This program presents a substantial
opportunity for the Company to provide services to Ford dealerships.

In fulfilling its obligations under its Ford consulting contracts, the
Company is paid a per diem rate for the services provided by its consultants or
internal staff, in addition to travel expenses and associated costs incurred by
the Consulting Division.

The Consulting Division also operates the Pricing Center, which provides
dealerships with a price book outlining the required maintenance schedules and
suggested maintenance prices for every Ford vehicle. There are over 2,500
permutations of service operations, and the book is used as an effective tool in
helping dealerships accurately determine prices for maintenance packages, thus
better serving their customers. Dealerships are charged a monthly fee for these
books and receive a maximum of two updates per year.

RECENTLY INTRODUCED SERVICES

AROUND THE WHEEL. The Around the Wheel Program is a component of the QCMRS,
designed to assist dealerships to increase revenues from the sale of parts and
service relating to tires and brakes through the inclusion in the regular
reminder letters of specialized graphs showing brake and tire wear. This
program, which is expected to be implemented in Ford dealerships, enables
cross-marketing of the Company's services.

WELCOME HOME. The Welcome Home Program is designed to recapture those
customers who may have defected from the dealership. When the Company implements
a dealership on the RESULTS Program, the dealership may choose to solicit only
vehicles that have visited the dealership for service within the last twelve
months. However, many of the dealership's customers that visited the dealership
prior to the last 12 months are still good prospects for service visitation.

Potential customers are sent a four-color mailing utilizing state-of-the-art
print-on-demand technology, with a personalized message inviting the customer to
return to the dealership for service. The mailing includes personalized coupons
as well as an innovative "scratch-off" feature, whereby the customer can win a
special gift such as a free oil change or a discount on service. When the
customer returns to the dealership, the customer is added to the Company's
active database for regular solicitation. The Company completed a pilot for the

34
<PAGE>
Welcome Home Program, and believes that the response rate is substantially
higher than response rates typically generated by direct mail. Newgen introduced
this service offering to its dealership customers during the third quarter of
1998.

DATA EXTRACTION AND DATA WAREHOUSING. The Company intends to leverage its
expertise and resources in data management by providing data extraction and data
warehousing services. The Company is currently working with a major automobile
manufacturer to perform data warehousing and mining services. Leveraging its
expertise in dealership data extraction, the Company will acquire data from
dealerships and utilize its database expertise to feed information back to the
manufacturer in different formats. The manufacturer will then use that
information in various marketing and research programs. The Company expects to
introduce this service in the first half of 1999.

SERVICES IN DEVELOPMENT

One of the Company's strategies is to continue to leverage its expertise in
database management, direct marketing services and the service department
operations of automobile dealerships by introducing innovative new services to
dealerships. The Company has several service programs under development. For
example, the Company is developing an After-visit Follow-up Program.

Many dealerships call their customers after a service visit to inquire about
the quality of their experience. Newgen is well positioned to provide this
service on an outsourced basis because it already acquires the necessary data as
part of its RESULTS Program. This service also allows the Company to leverage
its existing teleservice expertise and operational infrastructure. The Company
expects to pilot its After-visit Follow-up Program during the fourth quarter of
1998, with a full introduction to its dealerships during the first half of 1999.

There can be no assurance that the Company's customers will respond
positively to the Company's new services or that the Company will be able to
develop and introduce new services in a timely or cost-effective manner. See
"Risk Factors--Risks Associated with Introductions of New Services."

SALES AND MARKETING

SALES

As of July 31, 1998, the Company employed a sales force of 44 sales
professionals located in major markets throughout the United States. The sales
force is compensated through a combination of a salary and a commission based on
implementation of the RESULTS Program at dealerships. In addition, regular
visits from customer satisfaction representatives increase dealership awareness
and understanding of the benefits and value of the Company's services. The
Company employed 12 customer satisfaction representatives as of July 31, 1998
located throughout the United States. The Company believes that educated and
satisfied customers are more likely to provide referrals, increase the number of
active names in the Company's database and increase the number of the Company's
services that they use as the Company's product base broadens.

The continued consolidation of automobile dealerships has enabled the
Company to target its sales efforts more effectively. The Company's sales
professionals focus primarily on the largest dealerships within the industry as
such dealerships are able to benefit the most from the Company's services. In
addition, these dealerships represent the greatest revenue opportunity for the
Company. Depending on whether the dealership is affiliated with a national
manufacturer that recommends the Company's services, the Company's sales efforts
employ two different strategies.

When a manufacturer recommends the Company's services, a Company sales
person is able to more effectively contact the dealership principal and is able
to make a sales presentation that is tailored to the manufacturer's program.
Manufacturers influence the decisions made by dealerships through both financial
and non-financial incentives and support the Company's sales efforts. For
example, the recommendation of Ford has been instrumental in securing
appointments with Ford-affiliated dealership principals, which has resulted in
successful sales of the Company's services. In addition, through Ford-sponsored
dealership seminars, the

35
<PAGE>
Company has been able to enroll several hundred dealerships in its Around the
Wheel Program. Other benefits of a manufacturer's recommendation include
co-branded marketing materials and administrative support in the Company's
management of receivables and the collection process.

When a dealership is not affiliated with a manufacturer that recommends the
Company's services, the Company's sales representatives directly solicit the
dealership. The Company employs an active prospecting and sales management
process intended to increase direct sales by facilitating appointments with key
decision makers. Regional market-support personnel address administrative
responsibilities for teams of salespeople. Word-of-mouth, cold-call prospecting
by market-support personnel, special mailings to dealerships and booths at local
and regional dealership exhibits create sales leads that are then responded to
by sales representatives. In addition, the Company has an internal database
system that electronically tracks prospects throughout their life cycle.

The Company believes that its credibility among automobile dealerships is
based on its ethical sales practices, demonstrated industry expertise,
manufacturer recommendations, leading edge technology and efficient back office
operations.

MARKETING

The Company has recently formalized its marketing efforts by creating a
marketing department and enhancing its management capabilities with the hiring
of a Vice President of Marketing. The newly formed department is responsible for
the introduction of new services to the Company's customer base. In addition,
the Company's marketing efforts will focus on enhancing the Company's brand name
recognition, developing a Web strategy and networking with prominent dealerships
through a Dealership Advisory Board. The Marketing Department is also
responsible for the Company's participation in the annual NADA trade show, as
well as other smaller regional trade shows across the United States, that
increase awareness of the Company's services.

OPERATIONS

The Company has developed general expertise in the operational aspects of
database management, direct marketing and teleservice. The Company's core
competencies include the development and installation of databases with
dealership-specific information, the downloading of dealership data through the
Company's highly automated computer system, data purification and enhancement,
knowledge of maintenance schedules, personalized solicitation through direct
mail and teleservice and a dedication to customer satisfaction. The Company
completed a certification process for ISO 9001 in December 1997. ISO 9001 is an
international quality standard which the Company believes will allow it to
achieve special vendor status with major manufacturers. The Company believes
that its operations expertise provides a competitive advantage and has been a
key factor in the Company's success in growing its dealership base.

INSTALLATIONS. The Installation Department has the initial interaction with
a dealership in implementing the RESULTS Program. This department's activities
consist primarily of programming scripts to obtain dealership data via modem,
ensuring that all appropriate maintenance schedules and dealership information
are input to the Company's database system and creating customized digital
letterhead for sending to dealership customers. In addition, the Installation
Department works with dealerships to develop customized dealership-specific
information for the Company's database.

COMPUTER OPERATIONS. The Computer Operations Department downloads the
initial data from the dealership and is responsible for downloading data from
the dealership on a daily basis. For most dealerships, data is automatically
downloaded nightly containing a detailed list of customers who have come in for
service or have purchased a vehicle. This highly automated system allows the
Company to know whether a contacted dealership customer has come in for service
or made an appointment. If the customer has had his or her vehicle serviced, the
record is returned to the file for future solicitation. If the customer does not
come in for service within a time frame specified by the dealership, the name is
transferred to a phone list. The Computer Operations Department is also
responsible for maintaining the Company's HP9000 computers. In addition, the
Computer

36
<PAGE>
Operations Department facilitates the analysis of data for sale to manufacturers
as part of the Company's new data warehousing and mining services.

DATABASE OPERATIONS. The Company is focused on maintaining a comprehensive
transaction database by concentrating on continuous database purification. The
Database Operations Department prepares new records for processing by ensuring
that each dealership customer name has a proper salutation, proper address
(utilizing the National Change of Address Registry) and that each address is in
compliance with postal regulations. The Database Operations Department also
processes the files that are used to generate letters and downloads these files
to the Company's print vendor, which utilizes innovative print-on-demand
technology to generate customized letters on dealership letterhead. Dealerships
are able to change the number of active customers at any time. New names are
transferred into the database whenever an existing active name is made inactive
as part of the ongoing database purification activities thereby maintaining the
number of names requested by the dealership. The Database Operations Department
also develops general and dealership-specific information in its database,
including current information on virtually every make and model of vehicle
produced for sale in North America and their recommended maintenance schedules.
These standard maintenance schedules include a combination of time parameters
(for example, every six months) and mileage parameters (for example, every 3,000
miles). The Company's proprietary software individualizes these schedules by
making adjustments for the driving habits of each vehicle owner in the Company's
database. The database can also be customized to include special dealership
offerings, such as "winterization" packages in Michigan or "desert protection"
plans in Texas. The Database Operations Department also creates letter templates
for the direct marketing component of the Company's services.

TELESERVICE. The Teleservice Department contacts dealership customers that
do not respond to solicitation letters. As of July 31, 1998, the Teleservice
Department had 117 full-time and 120 part-time employees. The Teleservice
Department currently contacts over 600,000 customers per month. When a personal
contact cannot be made, the Company's teleservice representative leaves a
message for the dealership's customer. Newgen's research has indicated that the
response rate from solicitations by telephone messages is approximately the same
as solicitations by direct telephone contact. When a contact is made, the
Teleservice Department either makes an appointment for the dealership, or
"closes the loop" by establishing reasons for non-response. Teleservice
representatives may also identify dealership customers who are dissatisfied with
the dealership and do not wish to return for service. The Company believes that
its teleservice calls are effective because they are not viewed by the customer
as a sales call, rather customers are responsive because the telephone call is
seen as evidence of the dealership's interest in the customer.

CUSTOMER SERVICE. The Customer Service Center ensures that the needs of
dealerships are addressed. This department answers dealership and employee
questions about the Company's database and customer retention services and also
implement changes to a dealership's program, such as letter changes and
maintenance schedule changes. By tracking the nature of questions and concerns,
the Company is able to constantly improve its processes. This department, which
employed 25 persons as of July 31, 1998, is accessible to employees and
dealerships 24 hours a day, seven days a week.

CUSTOMER SATISFACTION. The mission of the Company's Customer Satisfaction
Department is to ensure dealership satisfaction and eliminate cancellation of
the Company's services by dealerships. As of July 31, 1998, the department
consisted of 12 outside field representatives who visit the Company's dealership
base on a regular basis. During the field visits, the Company proactively deals
with any issues that may have arisen at the dealership, such as management
changes at the dealership or operational changes such as new hours of operation.
In addition, the field representatives review management reports and explore new
avenues for revenue enhancement with the dealership. Also, the field
representatives are able to introduce new services to dealerships during their
visits, thereby supplementing the efforts of the Sales Department.

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<PAGE>
TECHNOLOGY

The Company is a leader in applying advanced technology to database
management and direct marketing. The Company's current software and database
systems have been developed over several years, and the Company has increased
functionality as it has grown. The Company has in place, where necessary,
license agreements for the software it uses from third parties.

In order to take advantage of the most current advanced technology, the
Company is in the process of implementing a software rewrite to its core
database management and customer retention software system, which it expects to
complete during the first quarter of 1999. The Company expects to greatly
enhance its core computing and database management services through the
implementation of the software rewrite. The Company believes the resulting
operating efficiencies will produce a significant return on the Company's
investment through cost savings and the ability to capture incremental revenues.
Some of the enhancements to be made in this rewrite include: (i) providing a
more flexible database that will enhance the Company's ability to provide
customized extract reports and new services to customers; (ii) increasing data
processing efficiency; (iii) enhancing the Company's ability to utilize the
Internet as part of future service offerings; (iv) improving service to
customers through more efficient use of screens and information; and (v)
providing the ability to more effectively purify data through the use of
software which will greatly reduce labor and postage expense. The new system
also will more effectively support the Company's strategic growth into new
service offerings. The new system will utilize Oracle database software and a
graphical user interface written in the Visual Basic 5 programming language. See
"Risk Factors--Risks Associated with Software Rewrite."

COMPETITION

The Company operates in a highly competitive business environment. The
Company competes with a variety of companies, including large national or
multi-national companies which have greater financial resources than the Company
and smaller regional or local companies that are involved to varying degrees in
the same business. Through its Service Systems Division, Reynolds & Reynolds,
Co. ("R&R") offers automobile dealerships database management and customer
retention services that compete directly with those of the Company. Through its
automobile dealership services group, Automatic Data Processing, Inc. ("ADP")
competes with the Company by providing customer retention services similar to
those of the Company. The Company believes that R&R and ADP each have
significantly more dealership customers than the Company. Moreover, both R&R and
ADP have significantly greater financial resources than the Company and both of
them actively compete against the Company for dealership business. For example,
R&R has recently offered a discount on customer retention systems to dealerships
that purchase certain hardware, and software, and ADP has in the past offered
free services for up to three months in order to compete on price. In addition,
in March 1997, ADP acquired Picture Perfect Promotions, Inc., a provider of
lower margin, direct marketing services to automotive dealerships and
manufacturers, that may enhance its ability to effectively compete. Moore
Corporation Limited also delivers integrated business communications,
personalized direct marketing and other related services. The Company also
competes to a limited degree with other small customer retention service
providers and in-house customer retention systems. As the trend towards
dealership consolidation continues, dealerships will be able to create internal
economies of scale, and could choose to satisfy their needs internally rather
than outsourcing. The decision by the Company's potential customers to
internally develop database management and direct marketing services could have
a material adverse effect on the Company's business, financial condition and
results of operations. Factors affecting the competitive success of the
Company's services include knowledge of dealership service department
operations, value of the services offered, manufacturer relationships, quality
and breadth of service, ability to identify, develop and offer innovative
services, ability to overcome difficulties associated with replacing incumbent
service providers, pricing and reputation among dealerships. R&R and ADP price
their services on a per letter basis and the Company prices its services based
on the number of active names in a dealership's database. Therefore, meaningful
price comparisons between services of the Company and its competitors are
difficult. There can be no assurance that dealerships will not perceive that the
Company's services are priced higher than its competitors, that the Company's
competitors

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will not increase their emphasis on programs similar to those offered by the
Company, that new competitors will not enter the market, or that dealerships or
automobile manufacturers themselves will not introduce competing programs.

TELEMARKETING REGULATIONS

The Company is subject to federal, state and local laws which regulate
telemarketing activities. For example, the Federal Trade Commission has
promulgated rules designed to prohibit deceptive and abusive telemarketing acts
or practices. Additionally, state laws regulate telemarketing activities in
order to protect consumers from fraud and invasions of privacy. Both federal and
state regulations set standards for telemarketing practices including, among
other things, regulating conduct such as the timing of calls, disclosures to be
made, records to be kept and requiring the registration of telemarketers.

The Company believes its teleservice center is registered in the states that
require registration, and the Company has designed procedures to ensure
compliance with federal, state and local telemarketing regulations. The Company
believes that its teleservice activities are currently in compliance with the
requirements of telemarketing regulations in all material respects. However,
there can be no assurance that violations will not occur in the future as a
result of human error, equipment failure and other causes. Furthermore,
telemarketing regulations could become more stringent over time, and the cost of
compliance with more stringent laws could be substantial.

Although the Company believes it is in full compliance with all
telemarketing regulations, the Company is unable to predict what effect, if any,
the adoption of more stringent regulations would have on its future operations.
The Company does not anticipate incurring any future material expenditures in
order to remain in compliance with presently applicable telemarketing
regulations. See "Risk Factors--Regulation of the Telemarketing Industry."

EMPLOYEES

As of July 31, 1998, the Company had approximately 488 employees, of whom
approximately 357 were full-time and approximately 126 were part-time (primarily
teleservice personnel). The Company's employees are not represented by any
collective bargaining organization and the Company has never experienced a work
stoppage. The Company believes that its relations with its employees are good.

PROPERTIES

The Company leases an approximately 28,000 square foot facility in San
Diego, California. The current lease for this facility expires in September
2001. In addition, the Company leases an approximately 7,000 square foot
facility in San Diego, California which houses some of Company's teleservice and
database operations. The lease for this facility expires on August 31, 1999. In
addition, the Company leases an approximately 2,500 square foot facility in
Hayward, California that houses repair facilities and some of the Company's
modems and dealership communications equipment. The lease for this facility
expires in July 2001.

LEGAL PROCEEDINGS

The Company is not currently a party to any material legal proceedings.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the Company's
directors and executive officers as of August 1, 1998:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
Gerald L. Benowitz............ 54 Chairman, President and Chief Executive Officer
Samuel Simkin................. 42 Senior Vice President, Chief Financial Officer and
Secretary
Leslie J. Silver.............. 47 President, Newgen Consulting Services and Executive
Vice President
James K. Roche................ 38 Senior Vice President, Operations
Mario Sanchez................. 42 Vice President and Chief Information Officer
Frederick Wallace............. 51 Vice President, Marketing
Eugene J. Fischer............. 52 Director
H. Robert Gill (1)............ 62 Director
Jess R. Marzak (1) (2)........ 48 Director
John Moragne.................. 40 Director
Abraham L. Simkin............. 76 Director
Bernard C. Simkin (1) (2)..... 48 Director
Gary Simkin................... 51 Director
Murray Simkin................. 44 Director
Todd A. Springer.............. 31 Director
Bert Winemiller (2)........... 55 Director
</TABLE>

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

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

GERALD L. BENOWITZ has served as Chairman, President and Chief Executive
Officer of the Company since the Company's inception. From October 1984 to June
1991, Mr. Benowitz served as Project Manager for Otay International Center, a
400-acre multi-use industrial park. From May 1980 to August 1984, he served as
President and Chief Operating Officer of Harco Medical Electronic Devices, a
medical device company. Mr. Benowitz holds a B.S. from the University of
Tennessee.

SAMUEL SIMKIN was named Senior Vice President in August 1998. Mr. Simkin has
served as Vice President and Chief Financial Officer of the Company since the
Company's inception. From November 1986 to June 1991, Mr. Simkin served as
President of Morite Investments, Inc., a private investment company. From June
1978 to November 1986, Mr. Simkin served as Vice President and Secretary of
Rudacel Investment Company Limited where he was responsible for investing in and
managing various companies, including Mostly Software, a software retailer, and
Citation Software, a software distributor. Mr. Simkin holds both a B.A. and an
L.L.B. from the University of Manitoba, and an M.B.A. from the University of
Western Ontario. He is a member of the Manitoba and California Bars, and is also
a Certified General Accountant.

LESLIE J. SILVER was named Executive Vice President in August 1998. Mr.
Silver has served as President of Newgen Consulting Services since the Company's
inception. From May 1982 until February 1994, Mr. Silver served in various
senior management capacities at Newgen Service Systems, Inc., and its successor
corporations, which developed and sold database management and customer
retention software to automobile dealerships, primarily in Canada. From May 1976
to April 1982, Mr. Silver served as Vice President of the Western Canadian
division of SHL Systemhouse, Inc., an international software development and
systems-integration company. Mr. Silver holds both a B.S. and an M.S. from the
University of Manitoba.

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JAMES K. ROCHE was named Senior Vice President, Operations in August 1998.
Mr. Roche has served as Vice President, Operations of the Company since the
Company's inception. Since 1983, Mr. Roche has held management positions with a
number of companies that have provided consulting and hardware and software
systems to the service departments of automobile dealerships. From May 1991 to
September 1993, Mr. Roche served as the General Manager of United States Support
Services of Newgen Services, L.P. From September 1990 to April 1991, he served
as Director of International Operations of Newgen Services Systems
International. From September 1987 to August 1990, Mr. Roche served as Director
of United States Operations of Newgen Service Systems, Inc. Mr. Roche holds a
B.S. from St. Louis University.

MARIO SANCHEZ has served as Vice President and Chief Information Officer of
the Company since May 1998. Mr. Sanchez is responsible for initiating,
developing and directing the Company's Information Technology projects. From
April 1997 to May 1998, Mr. Sanchez served as Divisional Vice President,
Information Technology for American International Underwriters, a worldwide
marketer of property-casualty products. From 1996 to 1997, Mr. Sanchez served as
Director of Information Technology for Precision Response Corporation, a
telephone-based marketing and customer service company. From 1994 to 1996, Mr.
Sanchez served as Director of Communications of the High Performance Database
Research Center at Florida International University. Mr. Sanchez holds both a
B.A. and an M.S. from Florida International University.

FRED WALLACE has served as Vice President, Marketing of the Company since
June 1998. From 1997 to June 1998, Mr. Wallace served as Vice President, Vehicle
Acquisition and Remarketing of AutoNation USA, a division of Republic
Industries, Inc., an automobile consolidator. From 1996 to 1997, Mr. Wallace
served as Director, Sales and Marketing of Fleetwood Enterprises, Inc., a
motorhome manufacturer. From 1990 to 1996, Mr. Wallace directed marketing and
promotional activities for Mazda Motor of America. From 1981 to 1990, Mr.
Wallace developed and directed marketing plans for Volkswagen of America. From
1968 to 1981, Mr. Wallace developed and coordinated the initial marketing launch
for Ford Motor Company's Extended Service Plan. Mr. Wallace holds a B.S. from
the University of Florida, Gainsville.

EUGENE J. FISCHER has been a Director of the Company since August 1996.
Since July 1996, Mr. Fischer has been a Managing Member of Capstone Management
L.L.C., a venture capital firm. Since October 1988, Mr. Fischer has been a
general partner of Pathfinder Venture Capital Funds, a venture capital firm, and
a Vice President of Pathfinder Ventures, Inc., its management company. Mr.
Fischer is a member of the Board of Directors of Examen Inc., Innerdyne Inc.,
MobileForce Technologies, Inc. and Portable Energy Products. Mr. Fischer holds a
B.S. from the University of Minnesota and an M.S. from the University of
California.

H. ROBERT GILL has been a Director of the Company since September 1996. Mr.
Gill has served as Chairman and Chief Executive Officer of MobileForce
Technologies, Inc., a computer systems and service provider, since May 1997.
From April 1996 to May 1997, Mr. Gill has served as President of the Topaz
Group, a consulting services company. From March 1995 to April 1996, he was
Senior Vice President of Frontier Corporation, a telecommunications company. Mr.
Gill is a member of the Board of Directors of QualMark Corporation, MOSAIX,
Inc., Online System Services, Inc. and Spatial Technologies, Inc. Mr. Gill holds
a B.E.E. from Indiana Institute of Technology, an M.S.E.E. from Purdue
University and an M.B.A. from Pepperdine University.

JESS R. MARZAK has been a Director of the Company since August 1996. Since
January 1994, Mr. Marzak has been a general partner of BankAmerica Ventures, a
venture capital firm. Prior to that, Mr. Marzak was a co-founder and general
partner of Paragon Partners and Paragon Venture Partners II, each a venture
capital firm. In addition, he serves on the Board of Directors of XTRA On-Line,
Inc., Kestrel Solutions, Inc. and NovaSoft Systems, Inc. Mr. Marzak holds a B.A.
from Occidental College and an M.B.A. from The Wharton School at the University
of Pennsylvania.

JOHN MORAGNE has been a Director of the Company since December 1997. Since
1993, Mr. Moragne has been a Managing Director of Trident Capital Management,
LLC, a private investment firm which he helped found ("Trident Capital"). From
1989 to 1993, Mr. Moragne served as a principal of Information Partners, a
private equity firm, and from 1989 to 1993, he served as a principal of Bain
Capital, a leveraged-buyout firm. Mr. Moragne is a director of DAOU Systems,
Inc. Mr. Moragne holds a B.A. from Dartmouth College, an M.S.

41
<PAGE>
from the Stanford Graduate School of Applied Earth Sciences and an M.B.A. from
Stanford Graduate School of Business.

ABRAHAM L. SIMKIN has been a Director of the Company since March 1994. Since
the late 1980s, Mr. Simkin has been active in founding and establishing
SNS/Assure, Inc. ("SNS"), a Canadian company that provides electronic commerce
solutions to a variety of industries and electronically processes insurance
claims. Mr. Simkin serves as Chairman of the Board of SNS. Mr. Simkin holds an
L.L.B. from the University of Manitoba.

MURRAY SIMKIN has been a Director of the Company since March 1994. He is
currently Chairman of the Board and Chief Executive Officer of Wordwide Roller
Hockey Facilities, LLC, a developer and operator of roller hockey facilities. He
is also President of Roma Ribs Ltd., a multi-location operator and developer of
Tony Roma Restaurants in Canada. In addition, he serves on the Board of
Directors of SNS. Mr. Simkin holds a Bachelor of Commerce degree from the
University of Manitoba.

GARY SIMKIN has been a Director of the Company since March 1994. Since 1972,
Mr. Simkin has been an active private investor in information and
communication-based companies. Since the early 1990s, Mr. Simkin has served on
the Board of Directors of SNS. He also serves on the Board of Directors of
Doubleday Canada Limited, a publishing company. Mr. Simkin holds a Bachelor of
Commerce degree from the University of Manitoba.

BERNARD C. SIMKIN has been a Director of the Company since March 1994. Since
the early 1990s, Mr. Simkin has served on the Board of Directors of SNS. Since
1997, Mr. Simkin has also served as Vice President and a member of the Board of
Directors of Westkin Properties, a real estate development company. Mr. Simkin
holds a B.A. and an L.L.B. from the University of Manitoba.

TODD A. SPRINGER has been a director of the Company since December 1997.
Since June 1998, Mr. Springer has been a Managing Director of Trident Capital.
From March 1996 to June 1998, Mr. Springer served as Vice President of Trident
Capital. From September 1994 to February 1996, Mr. Springer was an associate at
Jefferies and Company, Inc., an investment bank. Mr. Springer holds a B.S. from
The Wharton School at the University of Pennsylvania and an M.B.A. from Stanford
University Business School.

BERT WINEMILLER has been a Director of the Company since December 1997. Mr.
Winemiller is currently a private investor and also serves as President of
Albert Winemiller, Inc. a consulting company focused on the information
processing industry. From 1996 to 1997, Mr. Winemiller served as President and
Chief Executive Officer of Research Ltd., an Internet investment database and
report publishing company. From 1994 to 1995, Mr. Winemiller served as President
and Chief Operating Officer of American Business Information, a credit and
business information provider. Mr. Winemiller holds a B.S. and an M.S. from the
University of Missouri and an M.B.A. from Harvard Business School.

Under the terms of the Restated Certificate, the Company's Board of
Directors is divided into three classes, serving staggered terms of three years,
and any vacancies that occur during the year may be filled by the Company's
Board of Directors for the remainder of the full term. Gerald L. Benowitz, H.
Robert Gill, Murray Simkin and Todd A. Springer serve as Class I directors,
whose term will expire at the first annual meeting of stockholders following the
closing of this offering. Jess R. Marzak, Gary Simkin and Bert Winemiller serve
as Class II directors, whose term will expire at the second annual meeting of
stockholders following the closing of this offering. Abraham L. Simkin, Eugene
J. Fischer, Bernard C. Simkin and John Moragne serve as Class III directors,
whose term will expire at the third annual meeting of stockholders following the
closing of this offering. Officers serve at the discretion of the Board of
Directors. Gary Simkin, Bernard C. Simkin and Murray Simkin are brothers.
Abraham L. Simkin is their father and Samuel Simkin is their first cousin.

COMMITTEES OF THE BOARD OF DIRECTORS

Following the offering, the Audit Committee will consist of Bernard C.
Simkin, H. Robert Gill and Jess R. Marzak. The Audit Committee makes
recommendations to the Board of Directors regarding the selection of

42
<PAGE>
independent auditors, reviews the results and scope of the audit and other
services provided by the Company's independent auditors and reviews and
evaluates the Company's audit and control functions.

Following the offering, the Compensation Committee will consist of Bernard
C. Simkin, Jess R. Marzak and Bert Winemiller. The Compensation Committee makes
recommendations regarding the Company's 1998 Equity Incentive Plan and makes
recommendations concerning salaries and incentive compensation for employees and
consultants of the Company.

DIRECTOR COMPENSATION

The Company's directors do not currently receive any cash compensation for
services on the Board of Directors or any committee thereof, but directors may
be reimbursed for certain expenses in connection with attendance at Board and
committee meetings. All directors are eligible to participate in the Company's
1998 Equity Incentive Plan. Non-employee directors receive automatic grants of
options under the Company's Non-Employee Directors' Stock Option Plan as
described below. See "Management--Equity Incentive Plan" and "--Non-Employee
Directors' Stock Option Plan."

BOARD-COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee.

43
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth summary information concerning compensation
awarded to, earned by, or accrued for services rendered to, the Company in all
capacities during the fiscal year ended December 31, 1997 by (i) the Company's
Chief Executive Officer and (ii) the Company's four other most highly
compensated executive officers (together, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
(1) SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
- ---------------------------------------------- --------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Gerald L. Benowitz ........................... 1997 $ 228,000 $ 145,000 200,000 $ 12,000(3)
President and Chief Executive Officer

Samuel Simkin ................................ 1997 125,000 46,875 50,000 6,000(3)
Senior Vice President, Chief Financial
Officer and Secretary

Leslie J. Silver ............................. 1997 188,000 301,271 50,000 6,000(3)
President, Newgen Consulting Services,
Executive Vice President

James K. Roche ............................... 1997 100,000 18,750 11,500 6,000(3)
Senior Vice President, Operations

Jefferey B. Davis (2) ........................ 1997 -- 248,433 11,500 6,000(3)
Vice President, Sales
</TABLE>

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

(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), the compensation described in this table does not include
medical, group life insurance or other benefits which are available
generally to all salaried employees of the Company and certain perquisites
and other personal benefits received which do not exceed the lesser of
$50,000 or 10% of any officer's salary and bonus disclosed in this table.

(2) Mr. Davis is no longer employed by the Company effective August 1998.

(3) Includes $6,000 of automobile expenses.

44
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table provides certain summary information regarding stock
options granted to the Named Executive Officers during the fiscal year ended
December 31, 1997.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
NUMBER OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED TO EXERCISE OPTION TERM ($)(3)
OPTIONS EMPLOYEES IN FISCAL PRICE PER EXPIRATION --------------------------
NAME GRANTED (#) YEAR (%)(1) SHARE ($)(2) DATE 5% 10%
- -------------------------- ----------- --------------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Benowitz........ 200,000 32.5% $ 0.90 11/30/07 $ 113,201 $ 286,874
Samuel Simkin............. 50,000 8.1 0.90 11/30/07 28,300 71,718
Leslie J. Silver.......... 50,000 8.1 0.90 11/30/07 28,300 71,718
James K. Roche............ 11,500 1.9 0.90 11/30/07 6,509 16,495
Jefferey B. Davis (4)..... 11,500 1.9 0.90 11/30/07 6,509 16,495
</TABLE>

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

(1) Based on options to purchase 616,250 shares granted to employees in 1997,
including the Named Executive Officers. The options were granted under the
1996 Equity Incentive Plan. The options vest 25% on the first anniversary of
the vesting commencement date and 25% on each anniversary thereafter. The
term of each option is the earlier of (i) 10 years or (ii) 90 days after
termination of the optionee's services to the Company.

(2) Represents the fair market value of the underlying Common Stock as
determined by the Board of Directors on the date of grant.

(3) The potential realizable value is calculated based on the term of the option
(10 years) and is calculated by assuming that the fair market value of
Common Stock on the date of the grant as determined by the Board appreciates
at the indicated annual rate compounded annually for the entire term of the
option and that the option is exercised and the Common Stock received
therefor is sold on the last day of the term of the option for the
appreciated price. The 5% and 10% rates of appreciation are derived from the
rules of the Commission. The actual value realized may be greater than or
less than the potential realizable values set forth in the table.

(4) Mr. Davis is no longer employed by the Company effective August 1998.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

There were no exercises of options by any Named Executive Officer in the
fiscal year ended December 31, 1997.

1996 EQUITY INCENTIVE PLAN

The Company's 1996 Equity Incentive Plan (the "1996 Plan") was adopted in
August 1996. An aggregate of 700,000 shares of Common Stock have been reserved
for issuance under the 1996 Plan as of June 30, 1998. The 1996 Plan provides for
the grant, to employees, directors and consultants of the Company, of incentive
stock options ("Incentive Stock Options") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), options that do not
so qualify ("Nonstatutory Stock Options") and rights to purchase restricted
stock (Incentive Stock Options, Nonstatutory Stock Options and rights to
purchase restricted stock are hereinafter collectively referred to as "Stock
Awards"). The 1996 Plan is administered by the Board of Directors (the "Board")
or a Committee appointed by the Board. Subject to the limitations set forth in
the 1996 Plan, the Board has the authority to select the persons to whom grants
are to be made, to designate the number of shares to be covered by each Stock
Award, to determine whether an option is to be an Incentive Stock Option or a
Nonstatutory Stock Option, to establish vesting schedules, to specify the option
exercise or stock purchase

45
<PAGE>
price and the type of consideration to be paid to the Company upon exercise or
purchase and, subject to certain restrictions, to specify other terms of Stock
Awards.

The maximum term of options granted under the 1996 Plan is 10 years. Options
granted under the 1996 Plan generally are non-transferable and expire three
months after the termination of an optionee's service to the Company. In
general, if an optionee is permanently disabled or dies during his or her
service to the Company, such person's option may be exercised up to 12 months
following such disability or death.

The exercise price of options granted under the 1996 Plan is determined by
the Board in accordance with the guidelines set forth in the 1996 Plan. The
exercise price of an Incentive Stock Option cannot be less than 100% of the fair
market value of the Common Stock on the date of the grant. The exercise price of
a Nonstatutory Stock Option cannot be less than 85% of the fair market value of
the Common Stock on the date of grant. Options granted under the 1996 Plan vest
at the rate specified in the option agreement. The exercise price of Incentive
Stock Options granted to any person who at the time of grant owns stock
representing more than 10% of the total combined voting power of all classes of
the Company's capital stock (a "10% Stockholder") must be at least 110% of the
fair market value of the Common Stock on the date of grant and the term of such
Incentive Stock Options cannot exceed five years. Options may be exercised prior
to vesting, subject to a right in favor of the Company to repurchase unvested
shares.

Any restricted stock purchase awards granted under the 1996 Plan will be in
such form and will contain terms and conditions as the Board deems appropriate.
The purchase price under any restricted stock purchase agreement will not be
less than 85% of the fair market value of the Company's Common Stock on the date
of grant; provided that, in the case of a sale to a 10% Stockholder, the
purchase price will be not less than 100% of the fair market value of the
Company's Common Stock on the date of grant. Restricted stock purchase
agreements awarded under the 1996 Plan generally are non-transferable.

Shares subject to Stock Awards that have expired or have otherwise
terminated without having been exercised in full become available again for
grant under the 1996 Plan. The Board has the authority to reprice outstanding
options and to offer optionees the opportunity to replace outstanding options
with new options for the same or a different number of shares.

Upon certain changes in control of the Company, all outstanding Stock Awards
under the 1996 Plan shall either be assumed or substituted by the surviving
entity. If the surviving entity determines not to assume or substitute such
Stock Awards, then such Stock Awards shall expire at such time and on such
conditions as the Board shall determine.

As of June 30, 1998, options to purchase 555,200 shares of Common Stock were
outstanding. The 1996 Plan will terminate in August 2006 unless sooner
terminated by the Board. The Company does not intend to grant any further
options under the 1996 Plan. Outstanding options will be governed by the
original terms of those grants.

1998 EQUITY INCENTIVE PLAN

The Company adopted its 1998 Equity Incentive Plan (the "1998 Plan") in
August 1998. An aggregate of 1,000,000 shares of the Company's Common Stock have
initially been reserved for issuance pursuant to the exercise of stock awards
granted to employees, directors and consultants under the 1998 Plan. An
additional 500,000 shares may be reserved for issuance under the 1998 Plan to
the extent that options outstanding on the effective date of this offering under
the Company's 1996 Plan are returned to the 1996 Plan. The 1998 Plan will
terminate in August 2008, unless sooner terminated by the Board.

The 1998 Plan permits the granting of options intended to qualify as
Incentive Stock Options within the meaning of Section 422 of the Code to
employees (including officers and employee directors) and Nonstatutory Stock
Options (together with Incentive Stock Options, the "Options") to employees
(including officers and employee directors), directors and consultants
(including non-employee directors). In addition, the 1998 Plan permits the
granting of Stock Appreciation Rights ("SARs") appurtenant to or independently
of Options, as well as stock bonuses and rights to purchase restricted stock
(Options, SARs, stock bonuses and rights to purchase

46
<PAGE>
restricted stock are hereinafter referred to as "Stock Awards"). No person is
eligible to be granted Options and SARs covering more than 300,000 shares of the
Company's Common Stock in any calendar year.

The 1998 Plan is administered by the Board or a committee appointed by the
Board. Subject to the limitations set forth in the 1998 Plan, the Board has the
authority to select the persons to whom grants are to be made, to designate the
number of shares to be covered by each Stock Award, to determine whether an
Option is to be an Incentive Stock Option or a Nonstatutory Stock Option, to
establish vesting schedules, to specify the Option exercise price and the type
of consideration to be paid to the Company upon exercise and, subject to certain
restrictions, to specify other terms of Stock Awards.

The maximum term of Options granted under the 1998 Plan is 10 years. The
aggregate fair market value, determined at the time of grant, of the shares of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by an optionee during any calendar year (under all such plans of
the Company and its affiliates) may not exceed $100,000, or the Options or
portion thereof which exceed such limit (according to the order in which they
are granted) shall be treated as Nonstatutory Stock Options. Options granted
under the 1998 Plan generally are non-transferable and expire 30 days after the
termination of an optionee's service to the Company. In general, if an optionee
is permanently disabled during his or her service to the Company, such person's
Options may be exercised up to six months following such disability and if an
optionee dies during that period, such person's options may be exercised up to
12 months following such death.

The exercise price of Options granted under the 1998 Plan is determined by
the Board of Directors in accordance with the guidelines set forth in the 1998
Plan. The exercise price of an Incentive Stock Option cannot be less than 100%
of the fair market value of the Common Stock on the date of the grant. The
exercise price of a Nonstatutory Stock Option cannot be less than 85% of the
fair market value of the Common Stock on the date of grant. Options granted
under the 1998 Plan vest at the rate specified in the option agreement. The
exercise price of Incentive Stock Options granted to any person who at the time
of grant owns stock representing more than 10% of the total combined voting
power of all classes of the Company's capital stock must be at least 110% of the
fair market value of such stock on the date of grant and the term of such
Incentive Stock Options cannot exceed five years.

Any stock bonuses or restricted stock purchase awards granted under the 1998
Plan shall be in such form and will contain such terms and conditions as the
Board deems appropriate. The purchase price under any restricted stock purchase
agreement will not be less than 85% of the fair market value of the Company's
Common Stock on the date of grant. Stock bonuses and restricted stock purchase
agreements awarded under the 1998 Plan are generally non-transferable.

Pursuant to the 1998 Plan, shares subject to Stock Awards that have expired
or otherwise terminated without having been exercised in full again become
available for grant, but shares subject to exercised SARs will not again become
available for grant. The Board of Directors has the authority to reprice
outstanding Options and SARs and to offer optionees and holders of SARs the
opportunity to replace outstanding Options and SARs with new Options or SARs for
the same or a different number of shares.

Upon certain changes in control of the Company, all outstanding Stock Awards
under the 1998 Plan must either be assumed or substituted by the surviving
entity. In the event the surviving entity does not assume or substitute such
Stock Awards, such Stock Awards will be terminated to the extent not exercised
prior to such change in control.

Since August 1, 1998, the Company has not granted Options to purchase shares
of Common Stock pursuant to the 1998 Plan.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

In August 1998, the Company adopted its Non-Employee Directors' Stock Option
Plan (the "Directors' Plan") to provide for the automatic grant of options to
purchase shares of Common Stock to non-employee directors of the Company. The
Directors' Plan is administered by the Board, unless the Board delegates
administration to a committee of at least two disinterested directors.

47
<PAGE>
The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 150,000. Pursuant to the terms of
the Directors' Plan: (i) each person who, on the effective date of this
offering, is a non-employee director or, after the effective date of this
offering, for the first time becomes a non-employee director automatically will
be granted, upon the effective date of this offering or upon the date of his or
her initial appointment or election to be a non-employee director, as the case
may be, a one-time option to purchase 6,000 shares of Common Stock (the
"Inaugural Option"); and (ii) on the date of each annual meeting of the
stockholders of the Company after the effective date of this offering (other
than any such annual meeting held in 1998), each person who is elected at such
annual meeting to serve as a non-employee director (who was also a non-employee
director prior to such annual meeting) automatically will be granted an option
to purchase 2,000 shares of Common Stock.

No options granted under the Directors' Plan may be exercised after the
expiration of 10 years from the date it was granted. The Inaugural Option vests
monthly over a three-year period. All other options granted under the Directors'
Plan vest monthly over a one-year period. The exercise price of options under
the Directors' Plan will equal 100% of the fair market value of the Common Stock
on the date of grant. Options granted under the Directors' Plan are generally
non-transferable. Unless otherwise terminated by the Board of Directors, the
Directors' Plan automatically terminates when all of the Company's common stock
reserved for issuance under the Directors' Plan has been issued. As of the date
hereof, no options to purchase shares of Common Stock have been granted under
the Directors' Plan. Options granted under the Directors' Plan vest in full upon
certain changes in ownership or control of the Company.

EMPLOYEE STOCK PURCHASE PLAN

In August 1998, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan"), subject to stockholder approval covering an aggregate of
350,000 shares of Common Stock. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code.
Under the Purchase Plan, the Board may authorize participation by eligible
employees, including officers, in periodic offerings following the commencement
of the Purchase Plan. The initial offering under the Purchase Plan will commence
on the effective date of this offering and terminate 27 months after the
effective date of this offering.

Unless otherwise determined by the Board, employees are eligible to
participate in the Purchase Plan only if they are employed by the Company or a
subsidiary of the Company designated by the Board for at least 20 hours per week
and are customarily employed by the Company or a subsidiary of the Company
designated by the Board for at least five months per calendar year. Employees
who participate in an offering may have up to 15% of their earnings withheld
pursuant to the Purchase Plan. The amount withheld is then used to purchase
shares of the Common Stock on specified dates determined by the Board. The price
of Common Stock purchased under the Purchase Plan will be equal to 85% of the
lower of the fair market value of the Common Stock at the commencement date of
each offering period or the relevant purchase date. Employees may end their
participation in the offering at any time during the offering period and
participation ends automatically on termination of employment with the Company.

In the event of a merger, reorganization, consolidation or liquidation
involving the Company, the Board has discretion to provide that each right to
purchase Common Stock will be assumed or an equivalent right substituted by the
successor corporation or the Board may provide for all sums collected by payroll
deductions to be applied to purchase stock immediately prior to such merger or
other transaction. The Board has the authority to amend or terminate the
Purchase Plan, provided, however, that no such action may adversely affect any
outstanding rights to purchase Common Stock.

401(K) PLAN

In January 1996, the Board adopted an employee retirement savings plan (the
"401(k) Plan") covering certain of the Company's employees who have at least one
year of service with the Company and work a minimum of 1,000 hours during the
plan year. Pursuant to the 401(k) Plan, eligible employees may elect to reduce
their current compensation by up to the statutorily prescribed annual limit
($10,000 in 1998) and have

48
<PAGE>
the amount of such reduction contributed to the 401(k) Plan. In addition,
eligible employees may make roll-over contributions to the 401(k) Plan from a
tax-qualified retirement plan. The 401(k) Plan allows for the Company to make
discretionary matching and additional profit sharing contributions.
Contributions made by the Company were $34,492 in 1997.

LIMITATIONS ON DIRECTORS' AND EXECUTIVE OFFICERS' LIABILITY AND INDEMNIFICATION

The Company's Bylaws provide that the Company shall indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law, except with respect to
certain proceedings initiated by such persons. The Company is also empowered
under its Bylaws to enter into indemnification contracts with its directors and
executive officers and to purchase insurance on behalf of any person it is
required or permitted to indemnify. Pursuant to this provision, the Company has
entered into indemnification agreements with each of its directors and executive
officers.

In addition, the Company's Restated Certificate provides that a director of
the Company will not be personally liable to the Company or its stockholders for
monetary damages for any breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law (the "Delaware Law") or (iv) for any
transaction from which the director derives an improper personal benefit. The
Restated Certificate also provides that if the Delaware Law is amended after the
approval by the Company's stockholders of the Restated Certificate to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of the Company's directors shall be eliminated or
limited to the fullest extent permitted by the Delaware Law, as so amended. The
provision does not affect a director's responsibilities under any other law,
such as the federal securities laws or state or federal environmental laws.

49
<PAGE>
CERTAIN TRANSACTIONS

The following is a description of transactions since January 1, 1995, to
which the Company has been a party, in which the amount involved in the
transaction exceeds $60,000 and in which any director, executive officer or
holder of more than 5% of the capital stock of the Company had or will have a
direct or indirect material interest other than compensation arrangements which
are otherwise required to be described under "Management."

In August and December 1996, the Company sold in a private placement
1,250,137 shares of Series A Preferred Stock at a purchase price of $4.40 per
share, pursuant to a Series A Preferred Stock Agreement dated August 7, 1996
(the "Series A Agreement"). See Note 6 of Notes to Financial Statements for a
description of the Series A Preferred Stock. Upon the closing of this offering,
each share of Series A Preferred Stock will automatically convert into one share
of Common Stock. The following directors and beneficial owners of more than 5%
of the Company's Common Stock (assuming the conversion of all shares of
Preferred Stock into Common Stock) acquired beneficial ownership of Series A
Preferred Stock pursuant to the Series A Agreement:

<TABLE>
<CAPTION>
NO. OF
DIRECTORS/5% STOCKHOLDERS SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
Eugene J. Fisher/Capstone Ventures.............................................. 397,775
Jess R. Marzak/Entities Affiliated with BankAmerica Ventures.................... 795,545
</TABLE>

In November 1997, the Company sold in a private placement 2,158,604 shares
of Series B Preferred Stock at a purchase price of $4.52 per share (the "Series
B Financing"), pursuant to a Series B Preferred Stock Agreement dated November
26, 1997 (the "Series B Agreement"). See Note 6 of Notes to Financial Statements
for a description of the Series B Preferred Stock. Upon the closing of this
offering, each share of Series B Preferred Stock will automatically convert into
one share of Common Stock. The following directors and beneficial owners of more
than 5% of the Company's Common Stock (assuming the conversion of all shares of
Preferred Stock into Common Stock) acquired beneficial ownership of Series B
Preferred Stock pursuant to the Series B Agreement:

<TABLE>
<CAPTION>
NO. OF
DIRECTORS/5% STOCKHOLDERS SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
John Moragne and Todd A. Springer/Entities Affiliated with Trident Companies.... 1,592,921
Eugene J. Fischer/Capstone Ventures............................................. 111,172
Jess R. Marzak/Entities Affiliated with BankAmerica Ventures.................... 294,246
Johari Investment Company Ltd. ("Johari")....................................... 36,873
Bernard Simkin.................................................................. 36,873
Murray Simkin................................................................... 36,873
</TABLE>

In May and September 1997, the Company issued certain Convertible Unsecured
Promissory Notes (the "Notes") in 1997 in the aggregate amount of $2,332,500
(the "Bridge Financings") to directors of the Company and entities affiliated
with directors of the Company as follows: BankAmerica Ventures ($1,197,000) and
BA Venture Partners II ($133,000), affiliated with Jess R. Marzak; Johari
($166,667), affiliated with Gary Simkin; Bernard C. Simkin ($166,667); Murray
Simkin ($166,667); and Capstone Ventures ($502,500), affiliated with Eugene J.
Fisher. All Notes were converted on November 26, 1997, in connection with the
Company's Series B Financing, into shares of the Company's Series B Preferred
Stock, at a purchase price of $4.52 per share.

In connection with the Bridge Financings, the Company issued warrants to
purchase an aggregate of 106,024 shares of its Common Stock (the "Bridge
Warrants") in the following amounts to directors of the Company and to entities
affiliated with certain directors of the Company as follows: 54,409 to
BankAmerica Ventures and 6,046 to BA Venture Partners II, affiliated with Jess
R. Marzak; 22,842 to Capstone Ventures, affiliated with Eugene J. Fisher; 7,575
to Johari, affiliated with Gary Simkin; and 7,576 to each of Bernard C. Simkin
and Murray Simkin.

In January 1996, the Simkin Children Irrevocable Trust and Samuel Simkin,
the Company's Senior Vice President, Chief Financial Officer and Secretary,
loaned the Company $220,000 and $380,000, respectively,

50
<PAGE>
pursuant to secured promissory notes, with the principal amounts due on the
earlier of the Company's initial public offering and December 12, 1998. Interest
is payable monthly and is charged at a rate of prime plus 2.0%. In addition, a
bonus is payable annually to the noteholders at a rate of 1.7%. The Company
intends to use a portion of the proceeds received from the offering to repay
these promissory notes. See "Description of Capital Stock."

Between January and August 1996, Abraham Simkin, a director of the Company,
loaned the Company various amounts. As of August 31, 1996 such amounts totaled
$400,000 pursuant to a secured promissory note. Interest was charged at a rate
of prime plus 2.0%. In addition, during the periods that the loan was
outstanding, a bonus was paid annually to Mr. Simkin at a rate of 1.7%. The
Company repaid this loan in December 1997.

In March 1994, the Company entered into an agency agreement with Newgen
Services L.P., a company owned by certain members of the Company's Board of
Directors. Pursuant to the agency agreement, Newgen Services L.P. funded the
Company's operations and, as a result, substantially all of the Company's
revenues and expenses were reported by Newgen Services L.P. Such amounts have,
however, been included in the Company's consolidated results of operations from
the Company's inception through the termination of the agency agreement in
January 1996.

Effective January 1, 1996, the Company entered into an administrative
services agreement with Newgen Services L.P. pursuant to which the Company
agreed to provide administrative services for Newgen Services L.P. in exchange
for the monthly payment of $7,500, which is subject to adjustment. The term of
this agreement was for a period of one year, with automatic renewals for
additional one-year periods, unless terminated by the mutual consent of both
parties to the agreement. Amounts earned under this agreement totaled $90,000
for 1997.

The Company entered into capital lease agreements for certain equipment with
parties related to one of the stockholders. At December 31, 1997, the payments
remaining under these leases totaled $7,000. The lease agreements expire in
1998.

The Company entered into certain other agreements in connection with the
Series A Agreement and the Series B Agreement. Pursuant to one such agreement,
certain stockholders acquired registration rights. See "Description of Capital
Stock--Registration Rights."

The Company has entered into indemnification agreements with each of its
directors and executive officers. See "Management--Limitation on Directors' and
Executive Officers' Liability and Indemnification."

The Company has granted options to certain of its directors and executive
officers.

51
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information known to the Company with respect
to the beneficial ownership of its Common Stock as of June 30, 1998 and as
adjusted to reflect the sale of shares by the Company and the Selling
Stockholders for (i) each person who is known by the Company to own beneficially
more than five percent of the Common Stock, (ii) each of the Company's
directors, (iii) each of the Named Executive Officers, (iv) all directors and
executive officers as a group and (v) each of the Selling Stockholders. Unless
otherwise indicated in the footnotes to the table set forth below, each person
or entity named below has an address in care of the Company's principal
executive offices.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING(1) SHARES OFFERING(1)(2)
--------------------- BEING -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1)(2) NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------------------------------------- ---------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Entities Affiliated with
Trident Capital Management, L.L.C. (3)................. 1,592,921 22.2%
2480 Sand Hill Road
Menlo Park, CA 94025

Entities Affiliated with
BankAmerica Ventures (4)............................... 1,150,246 15.9%
950 Tower Lane, Suite 700
Foster City, CA 94404

Johari Investment Company Ltd. (5)....................... 975,629 13.6%
6289 Carnarvon Street
Vancouver, B.C.
Canada, V6N1K3

Bernard C. Simkin (6).................................... 975,630 13.6%
P.O. Box 9532
Rancho Santa Fe, CA 92067

Murray Simkin (7)........................................ 975,630 13.6%
P.O. Box 7102
Rancho Santa Fe, CA 92067

Gary Simkin (8).......................................... 975,629 13.6%
6289 Carnarvon Street
Vancouver, B.C.
Canada, V6N1K3

Capstone Ventures (9).................................... 531,789 7.4%
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025

Gerald L. Benowitz....................................... 327,185 4.6%
Newgen Results Corp.
12680 High Bluff Drive, Suite 300
San Diego, CA 92130

K&S Imports, Inc. (10)................................... 271,218 3.8%
Newgen Results Corp.
12680 High Bluff Drive, Suite 300
San Diego, CA 92130
</TABLE>

52
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING(1) SHARES OFFERING(1)(2)
--------------------- BEING -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1)(2) NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------------------------------------- ---------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Leslie J. Silver (11).................................... 240,123 3.3%
Newgen Results Corp.
12680 High Bluff Drive, Suite 300
San Diego, CA 92130

James K. Roche........................................... 38,423 *
Newgen Results Corp.
12680 High Bluff Drive, Suite 300
San Diego, CA 92130

Jefferey B. Davis (12)................................... 38,423 *
5180 Windsor Drive
Oceanside, CA 92109

All directors and officers as a group (15 persons) (13) 7,117,217 97.7%
</TABLE>

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

* Represents beneficial ownership of less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect
to securities. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Percentage of beneficial ownership is
based on 7,175,656 shares of Common Stock outstanding on an as-converted
basis as of June 30, 1998.

(2) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting." If the Underwriters' over-allotment option is exercised in
full, the Company will sell up to an aggregate of shares of Common
Stock of the Company, and up to shares of Common Stock will be
outstanding after the completion of this offering.

(3) Of the total shares indicated as beneficially owned, Information
Associates - II, L.P. owns 923,430 shares which represent 12.9% and % of
the total shares before and after this offering, respectively. Information
Associates, L.P. owns 598,908 shares which represent 8.3% and % of total
shares before and after this offering, respectively. IA-II Affiliates Fund,
L.L.C. owns 53,869 shares and Information Associates, C.V. owns 16,714
which represent less than one percent of total shares before and after this
offering. The general partner of Information Associates - II, L.P.,
Information Associates, L.P., IA-II Affiliates Fund, L.L.C. and Information
Associates, C.V. is Trident Capital Management, L.L.C., a Delaware limited
liability company ("Trident Capital"). The members of Trident Capital
include John Moragne and Todd A. Springer, directors of the Company. Mr.
Moragne and Mr. Springer disclaim beneficial ownership of the shares held
by these entities, except to the extent of their pecuniary interest in such
shares arising from their interest in Trident Capital.

(4) Of the total shares indicated as beneficially owned, BankAmerica Ventures
owns 980,812 shares which represent 13.7% and % of total shares before
and after this offering, respectively. BA Venture Partners II owns 108,979
shares which represent 1.5% and % of total shares before and after this
offering, respectively. Such share amounts include 54,509 and 6,046 shares
issuable upon the exercise of warrants held by BankAmerica Ventures and BA
Venture Partners II, respectively. Jess R. Marzak, a director of the
Company, is a Managing Director of BankAmerica Ventures and a General
Partner of BA Venture Partners II. Mr. Marzak disclaims beneficial
ownership of all shares owned by BankAmerica Ventures and BA Venture
Partners II except to the extent of his proportionate general partnership
interest in BA Venture Partners II.

53
<PAGE>
(5) Includes 7,575 shares of Common Stock issuable upon the exercise of
warrants held by Johari Investment Company Ltd. ("Johari"). Gary Simkin, a
Director of the Company, is the President of Johari. Mr. Simkin disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein.

(6) Includes 7,576 shares of Common Stock issuable upon the exercise of
warrants held by Bernard C. Simkin.

(7) Includes 7,576 shares of Common Stock issuable upon the exercise of
warrants held by Murray Simkin.

(8) Includes shares of Common Stock held by Johari. See Note 5 above.

(9) Includes 22,842 shares of Common Stock issuable upon the exercise of
warrants held by Capstone Ventures ("Capstone"). Eugene J. Fischer, a
director of the Company, is a Managing Member of Capstone Management LLC,
the general partner of Capstone. Mr. Fischer disclaims beneficial ownership
of such shares except to the extent of his pecuniary interest therein.

(10) Samuel Simkin, the Chief Financial Officer of the Company, is the
President of K&S Imports, Inc. ("K&S"). Mr. Simkin disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest
therein.

(11) Includes 232,623 shares of Common Stock held by the Silver Family Trust
dated January 15, 1996, of which Leslie J. Silver and Francis Silver are
Co-Trustees, and 7,500 shares held by Leslie J. Silver as Custodian for
Leigh Silver, Mason Silver and Darcy Silver.

(12) Mr. Davis is no longer employed by the Company effective August 1998.

(13) Includes 106,024 shares subject to warrants. See Notes 3, 4, 5, 6, 7, 8, 9
and 11.

54
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Effective upon the closing of this offering, the authorized capital stock of
the Company consists of 28,000,000 shares of Common Stock, $.001 par value, and
2,000,000 shares of Preferred Stock, $.001 par value.

COMMON STOCK

As of June 30, 1998, there were 7,175,656 shares of Common Stock outstanding
held of record by 22 stockholders, after giving effect to the conversion of all
outstanding shares of Preferred Stock into 3,408,741 shares of Common Stock.

The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by the stockholders. Subject to preferences that may be
applicable to any outstanding shares of Preferred Stock, holders of Common Stock
are entitled to receive ratably such dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preferences of any outstanding shares of
Preferred Stock. Holders of Common Stock have no preemptive, conversion,
subscription or other rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are, and
all shares of Common Stock to be outstanding upon completion of this offering
will be, fully paid and nonassessable.

Certain holders of Common Stock are entitled to registration rights. See
"--Registration Rights".

PREFERRED STOCK

Upon the closing of this offering, all outstanding shares of Preferred Stock
will be converted into 3,408,741 shares of Common Stock. Following such
conversion, the Company's Certificate of Incorporation will be amended and
restated to delete all references to such shares of Preferred Stock. Under the
Certificate of Incorporation, as amended and restated upon the closing of this
offering (the "Restated Certificate"), the Board will have the authority,
without further action by stockholders, to issue up to 2,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges, qualifications and restrictions granted to or imposed upon such
Preferred Stock, including dividend rights, conversion rights, voting rights,
rights and terms of redemption, liquidation preference and sinking fund terms,
any or all of which may be greater than the rights of the Common Stock. The
issuance of Preferred Stock could adversely affect the voting power of holders
of Common Stock and reduce the likelihood that such holders will receive
dividend payments and payments upon liquidation. Such issuance could have the
effect of decreasing the market price of the Common Stock. The issuance of
Preferred Stock could have the effect of delaying, deterring or preventing a
change in control of the Company. The Company has no present plans to issue any
shares of Preferred Stock.

WARRANTS

In November 1996, in conjunction with the execution of a Revolving Loan and
Security Agreement with Silicon Valley Bank ("SVB"), the Company issued to SVB a
warrant to purchase up to 10,000 shares of Series A Preferred Stock. Upon the
closing of this offering, this warrant shall become a warrant to purchase 10,000
shares of Common Stock. The warrant has an exercise price of $4.40 per share,
and expires on November 27, 2001.

In May and September 1997, in connection with the Bridge Financings, the
Company issued Bridge Warrants to purchase an aggregate of 106,024 shares of its
Common Stock in the following amounts to the following entities: 54,409 to
BankAmerica Ventures, 6,046 to BA Venture Partners II, 22,842 to Capstone
Ventures 7,576 to each of Bernard C. Simkin and Murray Simkin and 7,575 to
Johari. The exercise price of the Bridge Warrants is $0.75 per share. The Bridge
Warrants may be exercised by applying the value of a portion of the Bridge
Warrants (equal to the number of shares issuable under the Bridge Warrant being
exercised multiplied by the fair market value of the security receivable upon
exercise of the Bridge Warrant, less the aggregate per share exercise price) in
lieu of payment of the exercise price per share. 30,770 of the Bridge Warrants
expire in May 2002, 61,618 expire in September 2002 and 13,636 will expire in
November 2002.

55
<PAGE>
REGISTRATION RIGHTS

After this offering, the holders of shares of Common Stock will
be entitled to certain rights with respect to the registration of such shares
under the Securities Act; the Restated Investor Rights Agreement provides such
rights to holders of shares of Common Stock. Under the terms of the Restated
Investor Rights Agreement, if the Company proposes to register any of its
securities under the Securities Act of 1933, as amended (the "Securities Act"),
either for its own account or for the account of other security holders
exercising registration rights, such holders are entitled to notice of such
registration and are entitled, subject to certain limitations, to include shares
therein. The holders of shares of Common Stock may also require the Company
to file a registration statement under the Securities Act with respect to their
shares, and the Company is required to use its best efforts to effect such
registrations. Furthermore, the holders of shares of Common Stock may
require the Company to register their shares on Form S-3 when such form becomes
available to the Company. Generally, the Company is required to bear all
registration and selling expenses incurred in connection with any such
registrations. These rights are subject to certain conditions and limitations,
among them the right of the underwriters of an offering to limit the number of
shares included in such registration.

DELAWARE ANTI-TAKEOVER LAW

The Company is governed by the provisions of Section 203 of the Delaware
Law. In general, Section 203 prohibits a public Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. A "business combination" includes mergers, asset sale or
other transactions resulting in a financial benefit to the stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's voting stock. The statute could have the effect of delaying,
deferring or preventing a change in control of the Company.

The Company's Restated Certificate provides that the Board of Directors will
be divided into three classes of directors, with each class serving a staggered
three-year term. The classification system of electing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of the Company and may maintain the composition of the Board of
Directors, as the classification of the Board of Directors generally increases
the difficulty of replacing a majority of directors. The Company's Restated
Certificate provides that any action required or permitted to be taken by
stockholders of the Company must be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent in writing. In
addition, the Company's Bylaws provide that special meetings of the stockholders
of the Company may be called only by the Chairman of the Board of Directors, the
Chief Executive Officer of the Company, by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors or
by the holders of 10% of the outstanding voting stock of the Company. The
Company's Restated Certificate also specifies that the authorized number of
directors may be changed only by resolution of the Board of Directors and does
not include a provision for cumulative voting for directors. Under cumulative
voting, a minority stockholder holding a sufficient percentage of a class of
shares may be able to ensure the election of one or more directors. These and
other provisions contained in the Restated Certificate and the Company's Bylaws
could delay or discourage certain types of transactions involving an actual or
potential change in control of the Company or its management (including
transactions in which stockholders might otherwise receive a premium for their
shares over then current prices) and may limit the ability of stockholders to
remove current management of the Company or approve transactions that
stockholders may deem to be in their best interests and, therefore, could
adversely affect the price of the Company's Common Stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer and Trust Company, 40 Wall Street, New York, NY 10005.

56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common Stock
of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect market prices prevailing from time to time.
Furthermore, since only a limited number of shares will be available for sale
shortly after this offering because of certain contractual and legal
restrictions on resale described below, sales of substantial amounts of Common
Stock of the Company in the public market after the restrictions lapse could
adversely affect the prevailing market price and the ability of the Company to
raise equity capital in the future.

Upon completion of this offering, the Company will have outstanding an
aggregate of shares of Common Stock, assuming (i) no exercise of the
Underwriters' over-allotment option and (ii) no exercise of options or warrants
to purchase 671,224 shares of Common Stock outstanding as of June 30, 1998. Of
these shares, the shares of Common Stock sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act, unless such shares are purchased by "affiliates" of the Company as that
term is defined in Rule 144 under the Securities Act ("Affiliates"). The
remaining shares of Common Stock held by existing stockholders are
"restricted securities" as that term is defined in Rule 144 under the Securities
Act (the "Restricted Shares"). Restricted Shares may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rules 144 or 701 promulgated under the Securities Act, which rules are
summarized below. Subject to the contractual restrictions described below and
the provisions of Rules 144 and 701, additional shares will be available for
sale in the public market as follows: shares of Common Stock will be
eligible for sale as of the effective date of this Offering (the "Effective
Date") without restriction pursuant to Rule 144(k); shares will be
eligible for sale beginning 90 days after the Effective Date without restriction
pursuant to Rule 701; shares will be eligible for sale beginning 90
days after the Effective Date subject to the volume and other restrictions of
Rule 144; and from time to time, during the period beginning 90 days following
the Effective Date and ending one year following the Effective Date, shares
will become eligible for sale subject to the volume and other restrictions of
Rule 144.

Upon completion of this offering, the holders of shares of Common
Stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. Registration of such
shares under the Securities Act would result in such shares becoming freely
tradable without restriction under the Securities Act (except for shares
purchased by Affiliates) immediately upon the effectiveness of such
registration. See "Description of Capital Stock--Registration Rights."

The Company's officers, directors and stockholders have agreed that they
will not, without the prior written consent of Hambrecht & Quist LLC, directly
or indirectly offer, sell, contract to sell or otherwise dispose of shares
of the Restricted Shares or any securities convertible into or exercisable or
exchangeable for Common Stock during the 180-day period commencing on the
Effective Date (the "Lock-Up Agreement"). The Company has agreed that it will
not, without the prior written consent of Hambrecht & Quist LLC, (i) directly or
indirectly offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock during such 180-day period (the "180-day Lock-Up") except for
the sale of the shares of Common Stock in this offering, the issuance of options
and shares of Common Stock pursuant to the Company's employee benefit plans and
the issuance of shares of Common Stock upon exercise of warrants or options
presently outstanding; provided, however, that, without the prior written
consent of Hambrecht & Quist LLC, such additional options shall not be
exercisable during such period or (ii) allow any security holder of the Company
subject to the Lock-Up Agreement to sell, transfer or otherwise dispose any
shares of Common Stock or security exercisable for Common Stock without the
prior written consent of Hambrecht & Quist LLC. Any shares subject to the
Lock-Up Agreement may be released at any time by Hambrecht & Quist LLC.

Pursuant to certain amendments to Rule 144 that became effective in April
1997 (the "Rule 144 Amendments"), an Affiliate of the Company, or person (or
persons whose shares are aggregated) who has beneficially owned Restricted
Shares for at least one year will be entitled to sell in any three month period
a number of

57
<PAGE>
shares that does not exceed the greater of (i) one percent of the then
outstanding shares of the Company's Common Stock or (ii) the average weekly
trading volume of the Company's Common Stock in the Nasdaq National Market
during the four calendar weeks immediately preceding the date on which notice of
the sale is filed with the Commission. Sales pursuant to Rule 144 are subject to
certain requirements relating to manner of sale, notice and the availability of
current public information about the Company. A person (or persons whose shares
are aggregated) who is not deemed to have been an Affiliate of the Company at
any time during the 90 days immediately preceding the sale and who has
beneficially owned Restricted Shares for at least two years is entitled to sell
such shares under Rule 144(k), as amended by the Rule 144 Amendments, without
regard to the limitations described above.

An employee, officer or director of or consultant to the Company who
purchased or was awarded shares or options to purchase shares pursuant to a
written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701 under the Securities Act, which permits Affiliates and
non-Affiliates to sell their Rule 701 shares without having to comply with Rule
144's holding period restrictions, in each case commencing 90 days after the
Effective Date. In addition, non-Affiliates may sell Rule 701 shares without
complying with the public information, volume and notice provisions of Rule 144.

The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock reserved for issuance under the 1996 Equity
Incentive Plan, the 1998 Equity Incentive Plan, the 1998 Employee Stock Purchase
Plan and the 1998 Non-Employee Directors Stock Option Plan. See "Management".
Based on the number of options outstanding and options and shares reserved for
issuance at August 15, 1998, such registration statement would cover
approximately 2,700,000 shares. Such registration statement is expected to be
filed and to become effective as soon as practicable after the date hereof.
Shares registered under such registration statement will, subject to Rule 144
volume limitations applicable to Affiliates, be available for sale in the open
market, unless such shares are subject to vesting restrictions with the Company
or the Lock-Up Agreement described above. See "Management."

58
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC,
BancBoston Robertson Stephens Inc. and Dain Rauscher Wessels, a division of Dain
Rauscher Incorporated ("Dain Rauscher Wessels") have severally agreed to
purchase from the Company and the Selling Stockholders the following respective
numbers of shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ------------------------------------------------------------------------ -----------
<S> <C>
Hambrecht & Quist LLC...................................................
BancBoston Robertson Stephens Inc.......................................
Dain Rauscher Wessels...................................................
-----------
Total...................................................................
-----------
-----------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company, the Selling Stockholders,
their counsel and independent auditors. The nature of the Underwriters'
obligation is such that they are committed to purchase all shares of Common
Stock offered hereby if any of such shares are purchased.

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After the
initial public offering of the shares, the offering price and other selling
terms may be changed by the Representatives of the Underwriters. The
Representatives have advised the Company that the Underwriters do not intend to
confirm discretionary sales in excess of five percent of the shares of Common
Stock offered hereby.

The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

59
<PAGE>
The Selling Stockholders and certain other stockholders of the Company,
including the executive officers and directors, who will own in the aggregate
shares of Common Stock after the offering, have agreed that they will
not, without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable for or convertible into shares
of Common Stock owned by them during the 180-day period following the date of
this Prospectus. The Company has agreed that it will not, without the prior
written consent of Hambrecht & Quist LLC, offer, sell or otherwise dispose of
any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable for or convertible into shares of Common Stock
during the 180-day period following the date of this Prospectus, except that the
Company may issue shares upon the exercise of options granted prior to the date
hereof and may grant additional options under its stock option plans, provided
that, without the prior written consent of Hambrecht & Quist LLC, such
additional options shall not be exercisable during such period.

Prior to the offering, there has been no public market for the Common Stock.
The initial public offering price for the Common Stock will be determined by
negotiation among the Company, the Selling Stockholders and the Representatives.
Among the factors to be considered in determining the initial public offering
price are the prevailing market and economic conditions, revenue and earnings of
the Company, market valuations of other companies engaged in activities similar
to the Company, estimates of the business potential and prospects of the
Company, the present state of the Company's business operations, the Company's
management and other factors deemed relevant. The estimated initial public
offering price range set forth on the cover of this Prospectus is subject to
change as a result of market conditions and other factors.

Certain persons participating in this offering may over-allot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on the
Nasdaq National Market, in the over-the-counter market or otherwise. Such
stabilizing, if commenced, may be discontinued at any time.

In September 1997, the Company entered into an agreement (the "Placement
Agent Agreement") with a predecessor entity of BancBoston Robertson Stephens
Inc. under which this predecessor entity of BancBoston Robertson Stephens Inc.
acted as the Company's exclusive placement agent in connection with the
Company's Series B Financing. The Company paid to this predecessor entity of
BancBoston Robertson Stephens Inc. as compensation under the Placement Agent
Agreement (i) a $350,000 fee; and (ii) a number of shares of the Company's
Series B Preferred Stock with an aggregate value equal to one percent of the
gross proceeds received by the Company from the Series B Financing, using the
same price per share paid by the other Series B Preferred Stock investors.

In September 1997, in connection with a Bridge Financing, Capstone Ventures,
an affiliate of Dain Rauscher Wessels, received an Unsecured Convertible
Promissory Note in the amount $167,500, which was converted into 37,057 shares
of Series B Preferred Stock as part of the Series B Financing at the Series B
Preferred Stock per share price of $4.52. In addition, Capstone Ventures
received warrants to purchase 12,534 shares of Common Stock at an exercise price
of $0.75 per share as part of the Bridge Financing.

In November and December 1997, in connection with the Series B Financing,
the Company issued an aggregate of 2,158,604 shares of the Company's Series B
Preferred Stock at a per share price of $4.52. A predecessor entity of
BancBoston Robertson Stephens Inc. received an aggregate of 15,929 shares of
Series B Preferred Stock in accordance with the terms of the Placement Agent
Agreement. In addition, Capstone

60
<PAGE>
Ventures, an affiliate of Dain Rauscher Wessels, purchased an aggregate of
111,172 shares of Series B Preferred Stock (including the 37,057 shares from the
conversion of the Unsecured Convertible Promissory Note), which will be
converted into 111,172 shares of the Company's Common Stock upon completion of
this offering.

LEGAL MATTERS

The legality of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholders by Cooley Godward LLP, San
Diego, California. Certain legal matters will be passed upon for the
underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. As of the date of this Prospectus, certain members and
associates of Cooley Godward beneficially own an aggregate of approximately
5,530 shares of Common Stock through an investment partnership.

EXPERTS

The consolidated financial statements of the Company as of June 30, 1998 and
December 31, 1997 and 1996 and for the six months ended June 30, 1998 and for
the three years in the period ended December 31, 1997 included in this
Prospectus or elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.

ADDITIONAL INFORMATION

A Registration Statement on Form S-1 including amendments thereto relating
to the Common Stock offered by the Company has been filed with the Securities
and Exchange Commission (the "Commission"), Washington, D.C. 20549. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. Statements contained in this
Prospectus as to the content of any contract or other document filed as an
exhibit to the Registration Statement are qualified in all respects by such
reference. For further information with respect to the Company and such Common
Stock, reference is made to the Registration Statement and the exhibits and
schedules filed as part thereof. A copy of the Registration Statement, and the
exhibits and schedules thereto, may be inspected without charge at the public
reference facilities maintained by the Commission in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New
York 10048, and copies of all or any part of the Registration Statement may be
obtained from such offices upon the payment of the fees prescribed by the
Commission. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's World Wide Web site is http://www.sec.gov.

61
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants................................................................... F-2

Consolidated Balance Sheets--December 31, 1996 and 1997 and June 30, 1998.................................. F-3

Consolidated Statements of Operations--Years Ended December 31, 1995, 1996 and 1997 and Six Months Ended
June 30, 1997 (unaudited) and 1998........................................................................ F-5

Consolidated Statements of Stockholders' Deficit--Years Ended December 31, 1995, 1996 and 1997 and Six
Months Ended 1998......................................................................................... F-6

Consolidated Statements of Cash Flows--Years Ended December 31, 1995, 1996 and 1997 and Six Months Ended
June 30, 1997 (unaudited) and 1998........................................................................ F-7

Notes to Consolidated Financial Statements................................................................. F-8
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO NEWGEN RESULTS CORPORATION:

We have audited the accompanying consolidated balance sheets of NEWGEN
RESULTS CORPORATION (a California corporation) and subsidiary as of December 31,
1996 and 1997 and June 30, 1998, and the related consolidated statements of
operations, stockholders' deficit and cash flows for each of the three years in
the period ended December 31, 1997 and for the six month period ended June 30,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Newgen Results Corporation
and subsidiary as of December 31, 1996 and 1997, and June 30, 1998 and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997 and for the six month period ended June 30,
1998, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

San Diego, California
August 24, 1998

F-2
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- JUNE 30,
1996 1997 1998
------------ ------------- -------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................................... $ 127,658 $ 4,630,147 $ 2,132,642
Restricted cash..................................................... 566,105 -- --
Accounts receivable, net of allowance for doubtful accounts of
$127,000, $114,000 and $299,000, respectively..................... 2,822,934 4,909,831 7,957,033
Prepaid expenses and other.......................................... 184,726 645,559 509,130
------------ ------------- -------------
Total current assets.............................................. 3,701,423 10,185,537 10,598,805
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of $671,000, $1,508,000 and $2,064,000, respectively... 1,721,756 2,046,662 2,619,270
OTHER ASSETS.......................................................... 69,174 69,883 58,130
------------ ------------- -------------
Total assets...................................................... $ 5,492,353 $ 12,302,082 $ 13,276,205
------------ ------------- -------------
------------ ------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
---------------------------- JUNE 30, STOCKHOLDERS'
1996 1997 1998 EQUITY (NOTE
------------ -------------- -------------- 2)
--------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable........................................ $ 1,392,470 $ 1,728,160 $ 2,176,978
Accrued and other current liabilities................... 322,655 1,187,262 1,963,136
Line of credit.......................................... 1,300,000 -- --
Notes payable to related parties........................ -- 600,000 600,000
Current portion of capital lease obligations............ 202,458 379,498 821,947
------------ -------------- --------------
Total current liabilities............................. 3,217,583 3,894,920 5,562,061
------------ -------------- --------------
LONG TERM LIABILITIES:
Notes payable to related parties........................ 1,000,000 -- --
Long-term portion of capital lease obligations.......... 263,585 434,619 954,124
Deferred rent........................................... 83,272 108,876 99,717
------------ -------------- --------------
1,346,857 543,495 1,053,841
------------ -------------- --------------
COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK, no par value, 3,500,000 shares
authorized:
Series A convertible, 1,250,137 shares issued and
outstanding in 1996, 1997 and 1998, no shares pro
forma (aggregate liquidation preference of
$8,463,022), stated at................................ 5,421,539 5,466,259 5,694,189
Series B convertible, 2,158,604 shares issued and
outstanding in 1997 and 1998, no shares pro forma,
(aggregate liquidation preference of $14,962,431),
stated at............................................. -- 9,212,612 9,666,067

STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value, 15,000,000 shares
authorized, 3,766,915 shares issued and outstanding in
1996, 1997 and 1998 and 7,175,565 shares pro forma,
stated at............................................. 3,738,184 4,639,084 4,639,084 19,999,340
Deferred compensation................................... -- (900,900) (793,852) (793,852)
Retained deficit........................................ (8,231,810) (10,553,388) (12,545,185) (12,545,185)
------------ -------------- -------------- --------------
Total stockholders' equity (deficit).................. (4,493,626) (6,815,204) (8,699,953) 6,660,303
------------ -------------- -------------- --------------
Total liabilities and stockholders' equity (deficit).. $ 5,492,353 $ 12,302,082 $ 13,276,205
------------ -------------- --------------
------------ -------------- --------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>
NEWGEN RESULTS CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------ ----------------------------
1995 1996 1997 1998
------------ ------------- ------------- 1997 -------------
-------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Database marketing services.................. $ 1,823,659 $ 9,771,080 $ 20,974,032 $ 9,295,368 $ 14,220,236
Consulting services.......................... 1,789,996 1,858,459 5,439,660 1,329,971 5,155,095
------------ ------------- ------------- ------------- -------------
Total revenues............................. 3,613,655 11,629,539 26,413,692 10,625,339 19,375,331
------------ ------------- ------------- ------------- -------------
COST OF REVENUES:
Cost of database marketing services.......... 1,672,844 6,795,534 14,231,960 6,236,764 9,746,612
Cost of consulting services.................. 1,798,032 1,699,481 4,232,822 1,240,639 3,927,071
Installation costs........................... 655,573 1,656,293 1,931,649 911,819 774,208
------------ ------------- ------------- ------------- -------------
Total cost of revenues..................... 4,126,449 10,151,308 20,396,431 8,389,222 14,447,891
------------ ------------- ------------- ------------- -------------
Gross profit (loss)........................ (512,794) 1,478,231 6,017,261 2,236,117 4,927,440
------------ ------------- ------------- ------------- -------------
OPERATING COSTS:
Selling, general and administrative
expenses................................... 2,178,714 5,396,402 6,234,096 2,773,706 3,746,944
Technology and product development........... 116,960 543,909 937,252 321,647 960,792
Software rewrite cost........................ -- -- 616,593 102,322 1,520,806
------------ ------------- ------------- ------------- -------------
Total operating costs...................... 2,295,674 5,940,311 7,787,941 3,197,675 6,228,542
------------ ------------- ------------- ------------- -------------
Loss from operations....................... (2,808,468) (4,462,080) (1,770,680) (961,558) (1,301,102)
------------ ------------- ------------- ------------- -------------
INTEREST INCOME (EXPENSE):
Interest income.............................. -- 15,811 44,660 15,551 80,138

Interest expense............................. (2,361) (245,042) (463,322) (183,835) (89,443)
------------ ------------- ------------- ------------- -------------

Interest expense, net...................... (2,361) (229,231) (418,662) (168,284) (9,305)
------------ ------------- ------------- ------------- -------------
Net loss................................... $ (2,810,829) $ (4,691,311) $ (2,189,342) $ (1,129,842) $ (1,310,407)
------------ ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- -------------
PRO FORMA NET LOSS PER COMMON SHARE............ $ (0.41) $ (0.18)
------------- -------------
------------- -------------
PRO FORMA WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.................................. 5,286,878 7,175,656
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-5
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK
------------------------ DEFERRED RETAINED
SHARES AMOUNT COMPENSATION DEFICIT TOTAL
---------- ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994............... 3,766,915 $ 1,017,316 $ -- $ (729,670) $ 287,646
Capital contribution................... -- 2,428,568 -- -- 2,428,568
Net loss............................... -- -- -- (2,810,829) (2,810,829)
---------- ------------ ------------- -------------- ------------
BALANCE, December 31, 1995............... 3,766,915 3,445,884 -- (3,540,499) (94,615)
Capital contribution................... -- 292,300 -- -- 292,300
Net loss............................... -- -- -- (4,691,311) (4,691,311)
---------- ------------ ------------- -------------- ------------
BALANCE, December 31, 1996............... 3,766,915 3,738,184 -- (8,231,810) (4,493,626)
Accretion of redeemable preferred
stock................................ -- -- -- (132,236) (132,236)
Deferred compensation related to
options granted...................... -- 900,900 (900,900) -- --
Net loss............................... -- -- -- (2,189,342) (2,189,342)
---------- ------------ ------------- -------------- ------------
BALANCE, December 31, 1997............... 3,766,915 4,639,084 (900,900) (10,553,388) (6,815,204)
Accretion of redeemable preferred
stock................................ -- -- -- (681,390) (681,390)
Amortization of deferred
compensation......................... -- -- 107,048 -- 107,048
Net loss............................... -- -- -- (1,310,407) (1,310,407)
---------- ------------ ------------- -------------- ------------
BALANCE, June 30, 1998................... 3,766,915 $ 4,639,084 $ (793,852) $ (12,545,185) $ (8,699,953)
---------- ------------ ------------- -------------- ------------
---------- ------------ ------------- -------------- ------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-6
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
------------------------------------- ------------------------
1995 1996 1997 1998
----------- ----------- ----------- 1997 -----------
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss...................................................... $(2,810,829) $(4,691,311) $(2,189,342) $(1,129,842) $(1,310,407)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................... 195,265 379,907 837,492 371,607 555,579
Deferred rent............................................... -- 83,272 25,604 (9,161) (9,159)
Deferred compensation....................................... -- -- -- -- 107,048
Loss on retirements of property and equipment............... -- 66,243 -- -- --
Changes in assets and liabilities:
Accounts receivable 42,208 (2,312,816) (2,086,897) (590,769) (3,047,202)
Prepaid expenses and other................................ (167,986) 63,808 (460,833) (270,388) 225,224
Accounts payable.......................................... 286,122 980,483 335,690 (87,291) 448,818
Accrued and other current liabilities..................... 167,648 (35,889) 864,607 581,883 775,874
----------- ----------- ----------- ----------- -----------
Net cash used in operating activities................... (2,287,572) (5,466,303) (2,673,679) (1,133,961) (2,254,225)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........................... (254,170) (1,262,280) (500,467) (219,219) (538,297)
Other assets.................................................. 64,348 (38,929) (709) 14,085 11,753
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities (189,822) (1,301,209) (501,176) (205,134) (526,544)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock transactions.............................. 2,428,568 5,713,839 9,125,096 1,000,000 --
Repayments of related party loans............................. -- (255,000) (400,000) -- --
Proceeds from related party loans............................. -- 1,255,000 -- -- --
Repayment of notes payable to affiliate....................... 46,553 (433,955) -- -- --
Payments on capital lease obligations......................... (18,459) (118,609) (313,857) (125,542) (309,170)
Decrease (increase) in restricted cash -- (566,105) 566,105 566,105 --
(Repayments) proceeds of/from lines of credit, net............ -- 1,300,000 (1,300,000) 150,000 592,434
----------- ----------- ----------- ----------- -----------
Net cash provided by financing activities............... 2,456,662 6,895,170 7,677,344 1,590,563 283,264
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (20,732) 127,658 4,502,489 251,468 (2,497,505)
CASH AND CASH EQUIVALENTS, beginning of period.................. 20,732 -- 127,658 127,658 4,630,147
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period........................ $ -- $ 127,658 $ 4,630,147 379,126 $ 2,132,642
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest........................................ $ 2,361 $ 228,279 $ 452,886 $ 189,486 $ 94,443
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Capital lease obligations entered into for equipment.......... $ 50,255 $ 544,335 $ 661,931 $ 103,208 $ 1,271,123
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accretion of redeemable preferred stock....................... $ -- $ -- $ 132,236 $ -- $ 681,390
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-7
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Newgen Results Corporation ("Newgen") was incorporated in California on
February 16, 1994 and is a provider of customized, outsourced database
management, direct marketing and related services for the service departments of
automobile dealerships and automobile manufacturers throughout the United States
and Canada. Newgen also provides consulting services to both automobile
manufacturers and individual dealerships.

Certain affiliated companies, with common ownership, were involved in
various aspects of the early development and operations of Newgen's current
business activities. Since its inception, Newgen has assumed or absorbed certain
of the affiliates' lines of business and since August 31, 1996, all operating
activities have been conducted by Newgen.

The accompanying financial statements include the combined results of
operations of Newgen together with those operations of the affiliates, which
have been assumed or absorbed by Newgen. Since these operations have been
absorbed by Newgen the financial results of their operations have been included
with those of Newgen as entities under common control, similar to a pooling of
interest. The affiliates' operations that have been combined with Newgen
generated aggregate losses of approximately $3,700,000, of which approximately
$2,400,000 and $300,000 relate to 1995 and 1996 operations, respectively.
Because these losses have been funded by the affiliates, a capital contribution
of an equivalent amount has been reflected in common stock in the applicable
periods.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

In 1998 Newgen formed Newgen Dealer Pricing Center, Inc. ("NDPC"). NDPC is a
wholly-owned subsidiary of Newgen. The consolidated financial statements include
the accounts of Newgen and NDPC and are collectively referred to as the
"Company." All significant intercompany accounts and transactions have been
eliminated in consolidation.

RISKS AND UNCERTAINTIES

The Company has a retained deficit of approximately $12,545,000 at June 30,
1998 and has incurred losses of approximately $1,310,000, $2,189,000, $4,691,000
and $2,811,000 for the six months ended June 30, 1998, and the years ended
December 31, 1997, 1996 and 1995, respectively. Management believes that the
Company will continue to incur losses through at least the third quarter of
1998. The Company's future success is dependent upon several factors including,
among others, the continued acceptance of the Company's services in the
marketplace, the Company's ability to expand and maintain its relationships with
its major customers, the Company's enhancement of its existing services and the
development of new services that address the changing needs of its customers,
the Company's continued employment of certain key personnel and the Company's
ability to maintain or obtain adequate financing.

See "Risk Factors" for a more complete discussion of risks impacting the
Company.

F-8
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNAUDITED INTERIM RESULTS

The accompanying consolidated statements of operations and cash flows and
the related notes for the six months ended June 30, 1997 are unaudited. In the
opinion of management, these statements have been prepared on the same basis as
the audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of operations in accordance with generally accepted
accounting principles.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET PRESENTATION

The unaudited pro forma consolidated balance sheet is presented to show the
effects on the June 30, 1998 balance sheet of the conversion of all outstanding
shares of preferred stock into 3,408,741 shares of common stock which will occur
upon closing of the Company's proposed initial public offering as if the
conversion took place on June 30, 1998.

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable,
other current assets, and accounts payable and accrued and other current
liabilities approximates fair value because of the short-term nature of those
instruments. Based on borrowing rates currently available to the Company for
credit arrangements with similar terms, the carrying amounts of balances under
notes payable and capital lease obligations approximate fair value.

REVENUE RECOGNITION

The Company has standard agreements with its database marketing services
customers. Although the terms of each individual agreement may vary, most
agreements call for the Company to provide customized letters and telephone
contacts for its dealership customers, in exchange for the payment of a monthly
fee per active name in the automobile dealership's customer list. Most
agreements have an initial minimum six month term, with thirty day notice of
cancellation without penalty thereafter.

The Company recognizes revenue from both its database marketing services and
consulting services in the month that services are provided. In certain
instances, the Company's consulting customers may pay an amount in advance for
services to be provided over a period of time. In other cases, these customers
may pay the Company a fixed amount per month with the Company providing more
services in certain months than in others. Advance payments are reflected as
deferred revenue.

F-9
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK

Certain of the database marketing services provided by the Company have been
recommended by its major customer, Ford Motor Company ("Ford"). However, the
Company contracts separately with each individual dealership, and uses the
corporate recommendation to generate business. For all periods presented,
substantially all of the Company's consulting business is with Ford. During the
six months ended June 30, 1998 and the years ended December 31, 1997, 1996 and
1995, approximately 82%, 75%, 67% and 48%, respectively, of the Company's
revenues were with Ford and Ford's dealerships.

As of June 30, 1998 substantially all of the Company's accounts receivable
are due from Ford or its dealerships.

The Company invests its excess cash principally in commercial paper and has
established guidelines relative to diversification and maturities in an effort
to maintain safety and liquidity. These guidelines are periodically reviewed and
modified to take advantage of trends in yields and interest rates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash equivalents at
June 30, 1998 and December 31, 1997 consist primarily of commercial paper.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The Company provides for
depreciation and amortization using the straight-line method by charges to
operations in amounts estimated to allocate the costs of the property or
equipment over the estimated useful lives. The estimated useful lives for
computer equipment, furniture and other is three years, and for leasehold
improvements is the shorter of the estimated useful life of the leaseholds or
the life of the lease.

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Computer equipment, furniture and other........... $ 2,255,141 $ 3,284,054 $ 4,374,416
Leasehold improvements............................ 137,571 271,056 308,881
------------ ------------ ------------
2,392,712 3,555,110 4,683,297
Accumulated depreciation and amortization......... (670,956) (1,508,448) (2,064,027)
------------ ------------ ------------
Property and equipment, net....................... $ 1,721,756 $ 2,046,662 $ 2,619,270
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

Maintenance and repairs are charged to operations as incurred. When assets
are sold, or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
operations.

F-10
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK-BASED COMPENSATION

The Company elected to adopt the disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). Accordingly, the Company accounts for its
stock-based compensation plans under the provisions of APB No. 25 under which
compensation cost is measured by the excess, if any, of the fair market value of
the Company's common stock at the date of grant over the exercise price of the
option. See Note 7.

INCOME TAXES

The Company accounts for income taxes utilizing the liability method in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred income taxes are recorded to
reflect the tax consequences on future years of temporary differences between
the tax bases of assets and liabilities and their financial reporting amounts at
each year end. If it is more likely than not that some portion or all of the net
deferred tax asset will not be realized, a valuation allowance is recognized.

DEFERRED RENT

Rent expense is recognized on a straight-line basis over the terms of the
leases. Accordingly, rent expense incurred in excess of rent paid is reflected
as deferred rent.

SOFTWARE REWRITE COST

The Company has commissioned a substantial rewrite of its enterprise-wide
database management software. This rewrite is expected to be completed in the
first quarter of 1999. The Company's policy is to expense the cost of these
rewrites as incurred. During the year ended 1997, the Company incurred
approximately $600,000 and approximately $1,500,000 during the six months ended
June 30, 1998 related to this rewrite.

TECHNOLOGY AND PRODUCT DEVELOPMENT

The costs associated with the enhancement of its current products and
services and the development of new products and services are expensed as
incurred.

PRO FORMA NET LOSS PER SHARE

Pro forma net loss per share is computed by dividing the net loss by the
weighted average number of common shares outstanding during each period and the
weighted average shares resulting from the conversion of outstanding shares of
the redeemable preferred stock at the closing of the proposed initial public
offering of 3,408,741 and 1,519,963 for the six months ended June 30, 1998 and
the year ended December 31, 1997, respectively. Common stock equivalents have
not been included as their inclusion would be antidilutive. Due to the
significant impact of the assumed conversion of the redeemable preferred stock
upon closing of the offering, historical net loss per share is not considered
meaningful and is therefore not presented.

F-11
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). This statement provides
guidance on accounting for the costs of computer software developed or obtained
for internal use and identifies characteristics of internal use software as well
as assists in determining when computer software is for internal use. SOP 98-1
is effective for fiscal years beginning after December 15, 1998, with earlier
application permitted. The Company has not determined the impact of the adoption
of this SOP as this SOP is highly dependent upon the nature, timing and extent
of future internal use software development.

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities."
This Statement of Position provides guidance on the financial reporting of
start-up costs and organization costs. It requires that the cost of start-up
activities and organization costs to be expensed as incurred. The SOP is
effective for financial statements for fiscal years beginning after December 15,
1998. The Company does not expect adoption of this SOP to have a material
adverse impact on the financial statements.

The Company will be required to adopt Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information." Statement 131 superseded SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise" and is effective for years beginning after
December 31, 1997. Statement 131 establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. Statement 131
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. The adoption of Statement 131 will not
affect the results of operations or financial position, but may affect the
disclosure of the segment information that will be disclosed in the Company's
annual financial statements for the year ended December 31, 1998.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the 1998
presentation.

3. LINES OF CREDIT

The Company has a working capital line of credit with a bank that is secured
by substantially all assets. The total available amount of the line is
$4,500,000, with advances limited to 80% of qualified accounts receivable. The
line expires in March 1999. The Company has reduced its available line of credit
by allocating approximately $450,000 of the line of credit to support a letter
of credit collateralizing a facility lease (see Note 10). Interest on the
borrowings is charged at the bank's prime rate plus 1.25%. The line of credit
agreement contains certain financial covenants including, among others, minimum
revenue requirements, minimum quick and profitability ratios, as defined in the
agreement, and limitations and restrictions on capital expenditures and
additional indebtedness.

At June 30, 1998, the Company also has available approximately $800,000
pursuant to a $1,000,000 lease line of credit for equipment acquisitions with a
leasing company. The line expires on December 31, 1998.

F-12
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

4. INCOME TAXES

The net deferred tax asset as of June 30, 1998 and December 31, 1997 and
1996 result from the following temporary differences:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Depreciation and amortization..................... $ (5,562) $ (11,797) $ (5,856)
Accrued and other current liabilities............. 78,720 252,905 463,846
Net operating loss carryforwards.................. 1,475,446 2,102,438 2,123,873
Credit carryforwards.............................. -- 25,984 70,000
Other............................................. 1,434 2,508 572,811
------------ ------------ ------------
Total........................................... 1,550,038 2,372,038 3,224,674
Less valuation allowance........................ (1,550,038) (2,372,038) (3,224,674)
------------ ------------ ------------
Total............................................. $ -- $ -- $ --
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

As of December 31, 1997, the Company had net operating loss carryforwards of
approximately $5.8 million and $2.1 million, for Federal and California tax
reporting purposes, respectively. The difference between the Federal and
California tax loss carryforwards is primarily attributable to the 50%
limitation of California loss carryforwards. The Federal net operating losses
will begin expiring in 2009, unless previously utilized, while the California
tax carryforwards will begin expiring in 1999. Utilization of the Company's net
operating loss carryforwards may be limited as a result of certain changes in
the Company's ownership. The realization of the deferred tax asset is dependent
upon the Company generating sufficient taxable income prior to expiration of its
operating loss and credit carryforwards. Due to the uncertainty regarding
realization of the deferred tax asset, management has provided a full valuation
allowance against the net deferred tax asset.

5. CONVERTIBLE PROMISSORY NOTES PAYABLE

In 1997, the Company issued convertible subordinated unsecured promissory
notes to existing shareholders totaling $2,332,500. Automatic conversion of
these notes occurred in connection with the issuance of Series B Preferred Stock
in November 1997. Interest at 10% per annum was paid at the time of conversion.
In connection with the issuance of the convertible notes, the Company issued
106,024 warrants to purchase common stock.

6. REDEEMABLE PREFERRED STOCK

The Company has authorized 3,500,000 shares of preferred stock for issuance.
The Board of Directors designated 1,260,137 and 2,200,000 shares as Series A
Preferred Stock and Series B Preferred Stock, respectively. The remaining 39,863
shares of preferred stock are undesignated. Both issuances of preferred stock
carry the following rights and privileges:

a) VOTING: The holder of each preferred share has a right to the number of
votes equal to the number of shares issuable upon conversion, as defined.

b) REDEMPTION: Beginning November 26, 2002, and in each year thereafter,
the Company is obligated to redeem, at the option of the preferred
stockholders, up to 25% of the aggregate number of shares

F-13
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

6. REDEEMABLE PREFERRED STOCK (CONTINUED)
outstanding. The redemption value of each share shall equal the original
issuance price ($4.40 for Series A and $4.52 for Series B), plus any
declared and unpaid dividends and a premium of 8% per annum, compounded
annually. In the event that the Company does not redeem the required
shares at each redemption date, a premium of 12% per annum would be
charged until the shares are redeemed by the Company. In order to state
the preferred stock at redemption value, as of June 30, 1998, the Company
has accreted approximately $814,000, including amounts related to the 8%
premium.

c) DIVIDENDS: The preferred stockholders are entitled to non-cumulative
dividends, when and if declared, at the same rate the dividends are paid
to the common stockholders.

d) LIQUIDATION: In the event of any merger, sale or reorganization in
which control transfers or in liquidation or dissolution, the preferred
stockholders have a liquidation preference over common stockholders. The
liquidation preference is an amount equal to a multiple of 1.5 times the
original purchase price.

e) CONVERSION: Each share of the preferred stock is generally convertible
at the option of the holder into one share of common stock and is subject
to certain anti-dilution provisions. The preferred stock automatically
converts into a certain number of common shares, as defined, upon the
closing of certain offerings, as defined, and upon the election of 75%
and 70% of the Series A Preferred Stock and the Series B Preferred Stock,
respectively.

In August 1996, the Company completed a private offering of 1,136,487 shares
of Series A Preferred Stock at $4.40 per share resulting in net proceeds of
$4,921,479. In December 1996, the investors exercised an option for additional
113,650 shares of Series A Preferred Stock resulting in additional net proceeds
of $500,060.

In November 1997, the Company completed a private offering of 2,158,604
shares of Series B Preferred Stock at $4.52 per share resulting in net proceeds
of $9,125,096.

The Board of Directors has the authority, without further action by the
shareholders, to issue any authorized but undesignated shares of preferred stock
in one or more series and to fix all the terms, including rights, preferences,
restrictions and redemptions. See Note 12.

7. STOCKHOLDERS' EQUITY (DEFICIT)

COMMON STOCK

The Company has authorized 15,000,000 shares of common stock of which
3,766,915 shares of common stock were outstanding as of June 30, 1998, December
31, 1997 and December 31, 1996. Outstanding shares of common stock have been
issued to officers and employees pursuant to agreements which entitle the
Company, under certain circumstances, the option to repurchase the shares at
fair value in the event of termination of employment. As of June 30, 1998, no
shares have been repurchased.

STOCK OPTION PLAN

In August 1996, the Company adopted an incentive stock option plan ("the
Plan"), under which options may be granted to employees, directors, consultants
or advisors of the Company. Options issued under the Plan vest over either four
or five years. No options granted under the Plan have a term in excess of ten
years from the

F-14
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
date of grant. The exercise price of the option may not be less than the fair
value of the common stock on the date of grant as determined by the Board of
Directors. As of June 30, 1998 and December 31, 1997, 700,000 common shares have
been reserved for issuance under the Plan.

The following table summarizes stock option plan activity for the six-months
ended June 30, 1998 and the years ended December 31, 1997 and 1996:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1996 1997 JUNE 30, 1998
---------------------- ---------------------- ----------------------
WTD AVG. WTD AVG. WTD AVG.
SHARES EX. PRICE SHARES EX. PRICE SHARES EX. PRICE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of
year........................ -- $ -- 38,250 $ 0.50 641,100 $ 1.06
Granted..................... 38,250 0.50 616,250 1.09 -- --
Exercised................... -- -- -- -- -- --
Terminated.................. -- -- (13,400) 0.73 (85,900) 2.01
--------- ----- --------- ----- --------- -----
Outstanding end of year....... 38,250 $ 0.50 641,100 $ 1.06 555,200 $ .91
Exercisable, end of year...... -- 7,400 $ 0.50 46,460 $ 1.49
Weighted average fair value of
options granted............. -- $ .50 -- $ 2.32 -- $ --
</TABLE>

As required by SFAS 123, the Company has determined the pro-forma
information as if the Company had accounted for stock options under the minimum
value method of SFAS 123. The following weighted-average assumptions were used;
risk-free interest rate ranging between 5.9% and 6.9%; dividend yield of zero;
expected market price volatility factor of zero; and a weighted-average expected
life of the options of seven years. Had compensation cost for stock options
granted during the six-months ended June 30, 1998 and for the years ended
December 31, 1997 and 1996 been determined consistent with SFAS No. 123, the
Company's net loss and related per share amounts on a pro forma basis would not
materially differ from the amounts reported in the accompanying consolidated
statements of operations for those periods.

In August 1998, in connection with the Company's decision to file a
registration statement to register shares pursuant to an initial public
offering, the Company reevaluated its assumptions regarding the fair value of
its common stock in relation to its options granted during the previous year. As
a result, the Company has recorded $900,900 as deferred compensation related to
429,000 options granted in December 1997. The deferred compensation is being
amortized on a straight-line basis over the four or five year vesting period of
the underlying options.

In July 1998, the Company issued an additional 154,850 options at exercise
prices ranging between $2.50 and $8.00 per share. The Company expects to record
a deferred compensation charge of approximately $500,000 during the third
quarter of 1998 related to the grant of these options. The deferred compensation
will be amortized over the four or five year vesting period of the underlying
options.

F-15
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
WARRANTS

As of June 30, 1998 the Company has outstanding warrants to purchase 10,000
shares of its Series A preferred stock. The warrants have an exercise price of
$4.40 per share and expire in November 2001.

As of June 30, 1998 the Company has outstanding warrants to purchase 106,024
shares of its common stock. The warrants have an exercise price of $0.75 per
share and expire at various dates in 2002.

8. EMPLOYEE BENEFITS

The Company has a 401(k) Plan ("the 401(k) Plan") covering substantially all
full-time employees. The 401(k) Plan is subject to the provisions of the
Employee's Retirement Income Security Act of 1974. The 401(k) Plan allows for
the Company to make matching contributions, up to a maximum of $750 per year per
employee. The contributions made by the Company were $38,088, $34,492, $27,972
and $7,951 for the six months ended June 30, 1998 and the years ended December
31, 1997, 1996 and 1995, respectively.

The Company has a bonus plan for certain members of management. The bonuses
earned are based upon factors such as meeting certain operating targets,
including defined results of operations.

During the six months ended June 30, 1998, and for the years ended December
31, 1997, 1996 and 1995, the Company granted discretionary bonuses to its
officers and employees in the amount of approximately $538,000, $834,000,
$411,000 and $289,000, respectively.

9. RELATED PARTY TRANSACTIONS

The Company has notes payable to related parties in the amount of $600,000,
$600,000 and $1,000,000 at June 30, 1998, December 31, 1997 and 1996,
respectively. These notes are secured and subordinated to the bank line of
credit and mature December 31, 1998. Interest is payable monthly and is charged
at a rate of prime plus 2.0%. In addition, a bonus is payable annually to the
noteholders at a rate of approximately 1.7% on the outstanding balance. Interest
expense related to these notes totaled $31,241 for the six months ended June 30,
1998 and $100,858 and $182,863 for the years ended December 31, 1997 and 1996,
respectively.

Effective January 1, 1996, the Company entered into an administrative
service agreement with Newgen Services L.P., an affiliate, wherein the Company
agreed to provide administrative services for Newgen Services L.P., in exchange
for a monthly payment of $7,500, subject to adjustment. The agreement is in
effect for a period of one year, with automatic renewals, unless terminated by
the mutual consent of both companies. Amounts earned under this agreement
totaled $45,000 for the six months ended June 30, 1998, and $90,000 for each of
1997 and 1996. In addition, during 1996 the Company repaid advances from this
affiliate aggregating approximately $434,000. The Company also performs
consulting services for customers of this affiliate and has earned approximately
$38,000, $131,000, $219,000 and $399,000 for the six months ended June 30, 1998,
and for the years ended December 31, 1997, 1996, and 1995, respectively.

F-16
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

10. COMMITMENTS AND CONTINGENCIES

LEASES

The Company has both operating and capital lease commitments for facilities
and certain equipment which expire through June 2003. Provisions of the facility
lease provide for abatement of rent during certain periods and escalating rent
payments during the lease term. At December 31, 1996, restricted cash totaling
$566,105 consists of a term deposit maintained as collateral for a letter of
credit related to the facility lease. This deposit was released in March 1997
and replaced with a letter of credit from the Company's line of credit (see Note
3). Collateral requirements decline annually over the term of the lease and at
June 30, 1998 were approximately $450,000.

The future lease commitments as of June 30, 1998, are summarized as follows:

<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR ENDED DECEMBER 31, LEASES LEASES
- ------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
1998.............................................................. $ 325,331 $ 494,724
1999.............................................................. 587,280 909,028
2000.............................................................. 574,272 458,286
2001 430,016 148,833
2002.............................................................. -- 2,566
Thereafter........................................................ -- 675
------------ ------------
Total minimum lease payments...................................... $ 1,916,899 $ 2,014,112
------------
------------
Less amount representing interest................................. (238,041)
------------
Present value of remaining minimum capital lease payments......... 1,776,071
Less amount due in one year....................................... (821,947)
------------
Long-term portion of obligations under capital leases............. $ 954,124
------------
------------
</TABLE>

Rent expense for the six months ended June 30, 1998 and June 30, 1997 and
the years ended December 31, 1997, 1996 and 1995 was $358,502, $283,445,
$574,209, $306,479 and $199,402, respectively. At June 30, 1998, the net book
value of assets subject to capital leases was $1,626,018.

PROCESSING AGREEMENTS

On May 15, 1996, the Company entered into a two year agreement with a third
party, whereby the Company was given the rights to purchase dealership customers
names to whom it provides services, for a fixed rate and a percentage of the
Company's revenue from those dealers. Although the Company is under no
obligation to purchase any data from this company at any time, the Company
continues to exercise its rights under this agreement and incurred costs
aggregating $751,061, $1,552,351, and $671,380 during the six months ended June
30, 1998, and the years ended December 31, 1997, and 1996, respectively.

The Company has a month to month agreement with a third party whereby it
purchases postage and services relating to the production of letters for the
Company's customers. Costs incurred related to this agreement during the six
months ended June 30, 1998 and the years ended December 31, 1997, and 1996, were
$3,043,788, $4,304,345, and $993,907, respectively.

F-17
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

11. OTHER BALANCE SHEET DATA

Following are details concerning certain balance sheet accounts as of June
30, 1998 and December 31, 1997 and 1996:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Accrued and Other Current Liabilities:
Compensation and Benefits....................... $ 145,639 $ 606,664 $ 758,361
Deferred Revenue................................ -- 375,498 569,395
Other........................................... 177,016 205,100 635,380
------------ ------------ ------------
$ 322,655 $ 1,187,262 $ 1,963,136
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

12. SUBSEQUENT EVENTS (UNAUDITED)

EMPLOYEE STOCK PURCHASE PLAN

In August 1998, the Company adopted the Employee Stock Purchase Plan
("Purchase Plan"). The Company has reserved 350,000 shares of common stock for
issuance under the Purchase Plan. The Purchase Plan will enable eligible
employees to purchase common stock at 85% of the lower of the fair market value
of the Company's common stock on the first day of each option purchase period,
or the relevant purchase date.

EQUITY INCENTIVE PLAN

The Company adopted the 1998 Equity Incentive Plan (the "1998 Plan") in
August 1998. An aggregate of 1,000,000 shares of the Company's common stock have
initially been reserved for issuance pursuant to the exercise of stock awards
granted to employees, directors and consultants under the 1998 Plan. An
additional 500,000 shares may be reserved for issuance under the 1998 Plan to
the extent that options outstanding on the effective date of this offering under
the Company's 1996 Plan are returned to the 1996 Plan. The exercise price of an
Incentive Stock Option cannot be less than 100% of the fair market value of the
common stock on the date of the grant. The exercise price of a nonstatutory
stock option cannot be less than 85% of the fair market of the common stock on
the date of grant. Options granted under the 1998 Plan vest at the rate
specified in the option agreement.

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

In August 1998, the Company adopted the Non-employee Director's Option Plan
("Director Plan"). The Company has reserved 150,000 shares of common stock for
issuance under the Director Plan. The Director Plan provides an initial grant of
options to purchase 6,000 shares of common stock to each new eligible outside
director of the Company upon election to the Board. In addition, commencing with
the 1999 Annual Stockholders meeting, such eligible outside directors are
granted an option to purchase 2,000 shares of common stock at each annual
meeting. The exercise price per share of all options granted under the Director
Plan will be equal to the fair market value of the Company's common stock on the
date of grant. Options granted expire after ten years and generally vest monthly
over a one-year period. The initial grant options vest monthly over a three-year
period.

F-18
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION RELATING TO JUNE 30, 1997 IS UNAUDITED)

12. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
RECAPITALIZATION

Upon the closing of the Company's proposed initial public offering, all
outstanding shares of preferred stock will be converted into 3,408,741 shares of
common stock. Following the conversion, the Company's Certificate of
Incorporation will be amended and restated, to increase the authorized common
stock to 28,000,000 shares, delete all references to such shares of preferred
stock, and the Board of Directors will have the authority, without further
action by the stockholders to issue up to 2,000,000 shares of preferred stock in
one or more series and to fix the price, rights, preferences, privileges and
restrictions.

F-19
<PAGE>
[Photographs taken at the Company's principal executive offices surrounding
the Company's logo at the center of the page.]
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING
STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 15
Dividend Policy........................................................... 15
Capitalization............................................................ 16
Dilution.................................................................. 17
Selected Consolidated Financial Data...................................... 18
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 19
Business.................................................................. 28
Management................................................................ 40
Certain Transactions...................................................... 50
Principal and Selling Stockholders........................................ 52
Description of Capital Stock.............................................. 55
Shares Eligible for Future Sale........................................... 57
Underwriting.............................................................. 59
Legal Matters............................................................. 61
Experts................................................................... 61
Additional Information.................................................... 61
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

[LOGO]

COMMON STOCK

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

PROSPECTUS
-------------

HAMBRECHT & QUIST

BANCBOSTON ROBERTSON STEPHENS

DAIN RAUSCHER WESSELS

A DIVISION OF DAIN RAUSCHER INCORPORATED

, 1998

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered. All the amounts
shown are estimates except for the Commission registration fee and the NASD
filing fee.

<TABLE>
<CAPTION>
<S> <C>
Registration fee.................................................................. $ 13,750
NASD filing fee................................................................... 5,100
Nasdaq Stock Market Listing Application fee....................................... 17,500
Blue sky qualification fees and expenses.......................................... 5,000
Printing and engraving expenses................................................... 175,000
Legal fees and expenses........................................................... 225,000
Accounting fees and expenses...................................................... 225,000
Transfer agent and registrar fees................................................. 10,000
Miscellaneous..................................................................... 48,650
----------
Total......................................................................... $ 725,000
----------
----------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Section 145 of the Delaware General Corporation Law (the "Delaware
Law") , the Registrant has broad powers to indemnify its Directors and officers
against liabilities they may incur in such capacities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act").

The Registrant's Certificate of Incorporation and Bylaws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by
Section 102(b)(7) of the Delaware Law and (ii) require the Registrant to
indemnify its Directors and officers to the fullest extent permitted by Section
145 of the Delaware Law, including circumstances in which indemnification is
otherwise discretionary. Pursuant to Section 145 of the Delaware Law, a
corporation generally has the power to indemnify its present and former
Directors, officers, employees and agents against expenses incurred by them in
connection with any suit to which they are or are threatened to be made a party
by reason of their serving in such positions so long as they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action, they had
no reasonable cause to believe their conduct was unlawful. The Registrant
believes that these provisions are necessary to attract and retain qualified
persons as Directors and officers. These provisions do not eliminate the
Directors' duty of care, and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware Law. In addition, each Director will continue to be subject to
liability for breach of the Director's duty of loyalty to the Registrant, for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for acts or omissions that the Director believes to
be contrary to the best interests of the Registrant or its stockholders, for any
transaction from which the Director derived an improper personal benefit, for
acts or omissions involving a reckless disregard for the Director's duty to the
Registrant or its stockholders when the Director was aware or should have been
aware of a risk of serious injury to the Registrant or its stockholders, for
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the Director's duty to the Registrant or its
stockholders, for improper transactions between the Director and the Registrant
and for improper distributions to stockholders and loans to Directors and
officers. The provision also does not affect a Director's responsibilities under
any other law, such as the federal securities law or state or federal
environmental laws.

II-1
<PAGE>
The Registrant has entered into indemnity agreements with each of its
Directors and executive officers that require the Registrant to indemnify such
persons against expenses, judgments, fines, settlements and other amounts
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be made a
party by reason of the fact that such person is or was a Director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable cause
to believe his or her conduct was unlawful. The indemnification agreements also
set forth certain procedures that will apply in the event of a claim for
indemnification thereunder.

At present, there is no pending litigation or proceeding involving a
Director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or Director.

The Registrant has an insurance policy covering the officers and Directors
of the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since January 1, 1995, the Registrant has sold and issued the following
unregistered securities:

(a) Since January 1, 1995, the Company has issued a total of 808,950
options for shares of its Common Stock at exercise prices ranging from $0.50
to $8.00. As of August 1, 1998, optionees have exercised 250 options at an
exercise price of $0.50 per share and 250 options at an exercise price of
$0.75 and 709,550 options are outstanding (98,900 options having been
cancelled), 45,960 of which are vested. The Registrant relied on the
exemption provided by Rule 701 under the Securities Act.

(b) In August and December 1996, the Registrant issued and sold
1,250,137 shares of its Series A Preferred Stock to certain accredited
investors for an aggregate purchase price of $5,500,603, or $4.40 per share.
Upon the closing of this offering, the shares of Series A Preferred Stock
will automatically convert into 1,250,137 shares of Common Stock. The
Registrant relied on the exemption provided by Section 4(2) under the Act.
See "Certain Transactions."

(c) In November 1996, in conjunction with the execution of a Revolving
Loan and Security Agreement with Silicon Valley Bank ("SVB"), the Company
issued to SVB a warrant to purchase up to 10,000 shares of Series A
Preferred Stock. Upon the closing of this offering, this warrant shall
become a warrant to purchase 10,000 shares of Common Stock. This warrant has
an exercise price of $4.40 per share and expires on November 27, 2001. The
Registrant relied on the exemption provided by Section 4(2) under the Act.

(d) In May and September 1997, the Company entered into certain
Convertible Unsecured Promissory Notes (the "Notes") in the aggregate amount
of $2,332,500 (the "Bridge Financings") with directors of the Company and
entities affiliated with directors of the Company as follows: BankAmerica
Ventures ($1,197,000) and BA Venture Partners II ($133,000), affiliated with
Jess R. Marzak; Johari Investment Company Ltd. ($166,667), affiliated with
Gary Simkin; Bernard C. Simkin ($166,667); Murray Simkin ($166,667); and
Capstone Ventures ($502,500), affiliated with Eugene J. Fisher. All Notes
were converted on November 26, 1997, in connection with the Company's Series
B Financing, into shares of the Company's Series B Preferred Stock, at a
purchase price of $4.52 per share.

In connection with the Bridge Financings, the Company issued warrants to
purchase an aggregate of 106,024 shares of its Common Stock (the "Bridge
Warrants") in the following amounts to the following entities: 54,409 to
BankAmerica Ventures, 6,046 to BA Venture Partners II, 22,842 to Capstone
Ventures, 7,576 to each of Bernard C. Simkin and Murray Simkin and 7,575 to
Johari Investment Company, Ltd. The exercise price of the Bridge Warrants is
$0.75 per share. The Bridge Warrants may be exercised by applying the value
of a portion of the Bridge Warrants (equal to the number of shares issuable
under the Bridge Warrant being exercised multiplied by the fair market value
of the security receivable upon exercise of the

II-2
<PAGE>
Bridge Warrants, less the aggregate per share exercise price) in lieu of
payment of the exercise price per share. 30,770 of the Bridge Warrants
expire in May 2002, 61,618 expire in September 2002 and 13,636 will expire
in November 2002. The Registrant relied on the exemption provided by Section
4(2) under the Act. See "Certain Transactions."

(e) In November 1997, the Registrant issued and sold 2,158,604 shares of
Series B Preferred Stock to certain accredited investors for an aggregate
purchase price of $9,756,890, or $4.52 per share (includes the shares from
the conversion of the Unsecured Convertible Promissory Notes). Upon the
closing of this offering the shares of Series B Preferred Stock will
automatically convert into 2,158,664 shares of Common Stock. The Registrant
relied on the exemption provided by Section 4(2) under the Act. See "Certain
Transactions."

The recipients of the above-described securities represented their intention
to acquire the securities for investment only and not with a view to
distribution thereof. Appropriate legends were affixed to the stock certificates
issued in such transactions. All recipients had adequate access, through
employment or other relationships, to information about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation.
3.2 Amended and Restated Bylaws.
3.3 Restated Certificate of Incorporation, to be filed and become effective upon closing of this offering.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2 Specimen Stock Certificate.(1)
5.1 Opinion of Cooley Godward LLP. (1)
10.1 1996 Equity Incentive Plan (the "1996 Plan").
10.2 Form of Stock Option Agreement of Registrant pursuant to the 1996 Plan.
10.3 1998 Equity Incentive Plan (the "1998 Plan").
10.4 Form of Stock Option Agreement of Registrant pursuant to the 1998 Plan.
10.5 1998 Non-Employee Directors Stock Option Plan.
10.6 1998 Employee Stock Purchase Plan.
10.7 Restated Investor Rights Agreement by and among the Company and certain stockholders of the Company,
dated as of November 26, 1997.
10.8 Restated Right of First Refusal and Co-Sale Agreement between the Company and certain investors, dated
as of November 26, 1997.
10.9 Master Equipment Lease No. 0053 between the Company and Phoenix Leasing Incorporated, dated as of
December 15, 1996.(1)
10.10 License Agreement between the Company and Service Systems Development Limited Partnership, dated as of
October 11, 1995.
10.11 Amended and Restated Security Agreement between the Company and Silicon Valley Bank, dated March 10,
1998.
10.12+ Data Distribution Agreement between the Company and Universal Computer Services, dated as of May 15,
1996.
10.13 Office Lease between the Company and WCB II Limited Partnership, dated as of July 31, 1996.
10.14 Office Lease between the Company and Plaza Holdings, Inc., dated as of April 6, 1998.
10.15+ Delta--AGI Newgen Agreement between the Company, Delta Mailing and Fulfillment and Alumni Graphics
Incorporated, dated as of December 1, 1995.
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.16 Form of Warrant, dated September 2, 1997, between the Company and the following directors and entity
affiliated with a director: Bernard C. Simkin, Murray Simkin and Johari Investment Company, Ltd.(1)
10.17 Promissory Note, as amended, between the Company as borrower and Sam Simkin as lender.
10.18 Promissory Note, as amended, between the Company as borrower and Jack Simkin, as Trustee for Simkin
Children Irrevocable Trust, as lender.
10.19 General Services Agreement between the Company and Bolder Heuristics, Inc., dated December 25, 1996.
21 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-5.
27 Financial Data Schedule.
</TABLE>

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

+ Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.

(1) To be filed by amendment.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, officers and controlling persons of the Registrant
pursuant to provisions described in Item 14 or otherwise, the Registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes:

(1) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(2) That, for purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(3) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Diego,
County of San Diego, State of California, on August 27, 1998.

<TABLE>
<S> <C> <C>
By: /s/ GERALD L. BENOWITZ
-----------------------------------------
Gerald L. Benowitz
President and Chief Executive Officer
</TABLE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gerald L. Benowitz and Samuel Simkin and each of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place, and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments, exhibits thereto and other documents in connection therewith) to
this Registration Statement and any subsequent registration statement filed by
the registrant pursuant to Rule 462(b) of the Securities Act of 1933, as
amended, which relates to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

<S> <C> <C>
/s/ GERALD L. BENOWITZ
- ------------------------------ President, Chief Executive August 27, 1998
Gerald L. Benowitz Officer and Director

/s/ SAMUEL SIMKIN Chief Financial Officer,
- ------------------------------ Vice President and August 27, 1998
Samuel Simkin Secretary

/s/ EUGENE FISCHER
- ------------------------------ Director August 27, 1998
Eugene Fischer

/s/ H. ROBERT GILL
- ------------------------------ Director August 27, 1998
H. Robert Gill

/s/ JESS MARZAK
- ------------------------------ Director August 27, 1998
Jess Marzak
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

<S> <C> <C>
/s/ JOHN MORAGNE
- ------------------------------ Director August 27, 1998
John Moragne

/s/ ABRAHAM SIMKIN
- ------------------------------ Director August 27, 1998
Abraham Simkin

/s/ BERNARD C. SIMKIN
- ------------------------------ Director August 27, 1998
Bernard C. Simkin

/s/ MURRAY SIMKIN
- ------------------------------ Director August 27, 1998
Murray Simkin

/s/ GARY SIMKIN
- ------------------------------ Director August 27, 1998
Gary Simkin

/s/ TODD A. SPRINGER
- ------------------------------ Director August 27, 1998
Todd A. Springer

/s/ BERT WINEMILLER
- ------------------------------ Director August 27, 1998
Bert Winemiller
</TABLE>

II-6
<PAGE>
EXHIBIT INDEX

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

+ Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.

(1) To be filed by amendment.

<PAGE>

NEWGEN RESULTS CORPORATION

SHARES (1)

COMMON STOCK

UNDERWRITING AGREEMENT

_____ __, 1998

HAMBRECHT & QUIST LLC
BANCBOSTON ROBERTSON STEPHENS INC.
DAIN RAUSCHER WESSELS
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104

Ladies and Gentlemen:

Newgen Results Corporation, a Delaware corporation (herein called the
"COMPANY"), proposes to issue and sell _______ shares of its authorized but
unissued Common Stock, $____ par value (herein called the "COMMON STOCK"),
and the shareholders of the Company named in Schedule II hereto (herein
collectively called the "SELLING SECURITYHOLDERS") propose to sell an
aggregate of _________ shares of Common Stock of the Company (said _________
shares of Common Stock being herein called the "UNDERWRITTEN STOCK"). The
Company proposes to grant to the Underwriters (as hereinafter defined) an
option to purchase up to ________ additional shares of Common Stock (herein
called the "OPTION STOCK" and with the Underwritten Stock herein collectively
called the "STOCK"). The Common Stock is more fully described in the
Registration Statement and the Prospectus hereinafter mentioned.

The Company and the Selling Securityholders severally hereby confirm
the agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the "UNDERWRITERS", which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent
and warrant that you have

- ------------------------
(1) Plus an option to purchase from the Company and the Selling
Securityholders up to _____ additional shares to cover overallotments.

1
<PAGE>

been authorized by each of the other Underwriters to enter into this Agreement
on its behalf and to act for it in the manner herein provided.

1. REGISTRATION STATEMENT. The Company has filed with the
Securities and Exchange Commission (herein called the "COMMISSION") a
registration statement on Form S-1 (No. 333-_____), including the related
preliminary prospectus, for the registration under the Securities Act of
1933, as amended (herein called the "SECURITIES ACT"), of the Stock, such
amendments to such registration statement, such amended prospectuses subject
to completion and such abbreviated registration statements pursuant to Rule
462(b) of the applicable rules and regulations of the Commission (herein
called the "RULES AND REGULATIONS") as may have been required prior to the
date hereof; and the Company will file such additional amendments to such
registration statement, such amended prospectuses subject to completion and
such abbreviated registration statements as may hereafter be required.
Copies of such registration statement and of each amendment thereto, if any,
including the related preliminary prospectus (meeting the requirements of
Rule 430A of the Rules and Regulations), heretofore filed by the Company
with the Commission have been delivered to you.

The term "REGISTRATION STATEMENT" as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations with respect to the Stock (herein called a "RULE 462(b) REGISTRATION
STATEMENT"), and, in the event of any amendment thereto after the effective date
of such registration statement (herein called the "EFFECTIVE DATE"), shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any Rule 462(b) registration statement). The
term "PROSPECTUS" as used in this Agreement shall mean the prospectus relating
to the Stock first filed with the Commission pursuant to Rule 424(b) and Rule
430A (or if no such filing is required, as included in the Registration
Statement) and, in the event of any supplement or amendment to such prospectus
after the Effective Date, shall also mean (from and after the filing with the
Commission of such supplement or the effectiveness of such amendment) such
prospectus as so supplemented or amended. The term "PRELIMINARY PROSPECTUS" as
used in this Agreement shall mean each preliminary prospectus included in such
registration statement prior to the time it becomes effective.

The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Commission has not issued
any order preventing or suspending the use of any Preliminary Prospectus or
instituted proceedings for that purpose. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.

(a) The Company and each Selling Securityholder hereby represents and
warrants as follows:

2
<PAGE>

(i) Each of the Company and its subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and authority to own
or lease its properties and conduct its business as described in the
Registration Statement and the Prospectus and as being conducted, and is duly
qualified as a foreign corporation and in good standing in all jurisdictions in
which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiary, taken as a whole).

(ii) Except as set forth in the Registration Statement and Prospectus,
(i) each of the Company and its subsidiary has good and marketable title to all
properties and assets described in the Registration Statement and the Prospectus
as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than such as would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and its subsidiary, taken as a whole,
(ii) the agreements to which the Company or its subsidiary is a party described
in the Registration Statement and the Prospectus are valid agreements,
enforceable by the Company and its subsidiary (as applicable), except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles and, to the best
of the Company's and each Selling Securityholder's knowledge, the other
contracting party or parties thereto are not in material breach or material
default under any of such agreements, and (iii) each of the Company and its
subsidiary has valid and enforceable leases for all properties described in the
Registration Statement and the Prospectus as leased by it, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles. Except as set
forth in the Registration Statement and the Prospectus, the Company owns or
leases all such properties as are necessary to its operations as now conducted
or as described in the Registration Statement and the Prospectus.

(iii) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any materially
adverse change in the business, properties, financial condition or results of
operations of the Company and its subsidiary, taken as a whole, whether or not
arising from transactions in the ordinary course of business, other than as set
forth in the Registration Statement and the Prospectus, and since such dates,
except in the ordinary course of business, neither the Company nor its
subsidiary has entered into any material transaction not referred to in the
Registration Statement and the Prospectus.

(iv) The Registration Statement and the Prospectus comply, and on
the Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the Rules and
Regulations; on the Effective Date, the Registration Statement did not
contain any untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date the Prospectus
did not and, on the Closing Date and any later date on which Option Stock is
to be purchased, will not contain any untrue statement

3
<PAGE>

of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that none of the
representations and warranties in this subparagraph (iv) shall apply to
statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon and in conformity with information herein or
otherwise furnished in writing to the Company by or on behalf of the
Underwriters for use in the Registration Statement or the Prospectus.

(v) The authorized capital stock of the Company consists of
________ shares of Series A Preferred Stock, of which there are outstanding
________ shares, _________ shares of Series B Preferred Stock, of
which there are outstanding _________ shares, and ________ shares
of Common Stock, $________ par value, of which there are outstanding
__________ shares (including the Underwritten Stock plus the number of
shares of Option Stock issued on the date hereof); proper corporate
proceedings have been taken validly to authorize such authorized capital
stock; all of the shares of such capital stock outstanding prior to the
issuance of the Stock (including the shares to be purchased by the
Underwriters from the Selling Securityholders) have been duly and validly
issued and are fully paid and nonassessable; all outstanding shares of
capital stock (including the shares to be purchased by the Underwriters from
the Selling Securityholders) and options and other rights to acquire capital
stock have been issued in compliance with the registration and qualification
provisions of all applicable securities laws and were not issued in violation
of any preemptive rights, rights of first refusal or other similar rights;
and no preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to any of
the Stock or the issuance and sale thereof other than those that have been
expressly waived prior to the date hereof and those that will automatically
expire upon and will not apply to the consummation of the transactions
contemplated on or before the Closing Date.

(vi) All issued and outstanding shares of capital stock of the
subsidiary of the Company have been duly authorized and validly issued and are
fully paid and nonassessable, are owned directly by the Company, have been
issued in compliance with all applicable securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase shares and are owned by the Company free and clear of any lien,
encumbrance, equity, security interest or claim.

(vii) The Stock is duly and validly authorized, is (or, in the case of
shares of the Stock to be sold by the Company, will be, when issued and sold to
the Underwriters as provided herein) duly and validly issued, fully paid and
nonassessable, will be sold free and clear of any lien, encumbrance, equity,
security interest or claim and conforms to the description thereof in the
Prospectus. No further approval or authority of the shareholders or the Board
of Directors of the Company will be required for the transfer and sale of the
Stock to be sold by the Selling Securityholders or the issuance and sale of the
Stock as contemplated herein.

(viii) Except as disclosed or contemplated in the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, neither the Company nor its subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations.

4
<PAGE>

The description of the Company's stock option, stock bonus and other stock
plans or arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.

(ix) The Stock has been approved for quotation on The Nasdaq National
Market, subject to official notice of issuance.

(x) The Company and its subsidiary own or possess adequate licenses or
other rights to use all patents, patent rights, inventions, trade secrets,
copyrights, trademarks, service marks, trade names, technology and know-how
("Intellectual Property") currently employed or proposed to be employed by them
in connection with their business as described in the Prospectus. The Company
is not obligated to pay a royalty, grant a license, or provide other
consideration, and has not granted any exclusive license, to any third party in
connection with its Intellectual Property other than as disclosed in the
Prospectus. Except as disclosed in the Prospectus, neither the Company nor its
subsidiary has received any notice of infringement or conflict with (and neither
the Company nor its subsidiary, or any of the Selling Securityholders, knows of
any infringement or conflict with) asserted rights of others with respect to any
Intellectual Property that could result in any material adverse effect upon the
Company and its subsidiary, taken as a whole. The discoveries, inventions,
products or processes of the Company and its subsidiary referred to in the
Prospectus do not infringe or conflict with any right or patent of any third
party, or any discovery, invention, product or process that is the subject of a
patent application filed by any third party, that could have a material adverse
effect on the Company and its subsidiary, taken as a whole.

(xi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated herein, except such as have been obtained under the Securities Act
and such as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Stock by the Underwriters.

(xii) The Company owns no capital stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust or
other entity other than Newgen Dealer Pricing, Inc. The Company owns all of the
outstanding capital stock of its subsidiary free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest.

(xiii) All outstanding shares of Common Stock, and all securities
convertible into or exercisable or exchangeable for Common Stock, are subject to
valid, binding and enforceable agreements (herein called the "LOCK-UP
AGREEMENTS") that restrict the holders thereof from selling, making any short
sale of, granting any option for the purchase of, or otherwise transferring or
disposing of, any of such shares of Common Stock, or any such securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of 180 days after the date of the Prospectus without the prior written consent
of the Company or Hambrecht & Quist LLC.

5
<PAGE>

(xiv) Except as to defaults which individually or in the aggregate would
not have a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiary, taken as a whole,
neither the Company nor its subsidiary is in violation of any provision of its
respective charter or bylaws or other organizational documents, or is in breach
of or default with respect to any provision of any agreement, judgment, decree,
order, mortgage, deed of trust, lease, franchise, license, indenture, permit or
other instrument to which it is a party or by which it or any of its properties
are bound; and there does not exist any state of facts which constitutes an
event of default on the part of the Company or its subsidiary as defined in such
documents or which, with notice or lapse of time or both, would constitute such
an event of default.

(xv) There are no franchises, contracts, leases, documents or legal
proceedings, pending or threatened, which are of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement, which are not described and filed as
required; the franchises, contracts, leases and documents so described in the
Prospectus are in full force and effect on the date hereof; and neither the
Company nor its subsidiary, nor to the best of the Company's and each Selling
Securityholder's knowledge, any other party is in breach of or default under any
of such franchises, contracts, leases and documents.

(xvi) The Company and the Selling Securityholders have full legal right,
power and authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and the Selling Securityholders and is a valid and
binding agreement on the part of the Company and the Selling Securityholders,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. The execution and delivery by the Company and the
Selling Stockholders of, and the performance by the Company and the Selling
Stockholders of its obligations pursuant to, this Agreement, and the transfer
and sale of the Stock to be sold by the Selling Stockholders and the issue and
sale by the Company of the shares of Stock pursuant to this Agreement will not
conflict with, or result in a violation of, the respective charter or bylaws of
the Company or its subsidiary or result in any breach of, or constitute an event
of default under, any agreement or instrument to which the Company or its
subsidiary is a party or violate any applicable law, regulation, order, writ,
injunction or decree of any jurisdiction, court or governmental instrumentality;

(xvii) There is not any pending or, to the best of the Company's and each
Selling Securityholder's knowledge, threatened any action, suit, claim or
proceeding against the Company, its subsidiary or any of their respective
officers or any of their respective properties, assets or rights before any
court, government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its subsidiary or over their respective
officers or properties or otherwise which (i) might result in any material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its subsidiary, taken as a whole, or might
materially and adversely affect their properties, assets or rights, (ii) might
prevent consummation of the transactions contemplated

6
<PAGE>

hereby or (iii) is required to be disclosed in the Registration Statement or
the Prospectus and is not so disclosed.

(xviii) Arthur Andersen LLP, which has examined the consolidated
financial statements of the Company, together with the related schedules and
notes, as of _________________, 199__ and 199__ and for each of the years in
the three (3) years ended ________________, 199__ filed with the Commission
as a part of the Registration Statement, which are included in the
Prospectus, are independent accountants within the meaning of the Securities
Act and the Rules and Regulations; the audited consolidated financial
statements of the Company, together with the related schedules and notes, and
the unaudited consolidated financial information, forming part of the
Registration Statement and the Prospectus, fairly present the financial
position and the results of operations of the Company and its subsidiary at
the respective dates and for the respective periods to which they apply; and
all audited consolidated financial statements of the Company, together with
the related schedules and notes, and the unaudited consolidated financial
information, filed with the Commission as part of the Registration Statement,
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may
be otherwise stated therein. The selected and summary financial and
statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with
the audited financial statements presented therein. No other financial
statements or schedules are required to be included in the Registration
Statement.

(xix) The Company and its subsidiary have timely filed all necessary
federal, state and foreign income and franchise tax returns or have properly
requested extensions thereof and have paid all taxes shown thereon as due, and
there is no tax deficiency that has been or, to the best of the Company's and
each Selling Securityholder's knowledge, might be asserted against the Company
or its subsidiary that might have a material adverse effect on the business,
properties, financial condition or results of operations of the Company and its
subsidiary, taken as a whole; and the Company has made adequate charges,
accruals and reserves for all periods as to which tax liabilities of the Company
and its subsidiary have not been finally determined.

(xx) The Company and its subsidiary maintain insurance with insurers of
recognized financial responsibility of the types and in the amounts generally
deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company or its subsidiary against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect; neither the Company nor its subsidiary
has been refused any insurance coverage sought or applied for; and neither the
Company nor its subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not be expected to result in a material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its subsidiary, taken as a whole.

7
<PAGE>

(xxi) To the best of Company's and each Selling Securityholder's
knowledge, no labor disturbance by the employees of the Company or its
subsidiary exists or is imminent; and the Company and the Selling
Securityholders are not aware of any existing or imminent labor disturbance
by the employees of any of its principal suppliers, subcontractors, licensors
or customers that might be expected to result in a material adverse effect on
the business properties, financial condition or results of operations of the
Company and its subsidiary, taken as a whole. No collective bargaining
agreement exists with any of the Company's employees and, to the best of the
Company's and each Selling Securityholder's knowledge, no such agreement is
imminent.

(xxii) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Stock is to be
purchased, as the case may be, and (ii) completion of the distribution of the
Stock, any offering material in connection with the offering and sale of the
Stock other than any Preliminary Prospectuses, the Prospectus, the Registration
Statement and other materials, if any, permitted by the Securities Act.

(xxiii) Neither the Company nor its subsidiary has at any time
during the last four (4) years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.

(xxiv) The Company and the Selling Securityholders have not taken and
will not take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Stock.

(xxv) (i) Each of the Company and its subsidiary is in compliance with
all rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment (herein
called "ENVIRONMENTAL LAWS") which are applicable to its business, (ii) neither
the Company nor its subsidiary has received notice from any governmental
authority or third party of an asserted claim under Environmental Laws, which
claim is required to be disclosed in the Registration Statement and the
Prospectus and is not so disclosed, (iii) to the Company's and each Selling
Securityholder's knowledge, neither the Company nor its subsidiary will be
required to make future material capital expenditures to comply with existing
Environmental Laws, and (iv) no property which is owned, leased or occupied by
the Company or its subsidiary has been designated as a Superfund site pursuant
to the Comprehensive Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601, ET SEQ.), or otherwise designated as a
contaminated site under applicable state or local law.

(xxvi) The Company and its subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to

8
<PAGE>

maintain accountability for assets, (iii) access to assets is permitted only
in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(xxvii) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.

(xxviii) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.

(xxix) The Company has not been advised by [Ford] that [Ford] intends to
terminate or in any way alter its relationship with the Company that might be
expected to result in a material adverse effect on the business, properties,
financial condition or results of operation of the Company, and the Company has
no reason to believe that any such termination or alteration will occur.

(xxx) The execution and delivery of the [Agreement and Plan of Merger]
dated as of _____________, 1998 (herein called the "MERGER AGREEMENT") between
Newgen Results Corporation, a California corporation (herein called the
"CALIFORNIA CORPORATION"), and the Company, effecting the reincorporation of the
California Corporation under the laws of the State of Delaware, was duly
authorized by all necessary corporate action on the part of each of the
California Corporation and the Company. Each of the California Corporation and
the Company had all corporate power and authority to execute and deliver the
Merger Agreement, to file the Merger Agreement with the Secretary of State of
California and the Secretary of State of Delaware and to consummate the
reincorporation contemplated by the Merger Agreement, and the Merger Agreement
at the time of execution and filing constituted a valid and binding obligation
of each of the California Corporation and the Company.

(xxxi)The Company has not been advised, and has no reason to believe,
that either it or its subsidiary is not conducting business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not have a material adverse effect on the business, properties,
financial condition or results of operations of the Company and its subsidiary,
taken as a whole.

[ADDITIONAL REPRESENTATIONS AND WARRANTIES MAY BE REQUESTED AS IDENTIFIED
PURSUANT TO OUR CONTINUING DUE DILIGENCE INVESTIGATION.]

(b) Each of the Selling Securityholders hereby represents and warrants
as follows:

(i) Such Selling Securityholder has good and marketable title to all
the shares of Stock to be sold by such Selling Securityholder hereunder, free
and clear of all liens, encumbrances, equities,

9
<PAGE>

security interests and claims whatsoever, with full right and authority to
deliver the same hereunder, subject, in the case of each Selling
Securityholder, to the rights of __________, as Custodian (herein called the
"CUSTODIAN"), and that upon the delivery of and payment for such shares of
Stock hereunder, the several Underwriters will receive good and marketable
title thereto, free and clear of all liens, encumbrances, equities, security
interests and claims whatsoever.

(ii) Certificates in negotiable form for the shares of the Stock to be
sold by such Selling Securityholder have been placed in custody under a Custody
Agreement for delivery under this Agreement with the Custodian (herein called
the "CUSTODY AGREEMENT"); such Selling Securityholder specifically agrees that
the shares of the Stock represented by the certificates so held in custody for
such Selling Securityholder are subject to the interests of the several
Underwriters and the Company, that the arrangements made by such Selling
Securityholder for such custody, including the Power of Attorney provided for in
such Custody Agreement (herein called the "POWER OF ATTORNEY"), are to that
extent irrevocable, and that the obligations of such Selling Securityholder
shall not be terminated by any act of such Selling Securityholder or by
operation of law, whether by the death or incapacity of such Selling
Securityholder (or, in the case of a Selling Securityholder that is not an
individual, the dissolution or liquidation of such Selling Securityholder) or
the occurrence of any other event; if any such death, incapacity, dissolution,
liquidation or other such event should occur before the delivery of such shares
of the Stock hereunder, certificates for such shares of the Stock shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity, dissolution, liquidation or other event
had not occurred, regardless of whether the Custodian shall have received notice
of such death, incapacity, dissolution, liquidation or other event.

(iii) Such Selling Securityholder has reviewed the Registration
Statement and the Prospectus and, although such Selling Securityholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of such Selling
Securityholder that would lead such Selling Securityholder to believe that on
the Effective Date, the Registration Statement contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading;
and, on the Effective Date the Prospectus contained and, on the Closing Date and
any later date on which Option Stock is to be purchased, contains any untrue
statement of a material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.

(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
________ shares of the Underwritten Stock to the several Underwriters, each
Selling Securityholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company

10
<PAGE>

and the Selling Securityholders and purchased by the several Underwriters shall
be $___ per share. The obligation of each Underwriter to the Company and each
of the Selling Securityholders shall be to purchase from the Company and the
Selling Securityholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by each of the Company and the Selling Securityholders pursuant
to this Agreement as the number of shares of the Underwritten Stock set forth
opposite the name of such Underwriter in Schedule I hereto represents of the
total number of shares of the Underwritten Stock to be purchased by all
Underwriters pursuant to this Agreement, as adjusted by you in such manner as
you deem advisable to avoid fractional shares. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter is
to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule I.

(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company or the Selling Securityholders shall
immediately give notice thereof to you, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by you of such notice
to purchase, or procure one or more other Underwriters to purchase, in such
proportions as may be agreed upon between you and such purchasing Underwriter
or Underwriters and upon the terms herein set forth, all or any part of the
shares of the Stock which such defaulting Underwriter or Underwriters agreed
to purchase. If the non-defaulting Underwriters fail so to make such
arrangements with respect to all such shares and portion, the number of
shares of the Stock which each non-defaulting Underwriter is otherwise
obligated to purchase under this Agreement shall be automatically increased
on a pro rata basis to absorb the remaining shares and portion which the
defaulting Underwriter or Underwriters agreed to purchase; PROVIDED, HOWEVER,
that the non-defaulting Underwriters shall not be obligated to purchase the
shares and portion which the defaulting Underwriter or Underwriters agreed to
purchase if the aggregate number of such shares of the Stock exceeds 10% of
the total number of shares of the Stock which all Underwriters agreed to
purchase hereunder. If the total number of shares of the Stock which the
defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Securityholders shall have the right, within 24 hours
next succeeding the 24-hour period above referred to, to make arrangements
with other underwriters or purchasers satisfactory to you for purchase of
such shares and portion on the terms herein set forth. In any such case,
either you or the Company and the Selling Securityholders shall have the
right to postpone the Closing Date determined as provided in Section 5 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company and the Selling Securityholders shall make arrangements within the
24-hour periods stated above for the purchase of all the shares of the Stock
which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company or the Selling
Securityholders to any non-defaulting Underwriter and without any liability
on the part of any non-defaulting Underwriter to the Company or the Selling
Securityholders. Nothing in this paragraph (b),

11
<PAGE>

and no action taken hereunder, shall relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.

(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth,
the Company grants an option to the several Underwriters to purchase,
severally and not jointly, up to _________ shares in the aggregate of the
Option Stock from the Company at the same price per share as the Underwriters
shall pay for the Underwritten Stock. Said option may be exercised only to
cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part at any time (but not
more than once) on or before the thirtieth day after the date of this
Agreement upon written or telegraphic notice by you to the Company setting
forth the aggregate number of shares of the Option Stock as to which the
several Underwriters are exercising the option. Delivery of certificates for
the shares of Option Stock, and payment therefor, shall be made as provided
in Section 5 hereof. The number of shares of the Option Stock to be
purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Stock, as
adjusted by you in such manner as you deem advisable to avoid fractional
shares.

4. OFFERING BY UNDERWRITERS.

(a) The terms of the initial public offering by the Underwriters of
the Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.

(b) The information set forth in the last paragraph on the front cover
page and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Stock filed by the Company
(insofar as such information relates to the Underwriters) constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration Statement, any Preliminary Prospectus and the Prospectus, and you,
on behalf of the respective Underwriters, represent and warrant to the Company
that the statements made therein are correct.

5. DELIVERY OF AND PAYMENT FOR THE STOCK.

(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Cooley Godward LLP, 4365 Executive Drive, Suite 1100, San
Diego, California 92121, at 7:00 A.M., San Francisco time, on the third full
business day following the first day the Stock is traded, or on the fourth full
business day after the date of this Agreement if this Agreement is executed and
delivered after 1:30 P.M., San Francisco time, or at such time on such other
day, not later than seven full business days after such third or fourth business
day, as the case may be, as shall

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<PAGE>

be agreed upon in writing by the Company, the Selling Securityholders and
you. The date and hour of such delivery and payment (which may be postponed
as provided in Section 3(b) hereof) are herein called the "CLOSING DATE".

(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 A.M., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Cooley Godward LLP, 4365
Executive Drive, Suite 1100, San Diego, California 92121, at 7:00 A.M., San
Francisco time, on the third business day after the exercise of such option.

(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order, and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by one or more certified or official bank check or
checks in same day funds or, if you so elect, by wire transfer of immediately
available funds to an account specified in writing by the Company for the Stock
purchased from the Company and to an account specified in writing by the
Custodian for the respective accounts of the Selling Securityholders for the
Stock purchased from the Selling Securityholders. Such payment shall be made
upon delivery of certificates for the Stock to you for the respective accounts
of the several Underwriters against receipt therefor signed by you.
Certificates for the Stock to be delivered to you shall be registered in such
name or names and shall be in such denominations as you may request at least one
business day before the Closing Date, in the case of Underwritten Stock, and at
least one business day prior to the purchase thereof, in the case of the Option
Stock. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at the offices of Lewco Securities
Corporation, 2 Broadway, New York, New York 10004 on the business day prior to
the Closing Date or, in the case of the Option Stock, by 3:00 p.m., New York
time, on the business day preceding the date of purchase. If you so elect,
delivery of the Stock may be made through full fast transfer to the accounts at
The Depository Trust Company designated by you.

It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check or wire transfer shall not have been received by you on the
Closing Date or any later date on which Option Stock is purchased for the
account of such Underwriter. Any such payment by you shall not relieve such
Underwriter from any of its obligations hereunder.

6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING SECURITYHOLDERS.
Each of the Company and the Selling Securityholders respectively covenants and
agrees as follows:

(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A and
(ii) not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act or the Rules and Regulations.

13
<PAGE>

(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company and
the Selling Securityholders will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.

(c) The Company will (i) on or before the Closing Date, deliver to
you a signed copy of the Registration Statement as originally filed and of
each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of
each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless previously
furnished to you) and will also deliver to you, for distribution to the
Underwriters, a sufficient number of additional conformed copies of each of
the foregoing (but without exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to you
and send to the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably request,
and (iii) thereafter from time to time during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer,
likewise send to the Underwriters as many additional copies of the Prospectus
and as many copies of any supplement to the Prospectus and of any amended
prospectus, filed by the Company with the Commission, as you may reasonably
request for the purposes contemplated by the Securities Act.

(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time such Prospectus
is delivered to such purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended Prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock

14
<PAGE>

in accordance with the applicable provisions of the Securities Act and the
applicable Rules and Regulations thereunder for such period.

(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
Prospectus proposed to be filed.

(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; PROVIDED, HOWEVER, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time
to time, prepare and file such statements, reports and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.

(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission.

(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its security holders an earnings
statement in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.

(i) The Company and the Selling Securityholders jointly and severally
agree to pay all costs and expenses incident to the performance of their
obligations under this Agreement, including all costs and expenses incident to
(i) the preparation, printing and filing with the Commission and the National
Association of Securities Dealers, Inc. (herein called the "NASD") of the
Registration Statement, any Preliminary Prospectus and the Prospectus, (ii) the
furnishing to the Underwriters of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this Section 6 to be so
furnished, (iii) the printing of this Agreement and related documents delivered
to the Underwriters, (iv) the preparation, printing and filing of all
supplements and amendments to the Prospectus referred to in paragraph (d) of
this Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees. The Selling Securityholders will pay any transfer taxes incident to the
transfer to the Underwriters of the shares of the Stock being sold by the
Selling Securityholders.

(j) The Company and the Selling Securityholders jointly and severally
agree to reimburse you, for the account of the several Underwriters, for blue
sky fees and related disbursements (including counsel fees and disbursements and
cost of printing memoranda for the Underwriters) paid by or for the

15
<PAGE>

account of the Underwriters or their counsel in qualifying the Stock under
state securities or blue sky laws and in the review of the offering by the
NASD.

(k) The provisions of paragraphs (i) and (j) of this Section are
intended to relieve the Underwriters from the payment of the expenses and costs
which the Company and the Selling Securityholders hereby agree to pay and shall
not affect any agreement which the Company and the Selling Securityholders may
make, or may have made, for the sharing of any such expenses and costs.

(l) The Company and each of the Selling Securityholders hereby
agrees that, without the prior written consent of Hambrecht & Quist LLC on
behalf of the Underwriters, the Company or such Selling Securityholder, as
the case may be, will not, for a period of 180 days following the
commencement of the public offering of the Stock by the Underwriters,
directly or indirectly, (i) sell, offer, contract to sell, make any short
sale, pledge, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any rights to purchase
or acquire Common Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or ownership
of Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise. The foregoing sentence shall not apply to (A) the
Stock to be sold to the Underwriters pursuant to this Agreement, (B) shares
of Common Stock issued by the Company pursuant to the Company's 1996 Equity
Incentive Plan (herein called the "OPTION PLAN") or pursuant to currently
outstanding contractual obligations, options, warrants or similar rights, all
as described in the Preliminary Prospectus, and (C) options to purchase
Common Stock granted under the Option Plan; provided, however, that, without
the prior written consent of Hambrecht & Quist LLC, such additional
options shall not be exercisable during such period.

(m) The Company agrees to use its best efforts to cause all directors,
officers and stockholders to agree that, without the prior consent of Hambrecht
& Quist LLC on behalf of the Underwriters, such person or entity will not, for a
period of 180 days following the commencement of the public offering of the
Stock by the Underwriters, directly or indirectly, (i) sell, offer, contract to
sell, make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock or (ii) enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences or
ownership of Common Stock, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise.

(n) The Company agrees: (i) to enforce the terms of each Lock-Up
Agreement and (ii) issue stop-transfer instructions to the transfer agent for
the Common Stock with respect to any transaction or contemplated transaction
that would constitute a breach of or default under the applicable Lock-Up
Agreement. In addition, except with the prior written consent of Hambrecht &
Quist LLC, the Company agrees (i) not to amend or terminate, or waive any right
under, any Lock-Up Agreement, or take any other action that would directly or
indirectly have the same effect as an amendment or termination, or

16
<PAGE>

waiver of any right under, any Lock-Up Agreement, that would permit any
holder of shares of Common Stock, or securities convertible into or
exercisable or exchangeable for Common Stock, to sell, make any short sale
of, grant any option for the purchase of, or otherwise transfer or dispose
of, any such shares of Common Stock or other securities prior to the
expiration of 180 days after the date of the Prospectus, and (ii) not to
consent to any sale, short sale, grant of an option for the purchase of, or
other disposition or transfer of shares of Common Stock, or securities
convertible into or exercisable or exchangeable for Common Stock, subject to
a Lock-Up Agreement.

(o) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.

(p) The Company is familiar with the Investment Company Act of 1940,
as amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.

7. INDEMNIFICATION AND CONTRIBUTION.

(a) Subject to the provisions of paragraph (f) of this Section 7, the
Company and the Selling Securityholders jointly and severally agree to indemnify
and hold harmless each Underwriter and each person (including each partner or
officer thereof) who controls any Underwriter within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Securities Exchange Act of
1934, as amended (herein called the "EXCHANGE ACT"), or the common law or
otherwise, and the Company and the Selling Securityholders jointly and severally
agree to reimburse each such Underwriter and controlling person for any legal or
other expenses (including, except as otherwise hereinafter provided, reasonable
fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the

17
<PAGE>

Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that (1) the indemnity agreements of the Company and the Selling
Securityholders contained in this paragraph (a) shall not apply to any such
losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company
by or on behalf of any Underwriter for use in any Preliminary Prospectus or
the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and (2) the indemnity agreement contained in this
paragraph (a) with respect to any Preliminary Prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages, liabilities or expenses purchased the Stock which is
the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Stock a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person and the untrue statement or omission
of a material fact contained in such Preliminary Prospectus was corrected in
the Prospectus (or the Prospectus as amended or supplemented) unless the
failure is the result of noncompliance by the Company with paragraph (c) of
Section 6 hereof. The indemnity agreements of the Company and the Selling
Securityholders contained in this paragraph (a) and the representations and
warranties of the Company and the Selling Securityholders contained in
Section 2 hereof shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Stock.

(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his or
her own behalf or pursuant to a power of attorney, each of its directors, each
other Underwriter and each person (including each partner or officer thereof)
who controls the Company or any such other Underwriter within the meaning of
Section 15 of the Securities Act, and the Selling Securityholders from and
against any and all losses, claims, damages or liabilities, joint or several, to
which such indemnified parties or any of them may become subject under the
Securities Act, the Exchange Act, or the common law or otherwise and to
reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein

18
<PAGE>

stated or otherwise furnished in writing to the Company by or on behalf of
such indemnifying Underwriter for use in the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto. The
indemnity agreement of each Underwriter contained in this paragraph (b) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery
of and payment for the Stock.

(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the "NOTICE") of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its
own expense to participate in the defense of any action, suit or proceeding
against, or investigation or inquiry of, an indemnified party. Any indemnifying
party shall be entitled, if it so elects within a reasonable time after receipt
of the Notice by giving written notice (herein called the "NOTICE OF DEFENSE")
to the indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; PROVIDED, HOWEVER, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice

19
<PAGE>

of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party
or parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.

(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Securityholders on the one hand and the Underwriters on
the other shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Stock received by the Company and the
Selling Securityholders and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by each indemnifying party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission.

The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.

Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party

20
<PAGE>

from whom contribution may be sought from any obligation it may have
hereunder or otherwise (except as specifically provided in paragraph (c) of
this Section 7).

(e) Neither the Company nor the Selling Securityholders will, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.

8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company and the
Selling Securityholders if after the date of this Agreement trading in the
Common Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock Exchange,
the American Stock Exchange, or The Nasdaq Stock Market, or limitations on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such exchange or system, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company or the Selling
Securityholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Securityholders; PROVIDED, HOWEVER, that in the event of
any such termination the Company and the Selling Securityholders agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.

9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing

21
<PAGE>

Date or any later date on which Option Stock is to be purchased, as the case
may be, and to the following further conditions:

(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.

(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing and the
form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein) shall have been approved at or prior to
the Closing Date by Wilson Sonsini Goodrich & Rosati, P.C., counsel for the
Underwriters (herein called "UNDERWRITERS' COUNSEL").

(c) You shall have received from Cooley Godward LLP, counsel for the
Company and the Selling Securityholders, an opinion, addressed to the
Underwriters and dated the Closing Date, covering the matters set forth in Annex
A hereto, and if Option Stock is purchased at any date after the Closing Date,
an additional opinion from such counsel, addressed to the Underwriters and dated
such later date, confirming that the statements expressed as of the Closing Date
in such opinions remain valid as of such later date.

(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition or results of operations of the Company and its subsidiary, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business,
neither the Company nor its subsidiary has entered into any material transaction
not referred to in the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein, (iv) neither the Company
nor its subsidiary has any material contingent obligations which are not
disclosed in the Registration Statement and the Prospectus, (v) there are not
any pending or known threatened legal proceedings to which the Company or its
subsidiary is a party or of which property of the Company or its subsidiary is
the subject which are material and which are not disclosed in the Registration
Statement and the Prospectus, (vi) there are not any franchises, contracts,
leases or other documents which are required to be filed as exhibits to the
Registration Statement which have not been filed as required, (vii) the
representations and warranties of the Company herein are true and correct in all
material respects as of the Closing Date or any later date on which Option Stock
is to be purchased, as the case may be, and (viii) there has not been any
material change in the market for securities in general or in political,
financial or economic conditions

22
<PAGE>

from those reasonably foreseeable as to render it impracticable in your
reasonable judgment to make a public offering of the Stock, or a material
adverse change in market levels for securities in general (or those of
companies in particular) or financial or economic conditions which render it
inadvisable to proceed.

(e) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or such
later date, as the case may be, and signed by the President and the Chief
Financial Officer of the Company, stating that the respective signers of said
certificate have carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein and
any supplements or amendments thereto, and that the statements included in
clauses (i) through (vii) of paragraph (d) of this Section 9 are true and
correct.

(f) You shall have received from Arthur Andersen LLP a letter or
letters, addressed to the Underwriters and dated the Closing Date and any later
date on which Option Stock is purchased, confirming that they are independent
public accountants with respect to the Company within the meaning of the
Securities Act and the applicable published rules and regulations thereunder and
based upon the procedures described in their letter delivered to you
concurrently with the execution of this Agreement (herein called the "ORIGINAL
LETTER"), but carried out to a date not more than three business days prior to
the Closing Date or such later date on which Option Stock is purchased (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the Closing Date or such later date, as
the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company or its subsidiary which, in your sole
judgment, makes it impractical or inadvisable to proceed with the public
offering of the Stock or the purchase of the Option Stock as contemplated by the
Prospectus.

(g) You shall have received from Arthur Andersen LLP letter
stating that their review of the Company's system of internal accounting
controls, to the extent they deemed necessary in establishing the scope of
their examination of the Company's financial statements as at ______________,
19__, did not disclose any weakness in internal controls that they
considered to be material weaknesses.

(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.

(i) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by The Nasdaq National
Market upon official notice of issuance.

(j) On or prior to the Closing Date, you shall have received from all
directors, officers, and beneficial holders of more than 5% of the outstanding
Common Stock agreements, in form reasonably

23
<PAGE>

satisfactory to Hambrecht & Quist LLC, stating that without the prior written
consent of Hambrecht & Quist LLC on behalf of the Underwriters, such person
or entity will not, for a period of 180 days following the commencement of
the public offering of the Stock by the Underwriters, directly or indirectly,
(i) sell, offer, contract to sell, make any short sale, pledge, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise.

(k) You shall be satisfied that, and you shall have received a
certificate, dated the Closing Date, from the Attorney-in-Fact for the Selling
Securityholders as designated in the Power of Attorney to the effect that, as of
the Closing Date, they have not been informed that:

(1) The representations and warranties made by each Selling
Securityholder herein are not true or correct in any material
respect on the Closing Date; or

(2) Any Selling Securityholder has not complied with any
obligation or satisfied any condition which is required to be
performed or satisfied on the part of such Selling Securityholder
at or prior to the Closing Date.

(l) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, an opinion of
Underwriters' Counsel, in form and substance satisfactory to you, with respect
to the sufficiency of all such corporate proceedings and other legal matters
relating to this Agreement and the transactions contemplated hereby as you may
reasonably require, and the Company shall have furnished to such counsel such
documents as they may have requested for the purpose of enabling them to pass
upon such matters.

(m) The Company and the Selling Securityholders shall have furnished
to you such further certificates and documents as you shall reasonably request
(including certificates of officers of the Company, the Selling Securityholders
or officers of the Selling Securityholders (when the Selling Securityholder is
not a natural person)), as to the accuracy of the representations and warranties
of the Company and the Selling Securityholders herein, as to the performance by
the Company and the Selling Securityholders of their respective obligations
hereunder and as to the other conditions concurrent and precedent to the
obligations of the Underwriters hereunder.

All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Underwriters' Counsel shall be satisfied that they
comply in form and scope.

In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such

24
<PAGE>

termination shall be without liability of the Company or the Selling
Securityholders to the Underwriters and without liability of the Underwriters
to the Company or the Selling Securityholders; PROVIDED, HOWEVER, that (i) in
the event of such termination, the Company and the Selling Securityholders
agree to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company and
the Selling Securityholders under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof, and (ii)
if this Agreement is terminated by you because of any refusal, inability or
failure on the part of the Company or the Selling Securityholders to perform
any agreement herein, to fulfill any of the conditions herein or to comply
with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the transactions contemplated hereby.

10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling
Securityholders to deliver the Stock shall be subject to the conditions that
(a) the Registration Statement shall have become effective and (b) no stop
order suspending the effectiveness thereof shall be in effect and no
proceedings therefor shall be pending or threatened by the Commission.

In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company and the
Selling Securityholders by giving notice to you. Any such termination shall
be without liability of the Company and the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; PROVIDED, HOWEVER, that in the event of any such
termination the Company and the Selling Securityholders jointly and severally
agree to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company and
the Selling Securityholders under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof.

11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement, the Company and the Selling
Securityholders hereby jointly and severally agree to reimburse on a
quarterly basis the Underwriters for all reasonable legal and other expenses
incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
obligations under this Section 11 and the possibility that such payments
might later be held to be improper; PROVIDED, HOWEVER, that (i) to the extent
any such payment is ultimately held to be improper, the persons receiving
such payments shall promptly refund them and (ii) such persons shall provide
to the Company, upon request, reasonable assurances of their ability to
effect any refund, when and if due.

12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the

25
<PAGE>

provisions of Section 7 hereof, the several parties (in addition to the
Company, the Selling Securityholders and the several Underwriters)
indemnified under the provisions of said Section 7, and their respective
personal representatives, successors and assigns. Nothing in this Agreement
is intended or shall be construed to give to any other person, firm or
corporation any legal or equitable remedy or claim under or in respect of
this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser,
of any of the Stock from any of the several Underwriters.

13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Hambrecht & Quist LLC, One Bush Street,
San Francisco, California 94104; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, 12680 High Bluff Drive, Suite 300,
San Diego, California 92130, Attention: [Sam Simkin, Vice President and CFO];
and if to the Selling Securityholders, shall be mailed, telegraphed or delivered
to the Selling Securityholders in care of [Cooley Godward LLP] at [4365
Executive Drive, Suite 1100, San Diego, California 92121]. All notices given by
telegraph shall be promptly confirmed by letter.

14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or the Selling Securityholders or their respective
directors or officers, and (c) delivery and payment for the Stock under this
Agreement; PROVIDED, HOWEVER, that if this Agreement is terminated prior to the
Closing Date, the provisions of paragraphs (l) and (m) of Section 6 hereof shall
be of no further force or effect.

<PAGE>

This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.

Please sign and return to the Company and to the Selling Securityholders
in care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholders and the several Underwriters in accordance with its terms.

Very truly yours,

NEWGEN RESULTS CORPORATION

By __________________________
[Name]
[Title]

SELLING SECURITYHOLDERS:

By __________________________
[Attorney-in-Fact]

<PAGE>

The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.

HAMBRECHT & QUIST LLC
BANCBOSTON ROBERTSON STEPHENS INC.
DAIN RAUSCHER WESSELS
By Hambrecht & Quist LLC

By __________________________
Managing Director

Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.

<PAGE>

SCHEDULE I

UNDERWRITERS

NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
- ------------ ----------------
<S> <C>
Hambrecht & Quist LLC. . . . . . . . . . . . . . . . . . . . .
BancBoston Robertson Stephens Inc. . . . . . . . . . . . . . .
Dain Rauscher Wessels. . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE>

SCHEDULE II

SELLING SECURITYHOLDERS

NAME AND ADDRESS NUMBER OF SHARES
OF SELLING SECURITYHOLDERS TO BE SOLD
- -------------------------- ----------------
<S> <C>

Total. . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE>

ANNEX A

MATTERS TO BE COVERED IN THE OPINION OF COOLEY GODWARD LLP
COUNSEL FOR THE COMPANY AND THE SELLING SECURITYHOLDERS

(i) Each of the Company and its subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in each state of the United States of America in which its
ownership or leasing of property requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiary, taken as a whole), and has full corporate power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement; all the issued and outstanding capital stock of
the subsidiary of the Company has been duly authorized and validly issued and is
fully paid and nonassessable, and is owned by the Company free and clear of all
liens, encumbrances and security interests, and to the best of such counsel's
knowledge, no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in such subsidiaries are outstanding; to
such counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than Newgen
Dealer Pricing Center, Inc.;

(ii) the authorized capital stock of the Company consists of
__________ shares of Series A Preferred Stock, of which there are
outstanding _________ shares, _________ shares of Series B Preferred Stock,
of which there are outstanding _________ shares, and _________ shares of
Common Stock, $ _________ par value, of which there are outstanding _________
shares (including the Underwritten Stock plus the number of shares of Option
Stock issued on the date hereof); proper corporate proceedings have been
taken validly to authorize such authorized capital stock; all of the
outstanding shares of such capital stock (including the Underwritten Stock
and the shares of Option Stock issued, if any) have been duly and validly
issued and are fully paid and nonassessable; any Option Stock purchased after
the Closing Date, when issued and delivered to and paid for by the
Underwriters as provided in the Underwriting Agreement, will have been duly
and validly issued and be fully paid and nonassessable; and no preemptive
rights of, or rights of refusal in favor of, shareholders exist with respect
to the Stock, or the issue and sale thereof, pursuant to the Certificate of
Incorporation or Bylaws of the Company and, to the knowledge of such counsel,
there are no contractual preemptive rights that have not been waived, rights
of first refusal or rights of co-sale which exist with respect to the Stock
being sold by the Selling Securityholders or the issue and sale of the Stock;

(iii) the Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for that
purpose have been instituted or are pending or contemplated by the Commission;

<PAGE>

(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with the Rules
and Regulations;

(v) such counsel have no reason to believe that the Registration
Statement (except as to the financial statements and schedules and other
financial data contained therein, as to which such counsel need not express any
opinion or belief) at the Effective Date contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus (except as to the financial statements and schedules and other
financial data contained therein, as to which such counsel need not express any
opinion or belief) as of its date or at the Closing Date (or any later date on
which Option Stock is purchased), contained or contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading;

(vi) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to such counsel) and
11(c) of Form S-1 is to the best of such counsel's knowledge accurately and
adequately set forth therein in all material respects or no response is required
with respect to such Items, and the description of the Company's stock option
plans and the options granted and which may be granted thereunder and the
options granted otherwise than under such plans set forth in the Prospectus
accurately and fairly presents the information required to be shown with respect
to said plans and options to the extent required by the Securities Act and the
Rules and Regulations;

(vii) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;

(viii) the Company has the corporate power and authority to enter into
the Underwriting Agreement and to issue, sell and deliver to the Underwriters
the Stock to be issued and sold by it hereunder; the Underwriting Agreement has
been duly authorized, executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable in accordance with its terms,
except insofar as indemnification and contribution provisions may be limited by
applicable law and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles and limitations
on equitable remedies;

(ix) the Underwriting Agreement has been duly executed and delivered by
or on behalf of the Selling Securityholders and the Custody Agreement between
the Selling Securityholders and ____________________ , as Custodian, and the
Power of Attorney referred to in such Custody Agreement have been duly executed
and delivered by the several Selling Securityholders; each Selling
Securityholder that is not

1
<PAGE>

a natural person has full power and authority under its charter documents to
enter into and to perform its obligations under the Underwriting Agreement
and to sell, transfer, assign and deliver the Stock to be sold by such
Selling Securityholder hereunder; the Underwriting Agreement has been duly
authorized by each Selling Securityholder that is not a natural person; each
Selling Securityholder that is not a natural person has full power and
authority under its charter documents to enter into and to perform its
obligations under the Power of Attorney and Custody Agreement to be executed
and delivered by it in connection with the transactions contemplated herein;
the Power of Attorney and Custody Agreement of each Selling Securityholder
that is not a natural person has been duly authorized by such Selling
Securityholder; and the Underwriting Agreement and the Power of Attorney and
Custody Agreement of each Selling Securityholder constitutes the valid and
binding agreement of such Selling Securityholder, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and limitations on equitable remedies.

(x) the execution and delivery by the Company and the Selling
Shareholders of, and the performance by the Company and the Selling Shareholders
of their obligations under, the Underwriting Agreement, and the issue and sale
by the Company of the shares of Stock sold by the Company as contemplated by the
Underwriting Agreement will not conflict with, or result in a breach of, the
respective charter or bylaws of the Company or its subsidiary or any agreement
or instrument known to such counsel to which the Company or its subsidiary is a
party or any applicable law or regulation, or so far as is known to such
counsel, any order, writ, injunction or decree, of any jurisdiction, court or
governmental instrumentality;

(xi) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have waived such rights or
such rights have expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement;

(xii) good and marketable title to the shares of Stock sold by the
Selling Securityholders under the Underwriting Agreement, free and clear of all
liens, encumbrances, equities, security interests and claims, has been
transferred to the Underwriters who have severally purchased such shares of
Stock under the Underwriting Agreement, assuming for the purpose of this opinion
that the Underwriters purchased the same in good faith without notice of any
adverse claims;

(xiii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the Underwriters;

(xiv) the statements (1) in the Prospectus under the captions [to be
completed after S-1 filed] "Risk Factors--___________ , " "Dividend Policy,"
"Business--Intellectual Property," "Management," "Certain

1
<PAGE>

Transactions," "Description of Capital Stock," "Shares Eligible for Future
Sale" and "Underwriters" and (2) in the Registration Statement in Items 14
and 15, in each case insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;

(xv) the Stock sold by the Selling Securityholders and issued and sold
by the Company will been duly authorized for listing by The Nasdaq National
Market Stock Exchange upon official notice of issuance;

(xvi) to such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or its subsidiary of a
character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the rules and regulations of the Commission, other than
those described therein;

(xvii) to such counsel's knowledge, neither the Company nor its
subsidiary is presently (a) in material violation of its respective charter or
bylaws, or (b) subject to any order, writ or decree of any court or governmental
agency or body having jurisdiction over the Company or its subsidiary, or over
any of their properties or operations;

(xviii) the execution and delivery of the Merger Agreement, effecting the
reincorporation of the California Corporation under the laws of the State of
Delaware, was duly authorized by all necessary corporate action on the part of
each of the California Corporation and the Company; each of the California
Corporation and the Company had all corporate power and authority to execute and
deliver the Merger Agreement, to file the Merger Agreement with the Secretary of
State of California and the Secretary of State of Delaware and to consummate the
reincorporation contemplated by the Merger Agreement, and the Merger Agreement
at the time of execution and filing constituted a valid and binding obligation
of each of the California Corporation and the Company.

[ADDITIONAL OPINIONS MAY BE REQUESTED AS IDENTIFIED PURSUANT TO OUR CONTINUING
DUE DILIGENCE INVESTIGATION.]

In addition, such counsel shall state that such counsel has participated
in conferences with officials and other representatives of the Company, the
representatives of the Underwriters, Underwriters' Counsel and the independent
public accountants of the Company, at which such conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed,
and although they have not verified, and are not passing upon, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, nothing has come to the attention of such counsel
which leads such counsel to believe that, at the time the Registration Statement
became effective, the Registration Statement and any post-effective amendment
thereto (other than the financial statements, including supporting schedules,
financial information and statistical information derived therefrom, as to which
such counsel need express no comment) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or

4
<PAGE>

necessary to make the statements therein not misleading, or as of its date or
at the Closing Date (or any later date on which the Option Stock is purchased),
as the case may be, the Prospectus and any supplement thereto (except as
aforesaid) contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the State of California or the
Delaware General Corporation Law upon opinions of local counsel satisfactory in
form and scope to Underwriters' Counsel. Copies of any opinions so relied upon
shall be delivered to you, as representatives of the Underwriters, and to
Underwriters' Counsel, and the foregoing opinion shall also state that counsel
knows of no reason the Underwriters are not entitled to rely upon the opinions
of such local counsel.

<PAGE>
CERTIFICATE OF INCORPORATION

NEWGEN RESULTS CORPORATION

The undersigned, a natural person (the "Sole Incorporator"), for the purpose of
organizing a corporation to conduct the business and promote the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware hereby certifies that:

The name of this corporation is Newgen Results Corporation.

II.

The address of the registered office of the corporation in the State of Delaware
is 9 East Loockerman Street, City of Dover, County of Kent, and the name of the
registered agent of the corporation in the State of Delaware at such address is
National Registered Agents, Inc.

III.

The purpose of this corporation is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of the
State of Delaware.

IV.

A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is eighteen
million five hundred thousand (18,500,000) shares. Fifteen million (15,000,000)
shares shall be Common Stock, each having a par value of one-tenth of one cent
($.001). Three million five hundred thousand (3,500,000) shares shall be
Preferred Stock, each having a par value of one-tenth of one cent ($.001). One
million two hundred sixty thousand one hundred thirty-seven (1,260,137) shares
of Preferred Stock are designated Series A Preferred Stock, and two million two
hundred thousand (2,200,000) shares of Preferred Stock are designated Series B
Preferred Stock; and such designations and the rights, preferences and
privileges of such shares of Preferred Stock, shall not be affected by or
subject to the following paragraph.

The Preferred Stock may be issued from time to time in one or more series.
Except as set forth in the preceding paragraph, the Board of Directors is hereby
authorized, by filing a certificate (a "Preferred Stock Designation") pursuant
to the Delaware General Corporation Law, to fix or alter from time to time the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions of any wholly unissued
series of Preferred Stock, and to establish from time to time the number of
shares constituting any such

1.
<PAGE>

series or any of them; and to increase or decrease the number of shares of any
series subsequent to the issuance of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of shares
of any series shall be decreased in accordance with the foregoing sentence, the
shares constituting such decrease shall resume the status that they had prior to
the adoption of the resolution originally fixing the number of shares of such
series.

B. RIGHTS, PREFERENCES AND RESTRICTIONS OF COMMON STOCK AND PREFERRED
STOCK.
The rights, preferences, privileges and restrictions granted to and
imposed on the Common Stock and the Preferred Stock are as set forth in this
Article IV.B.

1. DEFINITIONS. For purposes of this Article IV, the following
definitions shall apply:

a. "BOARD" shall mean the Board of Directors of the Company.

b. "COMPANY" shall mean this corporation.

c. "ORIGINAL SERIES A ISSUE DATE" shall mean the date on which
the first share of Series A Preferred Stock is issued by the Company.

d. "ORIGINAL SERIES B ISSUE DATE" shall mean the date on which
the first share of Series B Preferred Stock is issued by the Company.

e. "ORIGINAL SERIES A ISSUE PRICE" shall mean $4.40 per share
for the Series A Preferred Stock.

f. "ORIGINAL SERIES B ISSUE PRICE" shall mean $4.52 per share
for the Series B Preferred Stock.

g. "PERMITTED REPURCHASES" shall mean the repurchase by the
Company of shares of Common Stock held by employees, officers, directors,
consultants, independent contractors, advisors, or other persons performing
services for the Company or a subsidiary that are subject to stock purchase
agreements or stock option exercise agreements under which the Company has the
option to repurchase such shares: (i) at cost, fair market value, or as
otherwise set forth in such agreements, upon the occurrence of certain events,
such as the termination of employment or services; or (ii) at any price pursuant
to the Company's exercise of a right of first refusal to repurchase such shares.

h. "SUBSIDIARY" shall mean any corporation of which at least
fifty percent (50%) of the outstanding voting stock is at the time owned
directly or indirectly by the Company or by one or more of such subsidiary
corporations.

2. DIVIDEND RIGHTS. Dividends shall be paid, when, as and if
declared by the Board, out of any funds and assets of the Company legally
available therefor. If such dividends are declared by the Board, they shall be
declared pro rata on the Common Stock and the Preferred Stock on an as-converted
basis according to the number of shares of Common Stock

2.
<PAGE>

held by such holders, where each holder of shares of Preferred Stock is to be
treated for this purpose as holding the greatest whole number of shares of
Common Stock then issuable upon conversion of all shares of Preferred Stock held
by such holder pursuant to Section B.5. below. Dividends on the Preferred Stock
and Common Stock shall not be mandatory or cumulative, and no rights or interest
shall accrue to the holders of the Preferred Stock or Common Stock by reason of
the fact that the Company shall fail to declare or pay dividends on the
Preferred Stock or Common Stock in any calendar year or any fiscal year of the
Company, whether or not the earnings of the Company in any calendar year or
fiscal year were sufficient to pay dividends.

3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the funds and
assets of the Company that may be legally distributed to the Company's
stockholders (the "Available Funds and Assets") shall be distributed to
stockholders in the following manner:

a. PREFERRED STOCK. The holder of each share of Preferred
Stock then outstanding shall be entitled to be paid, out of the Available Funds
and Assets, and prior and in preference to any payment or distribution setting
apart of any payment or distribution of any Available Funds and Assets on shares
of Common Stock, (a) an amount per share of Series A Preferred Stock equal to
the Original Series A Issue Price multiplied as set forth in Section B.3.b.
below (subject to appropriate adjustment for stock splits, stock dividends,
combinations or other recapitalizations) plus an amount equal to all declared
and unpaid dividends thereon, and (b) an amount per share of Series B Preferred
Stock equal to $6.78 (subject to appropriate adjustment for stock splits, stock
dividends, combinations or other recapitalizations) plus an amount equal to all
declared but unpaid dividends thereon, shall be tendered to the holders of the
Preferred Stock with respect to such liquidation, dissolution or winding up. If
upon any liquidation, dissolution or winding up of the Company, the Available
Funds and Assets to be distributed to the holders of the Preferred Stock shall
be insufficient to permit the payment to such stockholders of their full
preferential amount described in this Section B.3.a., then all of the Available
Funds and Assets shall be distributed among the holders of the then outstanding
Preferred Stock in proportion to the preferential amount each such stockholder
would have been entitled to receive pursuant to this Section B.3. if such
distribution had been sufficient to permit the full payment of such preferential
amount.

b. MULTIPLICATION OF ORIGINAL SERIES A ISSUE PRICE. In
calculating the liquidation preference amount to be paid on the Series A
Preferred Stock under Section B.3.a., the Original Series A Issue Price shall be
multiplied by one and one-half (1 1/2).

c. REMAINING ASSETS. If there are any Available Funds and
Assets remaining after the payment or distribution (or the setting aside for
payment or distribution) to the holders of the Preferred Stock of their full
preferential amounts described above in this Section B.3., then all such
remaining Available Funds and Assets shall be distributed among the holders of
the then outstanding Common Stock pro rata according to the number of shares of
Common Stock held by each holder thereof.

3.
<PAGE>

d. MERGER OR SALE OF ASSETS. A (i) consolidation,
reorganization (including a sale or exchange of securities) or merger of the
Company with or into any other corporation or entity in which the holders of the
Company's outstanding shares immediately before such consolidation,
reorganization or merger do not, immediately after such consolidation,
reorganization or merger, retain stock representing a majority of the voting
power of the surviving corporation of such consolidation or merger (a "Merger
Transaction"); or (ii) a sale of all or substantially all of the assets of the
Company (a "Sale of Assets"), shall each be deemed to be a liquidation,
dissolution or winding up of the Company as those terms are used in this Section
B.3.

e. NON-CASH CONSIDERATION. If any assets of the Company
distributed to stockholders in connection with any liquidation, dissolution, or
winding up of the Company are other than cash, then the value of such assets
shall be their fair market value as mutually agreed by the Board and the holders
of at least three-quarters (3/4) of the then outstanding shares of the Preferred
Stock or, if the Board and such stockholders are unable to mutually agree, as
determined by an independent third party appraiser jointly selected by the Board
and such stockholders, except that any securities to be distributed to
stockholders in a liquidation, dissolution, or winding up of the Company shall
be valued as follows:

(i) The method of valuation of securities not subject to
investment letter or other similar restrictions on free marketability shall be
as follows:

(a) if the securities are then traded on a
national securities exchange or the Nasdaq National Market (or a similar
national quotation system), then the value shall be deemed to be the average of
the closing prices of the securities on such exchange or system over the 30-day
period ending three (3) days prior to the distribution; and

(b) if actively traded over-the-counter, then
the value shall be deemed to be the average of the closing bid prices over the
30-day period ending three (3) days prior to the distribution; and

(c) if there is no active public market, then
the value shall be the fair market value thereof, as determined in good faith by
the Board of Directors of the Company.

(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in
subparagraphs (i)(a), (b) or (c) of this Section to reflect the approximate fair
market value thereof, as mutually agreed by the Board and the holders of at
least three-quarters (3/4) of the then outstanding shares of the Preferred Stock
or, if the Board and such stockholders are unable to mutually agree, as
determined by an independent third party appraiser jointly selected by the Board
and such stockholders.

4.
<PAGE>

4. VOTING RIGHTS.

a. COMMON STOCK. Each holder of shares of Common Stock shall
be entitled to one (1) vote for each share thereof held.

b. PREFERRED STOCK. Each holder of shares of Preferred Stock
shall be entitled to the number of votes equal to the number of whole shares of
Common Stock into which such shares of Preferred Stock could be converted
pursuant to the provisions of Section B.5. below at the record date for the
determination of the stockholders entitled to vote on such matters or, if no
such record date is established, the date such vote is taken or any written
consent of stockholders is solicited.

c. GENERAL. Subject to the foregoing provisions of this
Section B.4., each holder of Preferred Stock shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled to notice of any stockholders' meeting in accordance with the
Bylaws of the Company (as in effect at the time in question) and applicable law,
and shall be entitled to vote, together with the holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote, except as may be otherwise provided by applicable law. Except as
otherwise expressly provided herein or as required by law, the holders of
Preferred Stock and the holders of Common Stock shall vote together and not as
separate classes.

d. BOARD SIZE. The authorized number of directors of the
Company's Board shall be eleven (11). The Company shall not alter the
authorized number of directors in its Certificate of Incorporation, Bylaws or
otherwise, without first obtaining the written consent, or affirmative vote at a
meeting, of the holders of at least three-quarters (3/4) of the then outstanding
shares of the Series A Preferred Stock and Series B Preferred Stock, consenting
or voting (as the case may be) together as a single class.

e. BOARD OF DIRECTORS ELECTION AND REMOVAL.

(i) ELECTION. (i) So long as at least 100,000 shares of
Series B Preferred Stock are outstanding (such number being subject to
proportional adjustment to reflect combination or subdivisions of such Series B
Preferred Stock or dividends declared in shares of such stock), the holders of
the Series B Preferred Stock, voting as a separate class (with cumulative voting
rights as among themselves in accordance with Section 214 of the Delaware
General Corporation Law), shall be entitled to elect two (2) directors of the
Company; (ii) so long as at least 100,000 shares of Series A Preferred Stock are
outstanding (such number being subject to proportional adjustment to reflect
combination or subdivisions of such Series A Preferred Stock or dividends
declared in shares of such stock), the holders of the Series A Preferred Stock,
voting as a separate class (with cumulative voting rights as among themselves in
accordance with Section 214 of the Delaware General Corporation Law), shall be
entitled to elect two (2) directors of the Company; and (iii) the holders of the
Common Stock, voting as a separate class (with cumulative voting rights as among
themselves in accordance with Section 214 of the Delaware General Corporation
Law), shall be entitled to elect the remaining seven (7)

5.
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directors of the Company; provided however, (i) that if at any time shares of
Series B Preferred Stock are converted into shares of Common Stock pursuant to
Section B.5. below ("Converted Series B Common Shares") in sufficient numbers to
elect one (1), but not more than one (1), member of the Board by virtue of
cumulative voting rights as among the holders of Common Stock, then the number
of directors of the Company that the Series B Preferred Stock shall be entitled
to elect voting as a separate class shall be reduced to one (1) and the number
of directors of the Company that the Common Stock shall be entitled to elect
voting as a separate class shall be increased by one (1); and provided further
however, that if at any time the number of Converted Series B Common Shares is
sufficient to elect more than one (1) member of the Board by virtue of
cumulative voting rights as among the holders of Common Stock, then the number
of directors of the Company that the Series B Preferred Stock shall be entitled
to elect voting as a separate class shall be reduced to zero (0) and the number
of directors of the Company that the Common Stock shall be entitled to elect
voting as a separate class shall again be increased by one (1); and (ii) that if
at any time shares of Series A Preferred Stock are converted into shares of
Common Stock pursuant to Section B.5. below ("Converted Series A Common Shares")
in sufficient numbers to elect one (1), but not more than one (1), member of the
Board by virtue of cumulative voting rights as among the holders of Common
Stock, then the number of directors of the Company that the Series A Preferred
Stock shall be entitled to elect voting as a separate class shall be reduced to
one (1) and the number of directors of the Company that the Common Stock shall
be entitled to elect voting as a separate class shall be increased by one (1);
and provided further however, that if at any time the number of Converted Series
A Common Shares is sufficient to elect more than one (1) member of the Board by
virtue of cumulative voting rights as among the holders of Common Stock, then
the number of directors of the Company that the Series A Preferred Stock shall
be entitled to elect voting as a separate class shall be reduced to zero (0) and
the number of directors of the Company that the Common Stock shall be entitled
to elect voting as a separate class shall again be increased by one (1).

(ii) QUORUM; REQUIRED VOTE.

(a) QUORUM. At any meeting held for the purpose
of electing directors, the presence in person or by proxy of the holders of a
majority of the shares of the Series B Preferred Stock, Series A Preferred Stock
or Common Stock then outstanding, respectively, shall constitute a quorum of the
Series B Preferred Stock, Series A Preferred Stock or Common Stock, as the case
may be, for the election of directors to be elected solely by the holders of the
Series B Preferred Stock, Series A Preferred Stock or Common Stock,
respectively.

(b) REQUIRED VOTE. With respect to the election
of any director or directors by the holders of the outstanding shares of a
specified series or class of stock given the right to elect such director or
directors pursuant to subsection B.4.e.(i) above ("Specified Stock"), that
candidate or those candidates (as applicable) shall be elected who either: (i)
in the case of any such vote conducted at a meeting of the holders of such
Specified Stock, receive the highest number of affirmative votes of the
outstanding shares of such Specified Stock, up to the number of directors to be
elected by such Specified Stock; or (ii) in the

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case of any such vote taken by written consent without a meeting, are elected by
the unanimous written consent of the holders of shares of such Specified Stock.

(iii) VACANCY. If there shall be any vacancy in the
office of a director elected by the holders of any Specified Stock pursuant to
subsection B.4.e.(i) above, then a successor to hold office for the unexpired
term of such director may be elected by either: (i) the remaining director or
directors (if any) in office that were so elected by the holders of such
Specified Stock, by the affirmative vote of a majority of such directors (or by
the sole remaining director elected by the holders of such Specified Stock if
there be but one), or (ii) the affirmative vote of the holders of a majority of
the shares of such Specified Stock that are entitled to elect such director
under subsection B.4.e.(i) above.

(iv) REMOVAL. Subject to Section 141 of the Delaware
General Corporation Law, any director who shall have been elected to the Board
by the holders of any Specified Stock pursuant to subsection B.4.e.(i) or by any
director or directors elected by holders of any Specified Stock as provided in
subsection B.4.e.(iii) above, may be removed during his or her term of office,
either with or without cause, by, and only by, the affirmative vote of shares
representing a majority of the voting power of all the outstanding shares of
such Specified Stock entitled to vote, given either at a meeting of such
stockholders duly called for that purpose or pursuant to a written consent of
stockholders without a meeting, and any vacancy created by such removal may be
filled only in the manner provided in subsection B.4.e.(iii) above.

(v) PROCEDURES. Any meeting of the holders of any
Specified Stock, and any action taken by the holders of any Specified Stock by
written consent without a meeting, in order to elect or remove a director under
this Section B.4.e., shall be held in accordance with the procedures and
provisions of the Company's Bylaws, the Delaware General Corporation Law and
applicable law regarding stockholder meetings and stockholder actions by written
consent, as such are then in effect (including but not limited to procedures and
provisions for determining the record date for shares entitled to vote).

(vi) TERMINATION. Notwithstanding anything in this
Section B.4.e. to the contrary, the provisions of this Section B.4.e. shall
cease to be of any further force or effect upon the earlier to occur of: (i) the
first date on which the total number of outstanding shares of Preferred Stock is
less than 100,000 shares (such number of shares being subject to proportional
adjustment to reflect combination or subdivisions of such Preferred Stock or
dividends declared in shares of such stock); or (ii) upon the closing of a
Merger Transaction (but only after the proceeds from such transaction are
distributed to the stockholders of the Company in accordance with Section B.3.
above) or (iii) upon the closing of a Sale of Assets (but only after the
proceeds from such transaction are distributed to the stockholders of the
Company in accordance with Section C above).

5. CONVERSION RIGHTS. The outstanding shares of Preferred Stock
shall be convertible into Common Stock as follows:

a. OPTIONAL CONVERSION.

7.
<PAGE>

(i) At the option of the holder thereof, each share of
Preferred Stock shall be convertible, at any time or from time to time, into
fully paid and nonassessable shares of Common Stock as provided herein.

(ii) Each holder of Preferred Stock who elects to convert
the same into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for the Preferred Stock or Common Stock or the holder shall
notify the Company or its transfer agent that such certificate or certificates
have been lost, stolen or destroyed and execute an agreement satisfactory to the
Company to indemnify the Company from any loss incurred in connection with such
certificate or certificates, and shall give written notice to the Company at
such office that such holder elects to convert the same and shall state therein
the number of shares of Preferred Stock being converted. Thereupon the Company
shall promptly issue and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled upon such conversion. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the certificate or certificates representing the shares of Preferred Stock to be
converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.

b. AUTOMATIC CONVERSION.

(i) Each share of Preferred Stock shall automatically be
converted into fully paid and nonassessable shares of Common Stock as provided
herein: (i) immediately prior to the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Company in which the aggregate public offering price
(before deduction of underwriters' discounts and commissions) equals or exceeds
$13,500,000 and the public offering price per share of which equals or exceeds
two (2) times the Original Series B Issue Price before deduction of
underwriters' discounts and commissions (such price per share of Common Stock to
be appropriately adjusted to reflect Common Stock Events (as defined in Section
B.5.d. below), or immediately prior to the closing of an initial public offering
of the Company's Common Stock resulting from the exercise by the holders of the
Preferred Stock of a demand registration right pursuant to Section 2.2 of the
Investors' Rights Agreement between the Company and the holders of the Preferred
Stock (as amended and/or restated from time to time in accordance with its
terms, the "Rights Agreement"), (ii) solely with respect to shares of Series A
Preferred Stock, immediately upon the Company's receipt of the written consent
of the holders of at least three-quarters (3/4) of the then outstanding shares
of Series A Preferred Stock, and (iii) solely with respect to shares of Series B
Preferred Stock, immediately upon the Company's receipt of the written consent
of the holders of at least seventy percent (70%) of the then outstanding shares
of Series B Preferred Stock.

(ii) Upon the occurrence of any event specified in
subsection B.5.b.(i) (i), (ii) or (iii) above, the outstanding shares of the
applicable Preferred Stock shall be converted into Common Stock automatically
without the need for any further action by the

8.
<PAGE>

holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; provided, however,
that the Company shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Preferred Stock are either delivered to the Company or
its transfer agent as provided below, or the holder notifies the Company or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates. Upon the
occurrence of such automatic conversion of the Preferred Stock, the holders of
Preferred Stock shall surrender the certificates representing such shares at the
office of the Company or any transfer agent for the Preferred Stock or Common
Stock. Thereupon, there shall be issued and delivered to such holder promptly
at such office and in its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which the shares of Preferred Stock surrendered were convertible on
the date on which such automatic conversion occurred.

c. CONVERSION PRICE. Each share of Preferred Stock shall be
convertible in accordance with Section B.5.a. or Section B.5.b. above into the
number of shares of Common Stock which results from dividing the applicable
Original Issue Price for such series of Preferred Stock by the conversion price
for such series of Preferred Stock that is in effect at the time of conversion
(the "Conversion Price" with respect to such series). The initial Conversion
Price for the Series A Preferred Stock shall be the Original Series A Issue
Price, and the initial Conversion Price for the Series B Preferred Stock shall
be the Original Series B Issue Price. Each Conversion Price shall be subject to
adjustment from time to time as provided below.

d. ADJUSTMENT UPON COMMON STOCK EVENT. Upon the happening of a
Common Stock Event (as hereinafter defined), the applicable Conversion Price
shall, simultaneously with the happening of such Common Stock Event, be adjusted
by multiplying the Conversion Price of such series of Preferred Stock in effect
immediately prior to such Common Stock Event by a fraction, (i) the numerator of
which shall be the number of shares of Common Stock issued and outstanding
immediately prior to such Common Stock Event, and (ii) the denominator of which
shall be the number of shares of Common Stock issued and outstanding immediately
after such Common Stock Event, and the product so obtained shall thereafter be
the Conversion Price for such series of Preferred Stock. The Conversion Price
for a series of Preferred Stock shall be readjusted in the same manner upon the
happening of each subsequent Common Stock Event. As used herein, the term
"Common Stock Event" shall mean (i) a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (ii) a
combination of the outstanding shares of Common Stock into a smaller number of
shares of Common Stock.

e. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If at
any time or from time to time after the applicable Original Issue Date the
Company pays a dividend or makes another distribution to the holders of the
Common Stock payable in securities of the Company, then in each such event
provision shall be made so that the holders of the Preferred Stock shall receive
upon conversion thereof, in addition to the number of shares of Common

9.
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Stock receivable upon conversion thereof, the amount of securities of the
Company which they would have received had their Preferred Stock been converted
into Common Stock on the date of such event (or such record date, as applicable)
and had they thereafter, during the period from the date of such event (or such
record date, as applicable) to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this Section B.5. with
respect to the rights of the holders of the series of Preferred Stock or with
respect to such other securities by their terms.

f. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If at any time or from time to time after the applicable Original Issue Date the
Common Stock issuable upon the conversion of any series of Preferred Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than by
a Common Stock Event or a stock dividend, reorganization, merger, consolidation
or sale of assets provided for elsewhere in this Section B.5.), then in any such
event each holder of Preferred Stock shall have the right thereafter to convert
such stock into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which such shares of
Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.

g. SALE OF SHARES BELOW CONVERSION PRICE.

(i) ADJUSTMENT FORMULA. If at any time or from time to
time after the applicable Original Issue Date the Company issues or sells, or is
deemed by the provisions of this Section B.5.g. to have issued or sold,
Additional Shares of Common Stock (as hereinafter defined), otherwise than in
connection with a Common Stock Event as provided in Section B.5.d., a dividend
or distribution as provided in Section B.5.e. or a recapitalization,
reclassification or other change as provided in Section B.5.f., for an Effective
Price (as hereinafter defined) that is less than the Conversion Price for such
series in effect immediately prior to such issue or sale, then, and in each such
case, the Conversion Price for such series shall be reduced, as of the close of
business on the date of such issue or sale, to the price obtained by multiplying
the applicable Conversion Price by a fraction:

(a) The numerator of which shall be the sum of
(A) the number of Common Stock Equivalents Outstanding (as hereinafter defined)
immediately prior to such issue or sale of Additional Shares of Common Stock
plus (B) the quotient obtained by dividing the Aggregate Consideration Received
(as hereinafter defined) by the Company for the total number of Additional
Shares of Common Stock so issued or sold (or deemed so issued and sold) by the
applicable Conversion Price for such series of Preferred Stock in effect
immediately prior to such issue or sale; and

(b) The denominator of which shall be the sum of
(A) the number of Common Stock Equivalents Outstanding immediately prior to such
issue or sale

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<PAGE>

plus (B) the number of Additional Shares of Common Stock so issued or sold (or
deemed so issued and sold);

(ii) CERTAIN DEFINITIONS. For the purpose of making any
adjustment required under this Section B.5.g.:

(a) "ADDITIONAL SHARES OF COMMON STOCK" shall
mean all shares of Common Stock issued by the Company, whether or not
subsequently reacquired or retired by the Company, other than: (A) shares of
Common Stock issued or issuable upon conversion of Preferred Stock; (B) shares
of Common Stock (or options, warrants or rights therefor) issued to employees,
officers, directors or banks of, or contractors, consultants, advisors or
equipment lessors to, the Company or any Subsidiary pursuant to stock purchase
or stock option plans, stock bonuses or awards, warrants, contracts or other
arrangements that are approved by the Board including, as to shares of Common
Stock in excess of 700,000, at least one member elected by the holders of Series
A Stock voting as a separate class and at least one member elected by the
holders of Series B Preferred Stock voting as a separate class, (C) shares of
Common Stock issued pursuant to any acquisition of another corporation or
entity, whether by merger, purchase of assets or otherwise, pursuant to any
agreement or arrangement approved by the Board including at least one member
elected by the holders of Series A Preferred Stock voting as a separate class
and at least one member elected by the holders of Series B Preferred Stock
voting as a separate class, or (D) shares of Common Stock issued pursuant to any
other plan or arrangement approved by the Board, including at least one member
of the Board elected by the holders of the Series A Preferred Stock voting as a
separate class and at least one member elected by the holders of Series B
Preferred Stock voting as a separate class.

(b) THE "AGGREGATE CONSIDERATION RECEIVED" by
the Company for any issue or sale (or deemed issue or sale) of securities shall
(A) to the extent it consists of cash, be computed at the gross amount of cash
received by the Company before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale and without deduction of any expenses payable
by the Company (B) to the extent it consists of property other than cash, be
computed at the fair value of that property as determined in good faith by the
Board; and (C) if Additional Shares of Common Stock, Convertible Securities (as
defined below) or Rights or Options (as defined below) to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for a
consideration which covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
Rights or Options.

(c) "COMMON STOCK EQUIVALENTS OUTSTANDING" shall
mean the number of shares of Common Stock that is equal to the sum of (A) all
shares of Common Stock of the Company that are outstanding at the time in
question, plus (B) all shares of Common Stock of the Company issuable upon
conversion of all shares of Preferred Stock or other Convertible Securities that
are outstanding at the time in question, plus (C) all shares of

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Common Stock of the Company that are issuable upon the exercise of Rights or
Options that are outstanding at the time in question assuming the full
conversion or exchange into Common Stock of all such Rights or Options that are
Rights or Options to purchase or acquire Convertible Securities into or for
Common Stock.

(d) "CONVERTIBLE SECURITIES" shall mean stock,
evidences of indebtedness or other securities convertible into or exchangeable
for shares of Common Stock.

(e) The "EFFECTIVE PRICE" of Additional Shares
of Common Stock shall mean the quotient determined by dividing the total number
of Additional Shares of Common Stock issued or sold, or deemed to have been
issued or sold, by the Company under this Section B.5.g., into the Aggregate
Consideration Received, or deemed to have been received, by the Company under
this Section B.5.g., for the issue of such Additional Shares of Common Stock;
and

(f) "RIGHTS OR OPTIONS" shall mean warrants,
options or other rights to purchase or acquire shares of Common Stock or
Convertible Securities.

(iii) DEEMED ISSUANCES. For the purpose of making any
adjustment to the applicable Conversion Price of the Preferred Stock required
under this Section B.5.g., if the Company issues or sells any Rights or Options
or Convertible Securities and if the Effective Price of the shares of Common
Stock issuable upon exercise of such Rights or Options and/or the conversion or
exchange of Convertible Securities (computed without reference to any additional
or similar protective or antidilution clauses) is less than the Conversion Price
then in effect for such series of Preferred Stock, then the Company shall be
deemed to have issued, at the time of the issuance of such Rights, Options or
Convertible Securities, that number of Additional Shares of Common Stock that is
equal to the maximum number of shares of Common Stock issuable upon exercise or
conversion of such Rights, Options or Convertible Securities upon their issuance
and to have received, as the Aggregate Consideration Received for the issuance
of such shares, an amount equal to the total amount of the consideration, if
any, received by the Company for the issuance of such Rights or Options or
Convertible Securities, plus, in the case of such Rights or Options, the minimum
amounts of consideration, if any, payable to the Company upon the exercise in
full of such Rights or Options, plus, in the case of Convertible Securities, the
minimum amounts of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof; provided that:

(a) if the minimum amounts of such consideration
cannot be ascertained, but are a function of antidilution or similar protective
clauses, then the Company shall be deemed to have received the minimum amounts
of consideration without reference to such clauses;

(b) if the minimum amount of consideration
payable to the Company upon the exercise of Rights or Options or the conversion
or exchange of Convertible Securities is reduced over time or upon the
occurrence or non-occurrence of

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specified events other than by reason of antidilution or similar protective
adjustments, then the Effective Price shall be recalculated using the figure to
which such minimum amount of consideration is reduced; and

(c) if the minimum amount of consideration
payable to the Company upon the exercise of such Rights or Options or the
conversion or exchange of Convertible Securities is subsequently increased, then
the Effective Price shall again be recalculated using the increased minimum
amount of consideration payable to the Company upon the exercise of such Rights
or Options or the conversion or exchange of such Convertible Securities.

No further adjustment of the applicable Conversion Price, adjusted upon the
issuance of such Rights or Options or Convertible Securities, shall be made as a
result of the actual issuance of shares of Common Stock on the exercise of any
such Rights or Options or the conversion or exchange of any such Convertible
Securities. If any such Rights or Options or the conversion rights represented
by any such Convertible Securities shall expire without having been fully
exercised, then the applicable Conversion Price as adjusted upon the issuance of
such Rights or Options or Convertible Securities shall be readjusted to the
applicable Conversion Price which would have been in effect had an adjustment
been made on the basis that the only shares of Common Stock so issued were the
shares of Common Stock, if any, that were actually issued or sold on the
exercise of such Rights or Options or rights of conversion or exchange of such
Convertible Securities, and such shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the consideration, if any, actually received by the Company for the
granting of all such Rights or Options, whether or not exercised, plus the
consideration received for issuing or selling all such Convertible Securities
actually converted or exchanged, plus the consideration, if any, actually
received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion or
exchange of such Convertible Securities, provided that such readjustment shall
not apply to prior conversions of Preferred Stock.

h. CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the applicable Conversion Price for a series of Preferred Stock,
the Company, at its expense, shall cause its Chief Financial Officer to compute
such adjustment or readjustment in accordance with the provisions hereof and
prepare a certificate showing such adjustment or readjustment, and shall mail
such certificate, by first class mail, postage prepaid, to each registered
holder of the Preferred Stock at the holder's address as shown in the Company's
books.

i. FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon any conversion of Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the Company
shall pay the holder cash equal to the product of such fraction multiplied by
the Common Stock's fair market value as determined in good faith by Board as of
the date of conversion.

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j. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect conversion of all outstanding
shares of the Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Preferred Stock, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.

k. NOTICES. Any notice required by the provisions of this
Section 5 to be given to the holders of shares of the Preferred Stock shall be
deemed given upon the earlier of actual receipt or deposit in the United States
mail, by certified or registered mail, return receipt requested, postage
prepaid, addressed to each holder of record at the address of such holder
appearing on the books of the Company.

l. NO IMPAIRMENT. The Company shall not avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Preferred Stock
against impairment.

6. RESTRICTIONS AND LIMITATIONS.

a. CLASS PROTECTIVE PROVISIONS.

(i) So long as not less than 100,000 shares of Series A
Preferred Stock remain outstanding (such number being subject to proportional
adjustment to reflect combination or subdivisions of such Preferred Stock or
dividends declared in shares of such stock), the Company shall not, without the
approval, by vote or written consent, of the holders of at least three-quarters
(3/4) of the then outstanding shares of the Series A Preferred Stock, voting
together as a single class:

(a) merge or consolidate with or into any
corporation if such merger or consolidation would result in the stockholders of
the Company immediately prior to such merger or consolidation holding less than
a majority of the voting power of the stock of the surviving corporation
immediately after such merger or consolidation;

(b) sell all or substantially all of the
Company's assets in a single transaction or series of related transactions;

(c) amend its Certificate of Incorporation or
Bylaws in any manner that would alter or change any of the rights, preferences,
privileges or restrictions of the Series A Preferred Stock;

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<PAGE>

(d) increase or decrease the authorized number
of shares of Preferred Stock;

(e) authorize or issue (by reclassification or
otherwise) any new class or series or any other security convertible into equity
securities having rights, preferences or privileges senior to or on parity with
the Series A Preferred Stock;

(f) redeem or otherwise repurchase any shares of
the Company's Common Stock or Preferred Stock (other than (i) pursuant to equity
incentive arrangements or stock purchase agreements with service providers,
including employees, that give the Company the right to repurchase such shares
upon termination of services, (ii) pursuant to the Company's right of first
refusal to repurchase shares of Common Stock under any other written agreements
with its stockholders and (iii) pursuant to the redemption provisions of Section
B.7. hereof); or

(g) declare or pay any dividends (other than
dividends payable solely in shares of its own Common Stock) on or declare or
make any other distribution (other than Permitted Repurchases), directly or
indirectly, on account of any shares of Common Stock now or hereafter
outstanding.

(ii) So long as not less than 100,000 shares of Series B
Preferred Stock remain outstanding (such number being subject to proportional
adjustment to reflect combination or subdivisions of such Preferred Stock or
dividends declared in shares of such stock), the Company shall not, without the
approval, by vote or written consent, of the holders of at least seventy percent
(70%) of the then outstanding shares of the Series B Preferred Stock, voting
together as a single class:

(b) sell all or substantially all of the
Company's assets in a single transaction or series of related transactions;

(c) amend its Certificate of Incorporation or
Bylaws in any manner that would alter or change any of the rights, preferences,
privileges or restrictions of the Series B Preferred Stock;

(d) increase or decrease the authorized number
of shares of Preferred Stock;

15.
<PAGE>

7. REDEMPTION.

a. Beginning on the fifth anniversary of the Original Series B
Issue Date (the "First Redemption Date"), and at the individual option of each
holder of shares of Series A Preferred Stock and Series B Preferred Stock, the
Company shall redeem on the First Redemption Date and on each anniversary of the
First Redemption Date thereafter (each a "Redemption Date"), the number of
shares of Series A Preferred Stock and/or shares of Series B Preferred Stock
held by such holder that is specified in a request for redemption delivered to
the Company by the holder not less than 90 days prior to the First Redemption
Date by paying in cash therefor a sum per share equal to (i) with respect to
each share of Series A Preferred Stock: the Original Series A Issue Price per
share of Series A Preferred Stock (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such share)
plus declared and unpaid dividends with respect to such share plus the
Redemption Price Premium per share (collectively, the "Series A Redemption
Price"), and (ii) with respect to each share of Series B Preferred Stock: the
Original Series B Issue Price per share of Series B Preferred Stock (as adjusted
for any stock dividends, combinations, splits, recapitalizations and the like
with respect to such share) plus declared and unpaid dividends with respect to
such share plus the Redemption Price Premium per share (collectively, the
"Series B Redemption Price"). The "Redemption Price Premium" per share of
Series A Preferred Stock and Series B Preferred Stock shall be eight percent
(8%) of the Original Series A Issue Price per share and the Original Series B
Issue Price per share, respectively (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such share)
compounded annually from the Redemption Accrual Commencement Date; provided,
however, that in the event the full amount of Preferred Stock which the Company
is obligated to redeem for any holder is not so redeemed on the applicable
Redemption Date(s), then from and after such scheduled Redemption Date and until
such shares are redeemed, the Redemption Price Premium shall be calculated using
twelve percent (12%) per annum rather than eight percent (8%) per annum as to
that portion of such holder's shares of Preferred Stock which was not timely
redeemed by the Company on the scheduled Redemption Date. The "Redemption
Accrual Commencement Date" for both the Series A Preferred Stock and the Series
B Preferred Stock shall be the Original Series B Issue Date Notwithstanding
anything else herein to the contrary, the Company shall not be required under
this Section B.7.a. to redeem from any particular holder in connection with any
one

16.
<PAGE>

Redemption Date a number of shares of Preferred Stock greater than 25% of the
aggregate number of shares of Preferred Stock held by such holder immediately
prior to the First Redemption Date plus any shares not redeemed in a prior year
pursuant to a valid request for redemption hereunder.

b. Upon receipt of any request for redemption of shares of
Preferred Stock hereunder, the Company shall promptly give written notice of
such request to each nonrequesting holder of record (at the close of business on
the business day next preceding the day on which notice is given) of Preferred
Stock, postage prepaid, at the address last shown on the records of the Company
for such holder. Such nonrequesting holders of Preferred Stock shall have 15
days from the date such notice is mailed to request redemption of their shares
of Preferred Stock on the terms contained herein.

c. At least 10 days prior to a Redemption Date, written notice
shall be mailed, first class postage prepaid, to each holder of record (at the
close of business on the business day next preceding the day on which notice is
given) of the Preferred Stock to be redeemed, at the address last shown on the
records of the Company for such holder, notifying such holder of the redemption
to be effected, specifying the number of shares to be redeemed from such holder,
the Redemption Date, the applicable Series A Redemption Price or Series B
Redemption Price, the place at which payment may be obtained and calling upon
such holder to surrender to the Company, in the manner and at the place
designated, such holder's certificate or certificates representing the shares to
be redeemed (the "Redemption Notice"). Except as provided in Section B.7.d. on
or after the Redemption Date, each holder of Preferred Stock to be redeemed
shall surrender to the Company the certificate or certificates representing such
shares, in the manner and at the place designated in the Redemption Notice, and
thereupon the Redemption Price shall be payable to the order of the person whose
name appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.

d. From and after the Redemption Date, unless there shall have
been a default in payment of the applicable redemption price, all rights of the
holders of shares of Preferred Stock designated for redemption on such
Redemption Date in the Redemption Notice shall cease with respect to such shares
(except the right to receive the applicable Series A Redemption Price or Series
B Redemption Price without interest upon surrender of their certificate or
certificates), and such shares shall not thereafter be transferred on the books
of the Company or be deemed to be outstanding for any purpose whatsoever. If
the funds of the Company legally available for redemption of shares of Preferred
Stock on any Redemption Date are insufficient to redeem the total number of
shares of Preferred Stock to be redeemed on such date, those funds which are
legally available will be used to redeem the maximum possible number of such
shares ratably among the holders of such shares to be redeemed in proportion to
the amount each such holder would have been entitled to receive if the Company
had had sufficient funds available to redeem the total number of shares of
Preferred Stock to be redeemed on such date. Such shares of Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and preferences
provided herein. At any time thereafter when additional funds of

17.
<PAGE>

the Company are legally available for the redemption of such shares of Preferred
Stock, such funds will immediately be used to redeem the balance of the shares
which the Company has become obligated to redeem on any Redemption Date but
which it has not redeemed.

8. MISCELLANEOUS.

a. NO REISSUANCE OF PREFERRED STOCK. No share or shares of
Preferred Stock acquired by the Company by reason of purchase, conversion or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Company shall be authorized to issue.

b. CONSENT TO CERTAIN TRANSACTIONS. Each holder of shares of
Preferred Stock shall, by virtue of its acceptance of a stock certificate
evidencing Preferred Stock, be deemed to have consented, for purposes of
Sections 170 and 173 of the Delaware General Corporation Law, to all Permitted
Repurchases.

For the management of the business and for the conduct of the affairs of the
corporation, and in further definition, limitation and regulation of the powers
of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

1. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the voting stock of the corporation entitled to
vote. The Board of Directors shall also have the power to adopt, amend, or
repeal Bylaws.

2. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws or by written consent of stockholders in accordance with the Bylaws
prior to the closing of the Initial Public Offering and following the closing of
the Initial Public Offering no action shall be taken by the stockholders by
written consent.

4. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.

VI.

A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.

18.
<PAGE>

B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.

VII.

A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII., and all rights conferred upon the stockholders herein are granted
subject to this reservation.

B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI
and VII.

VIII.

The name and the mailing address of the Sole Incorporator is as follows:

NAME MAILING ADDRESS

Steven M. Weiss Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121-2128

19.
<PAGE>

IN WITNESS WHEREOF, this Certificate has been subscribed this 25th day of
August, 1998 by the undersigned who affirms that the statements made herein
are true and correct.

/s/ Steven M. Weiss
---------------------------
Steven M. Weiss
Sole Incorporator

20.

<PAGE>

BYLAWS

NEWGEN RESULTS CORPORATION

(A DELAWARE CORPORATION)

TABLE OF CONTENTS

<PAGE>

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Section 1. Registered Office. . . . . . . . . . . . . . . . . . .1

Section 2. Other Offices. . . . . . . . . . . . . . . . . . . . .1

ARTICLE II CORPORATE SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Section 3. Corporate Seal . . . . . . . . . . . . . . . . . . . .1

ARTICLE III STOCKHOLDERS' MEETINGS. . . . . . . . . . . . . . . . . . . . . . . .1

Section 4. Place Of Meetings. . . . . . . . . . . . . . . . . . .1

Section 5. Annual Meetings. . . . . . . . . . . . . . . . . . . .1

Section 6. Special Meetings . . . . . . . . . . . . . . . . . . .3

Section 7. Notice Of Meetings . . . . . . . . . . . . . . . . . .4

Section 8. Quorum . . . . . . . . . . . . . . . . . . . . . . . .4

Section 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS . . . . .5

Section 10. Voting Rights. . . . . . . . . . . . . . . . . . . . .5

Section 11. Joint Owners Of Stock. . . . . . . . . . . . . . . . .5

Section 12. List Of Stockholders . . . . . . . . . . . . . . . . .5

Section 13. Action Without Meeting . . . . . . . . . . . . . . . .6

Section 14. Organization . . . . . . . . . . . . . . . . . . . . .6

ARTICLE IV DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Section 15. Number And Term Of Office. . . . . . . . . . . . . . .7

Section 16. Powers . . . . . . . . . . . . . . . . . . . . . . . .7

Section 17. Classes Of Directors . . . . . . . . . . . . . . . . .7

Section 18. Vacancies. . . . . . . . . . . . . . . . . . . . . . .8

Section 19. Resignation. . . . . . . . . . . . . . . . . . . . . .8

Section 20. Removal. . . . . . . . . . . . . . . . . . . . . . . .8

Section 21. Meetings . . . . . . . . . . . . . . . . . . . . . . .9

Section 22. Quorum And Voting. . . . . . . . . . . . . . . . . . 10

Section 23. Action Without Meeting . . . . . . . . . . . . . . . 10

Section 24. Fees And Compensation. . . . . . . . . . . . . . . . 10

Section 25. Committees . . . . . . . . . . . . . . . . . . . . . 10

<PAGE>

<CAPTION>
TABLE OF CONTENTS
(CONTINUED)

PAGE
<S> <C> <C>

Section 26. Organization . . . . . . . . . . . . . . . . . . . . 12

ARTICLE V OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 27. Officers Designated. . . . . . . . . . . . . . . . . 12

Section 28. Tenure And Duties Of Officers. . . . . . . . . . . . 12

Section 29. Delegation Of Authority. . . . . . . . . . . . . . . 13

Section 30. Resignations . . . . . . . . . . . . . . . . . . . . 14

Section 31. Removal. . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION . . . . . . . . . . . . . . . . . . . 14

Section 32. Execution Of Corporate Instruments . . . . . . . . . 14

Section 33. Voting Of Securities Owned By The Corporation. . . . 14

ARTICLE VII SHARES OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 34. Form And Execution Of Certificates . . . . . . . . . 15

Section 35. Lost Certificates. . . . . . . . . . . . . . . . . . 15

Section 36. Transfers. . . . . . . . . . . . . . . . . . . . . . 15

Section 37. Fixing Record Dates. . . . . . . . . . . . . . . . . 16

Section 38. Registered Stockholders. . . . . . . . . . . . . . . 17

ARTICLE VIII OTHER SECURITIES OF THE CORPORATION . . . . . . . . . . . . . . . . 17

Section 39. Execution Of Other Securities. . . . . . . . . . . . 17

ARTICLE IX DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 40. Declaration Of Dividends . . . . . . . . . . . . . . 18

Section 41. Dividend Reserve . . . . . . . . . . . . . . . . . . 18

ARTICLE X FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 42. Fiscal Year. . . . . . . . . . . . . . . . . . . . . 18

ARTICLE XI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 43. Indemnification Of Directors, Executive Officers,
Other Officers, Employees And Other Agents . . . . . 18

ARTICLE XII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Section 44. Notices. . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE XIII AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ii.
<PAGE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)

PAGE
<S> <C> <C>

Section 45. Amendments . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE XIV LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 23

Section 46. Loans To Officers. . . . . . . . . . . . . . . . . . 23
</TABLE>
iii.

<PAGE>

BYLAWS

NEWGEN RESULTS CORPORATION

(A DELAWARE CORPORATION)

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent.

SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.

ARTICLE II

CORPORATE SEAL

SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.

ARTICLE III

STOCKHOLDERS' MEETINGS

SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.

SECTION 5. ANNUAL MEETINGS.

(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.

(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought

1.
<PAGE>

before an annual meeting, business must be: (A) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (B) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (C) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; PROVIDED, HOWEVER, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.

(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the corporation entitled to vote
in the election of directors at the meeting who complies with the notice
procedures set forth in this paragraph (c). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the corporation in accordance with
the provisions of paragraph (b) of this Section 5. Such

2.
<PAGE>

stockholder's notice shall set forth (i) as to each person, if any, whom the
stockholder proposes to nominate for election or re-election as a director:
(A) the name, age, business address and residence address of such person,
(B) the principal occupation or employment of such person, (C) the class and
number of shares of the corporation which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and (E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected); and (ii) as to
such stockholder giving notice, the information required to be provided pursuant
to paragraph (b) of this Section 5. At the request of the Board of Directors,
any person nominated by a stockholder for election as a director shall furnish
to the Secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if he should so determine, he shall so declare at the meeting,
and the defective nomination shall be disregarded.

(d) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act.

SECTION 6. SPECIAL MEETINGS.

(a) Special meetings of the stockholders of the corporation
may be called, for any purpose or purposes, by (i) the Chairman of the Board
of Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to the
Board of Directors for adoption) or (iv) by the holders of shares entitled to
cast not less than ten percent (10%) of the votes at the meeting, and shall
be held at such place, on such date, and at such time as the Board of
Directors, shall fix.

(b) If a special meeting is properly called by any person or
persons other than the Board of Directors, the request shall be in writing,
specifying the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the Chairman of the Board of Directors, the
Chief Executive Officer, or the Secretary of the corporation. No business may
be transacted at such special meeting otherwise than specified in such notice.
The Board of Directors shall determine the time and place of such special
meeting, which shall be held not less than thirty-five (35) nor more than one
hundred twenty (120) days after the date of the receipt of the request.

3.
<PAGE>

Upon determination of the time and place of the meeting, the officer receiving
the request shall cause notice to be given to the stockholders entitled to vote,
in accordance with the provisions of Section 7 of these Bylaws. If the notice
is not given within sixty (60) days after the receipt of the request, the person
or persons properly requesting the meeting may set the time and place of the
meeting and give the notice. Nothing contained in this paragraph (b) shall be
construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.

SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.

SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote
shall constitute a quorum for the transaction of business. In the absence of
a quorum, any meeting of stockholders may be adjourned, from time to time,
either by the chairman of the meeting or by vote of the holders of a majority
of the shares represented thereat, but no other business shall be transacted
at such meeting. The stockholders present at a duly called or convened
meeting, at which a quorum is present, may continue to transact business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. Except as otherwise provided by statute, the
Certificate of Incorporation or these Bylaws, in all matters other than the
election of directors, the affirmative vote of the majority of shares present
in person or represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders. Except as otherwise
provided by statute, the Certificate of Incorporation or these Bylaws,
directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors. Where a separate vote by a class or classes or series
is required, except where otherwise provided by the statute or by the
Certificate of Incorporation or these Bylaws, a majority of the outstanding
shares of such class or classes or series, present in person or represented
by proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter and, except where otherwise provided by the statute
or by the Certificate of Incorporation or these Bylaws, the affirmative vote
of the majority (plurality, in the case of the election of directors) of the
votes cast by the holders of shares of such class or classes or series shall
be the act of such class or classes or series.

4.
<PAGE>

SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting
of stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.

SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the Delaware General Corporation Law, Section 217(b). If
the instrument filed with the Secretary shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of subsection (c)
shall be a majority or even-split in interest.

SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.

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SECTION 13. ACTION WITHOUT MEETING.

(a) Unless otherwise provided in the Certificate of
Incorporation, any action required by statute to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.

(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated consent delivered to the corporation in the
manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.

(c) Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the Delaware General Corporation Law if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written consent has been given in
accordance with Section 228 of the Delaware General Corporation Law.

(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock
of the corporation (the "Initial Public Offering").

SECTION 14. ORGANIZATION.

(a) At every meeting of stockholders, the Chairman of the Board
of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, a chairman of the meeting chosen by a
majority in interest of the stockholders entitled to vote, present in person or
by proxy, shall act as chairman. The Secretary, or, in his absence, an
Assistant Secretary directed to do so by the President, shall act as secretary
of the meeting.

(b) The Board of Directors of the corporation shall be entitled
to make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules,

6.
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regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order of
business for the meeting, rules and procedures for maintaining order at the
meeting and the safety of those present, limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.

ARTICLE IV

DIRECTORS

SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of
directors of the corporation shall be fixed in accordance with the Certificate
of Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws. No reduction of the authorized number of
directors shall have the effect of removing any director before the director's
term of office expires, unless such removal is made pursuant to the provisions
of Section 20 hereof.

SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.

SECTION 17. CLASSES OF DIRECTORS. Subject to the rights of the holders
of any series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the Initial Public Offering, the
directors shall be divided into three classes designated as Class I, Class II
and Class III, respectively. Directors shall be assigned to each class in
accordance with a resolution or resolutions adopted by the Board of Directors.
At the first annual meeting of stockholders following the closing of the Initial
Public Offering, the term of office of the Class I directors shall expire and
Class I directors shall be elected for a full term of three years. At the
second annual meeting of stockholders following the closing of the Initial
Public Offering, the term of office of the Class II directors shall expire and
Class II directors shall be elected for a full term of three years. At the
third annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class III directors shall expire and Class
III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.

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Notwithstanding the foregoing provisions of this section, each director shall
serve until his successor is duly elected and qualified or until his death,
resignation or removal. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.

SECTION 18. VACANCIES.

(a) Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A
vacancy in the Board of Directors shall be deemed to exist under this Bylaw in
the case of the death, removal or resignation of any director.

(b) If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
Delaware General Corporation Law.

SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When
one or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.

SECTION 20. REMOVAL.

(a) The Board of Directors or any individual director may be
removed from office at any time without cause by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting
power of all the then-outstanding shares of the voting stock of the corporation
entitled to vote at an election of directors.

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(b) Subject to any limitation imposed by law, any individual
director or directors may be removed with cause by the affirmative vote of a
majority of the voting power of the corporation entitled to vote at an election
of directors.

SECTION 21. MEETINGS.

(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately before or after the annual meeting of
stockholders and at the place where such meeting is held. No notice of an
annual meeting of the Board of Directors shall be necessary and such meeting
shall be held for the purpose of electing officers and transacting such other
business as may lawfully come before it.

(b) REGULAR MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may be
held at any time or date and at any place within or without the State of
Delaware which has been designated by the Board of Directors and publicized
among all directors. No formal notice shall be required for regular meetings of
the Board of Directors.

(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the President or any two of the directors

(d) TELEPHONE MEETINGS. Any member of the Board of Directors,
or of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.

(e) NOTICE OF MEETINGS. Notice of the time and place of all
special meetings of the Board of Directors shall be orally or in writing, by
telephone, including a voice messaging system or other system or technology
designed to record and communicate messages, facsimile, telegraph or telex, or
by electronic mail or other electronic means, during normal business hours, at
least twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.

(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the directors not present shall sign a written
waiver of notice. All such waivers shall be filed with the corporate records or
made a part of the minutes of the meeting.

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SECTION 22. QUORUM AND VOTING.

(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 43 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; PROVIDED, HOWEVER, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.

(b) At each meeting of the Board of Directors at which a quorum
is present, all questions and business shall be determined by the affirmative
vote of a majority of the directors present, unless a different vote be required
by law, the Certificate of Incorporation or these Bylaws.

SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.

SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.

SECTION 25. COMMITTEES.

(a) EXECUTIVE COMMITTEE. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and provided
in the resolution of the Board of Directors shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the corporation, including without limitation the power of
authority to declare a dividend, to authorize the issuance of stock and to adopt
a certificate of ownership and merger, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
certificate of incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends,

10.
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redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series), adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation.

(b) OTHER COMMITTEES. The Board of Directors may, from time to
time, appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall any such committee have the powers denied to
the Executive Committee in these Bylaws.

(c) TERM. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to any requirements of any
outstanding series of preferred Stock and the provisions of subsections (a) or
(b) of this Bylaw, may at any time increase or decrease the number of members of
a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of
any committee may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat, except when the
director

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attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee.

SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President (if a director), or if the President is absent, the
most senior Vice President (if a director), or, in the absence of any such
person, a chairman of the meeting chosen by a majority of the directors present,
shall preside over the meeting. The Secretary, or in his absence, any Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.

ARTICLE V

OFFICERS

SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the
officers of the corporation shall be fixed by or in the manner designated by the
Board of Directors.

SECTION 28. TENURE AND DUTIES OF OFFICERS.

(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.

(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.

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(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is
present. Unless some other officer has been elected Chief Executive Officer
of the corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of
the corporation. The President shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers, as the Board of Directors shall designate from time to time.

(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume
and perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.

(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders and of all meetings of the Board of Directors and any committee
thereof requiring notice. The Secretary shall perform all other duties given
him in these Bylaws and other duties commonly incident to his office and shall
also perform such other duties and have such other powers, as the Board of
Directors shall designate from time to time. The President may direct any
Assistant Secretary to assume and perform the duties of the Secretary in the
absence or disability of the Secretary, and each Assistant Secretary shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.

(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation
in a thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order
of the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors or the President shall
designate from time to time. The President may direct the Treasurer or any
Assistant Treasurer, or the Controller or any Assistant Controller to assume and
perform the duties of the Chief Financial Officer in the absence or disability
of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and
each Controller and Assistant Controller shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time.

SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.

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SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.

SECTION 31. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.

ARTICLE VI

EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
CORPORATION

SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.

All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.

Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.

SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.

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ARTICLE VII

SHARES OF STOCK

SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the powers,
designations, preferences, and rights, and the limitations or restrictions of
the shares authorized to be issued or shall, except as otherwise required by
law, set forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a reasonable time after
the issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section or
otherwise required by law or with respect to this section a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.

SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to agree to indemnify the corporation in such manner as it shall
require or to give the corporation a surety bond in such form and amount as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.

SECTION 36. TRANSFERS.

(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.

15.
<PAGE>

(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the Delaware General Corporation Law.

SECTION 37. FIXING RECORD DATES.

(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall, subject to applicable law, not be more than sixty (60) nor less than ten
(10) days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; PROVIDED, HOWEVER, that the Board of Directors may
fix a new record date for the adjourned meeting.

(b) Prior to the Initial Public Offering, in order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the secretary, request the board of
directors to fix a record date. The Board of Directors shall promptly, but in
all events within ten (10) days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has been
fixed by the Board of Directors within ten (10) days of the date on which such a
request is received, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is required by applicable law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.

(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the
16.
<PAGE>

stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.

SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VIII

OTHER SECURITIES OF THE CORPORATION

SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; PROVIDED, HOWEVER, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.

17.
<PAGE>

ARTICLE IX

DIVIDENDS

SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation and applicable law, if any, may be declared by the Board of
Directors pursuant to law at any regular or special meeting. Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation and applicable law.

SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.

ARTICLE X

FISCAL YEAR

SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.

ARTICLE XI

INDEMNIFICATION

SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.

(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its directors and executive officers (for the purposes of this Article
XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the Delaware General
Corporation Law or any other applicable law; PROVIDED, HOWEVER, that the
corporation may modify the extent of such indemnification by individual
contracts with its directors and executive officers; and, PROVIDED, FURTHER,
that the corporation shall not be required to indemnify any director in
connection with any proceeding (or part thereof) initiated by such person unless
(i) such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the corporation,
(iii) such indemnification is provided by the corporation, in its sole
discretion, pursuant to the powers vested in the corporation under the Delaware
General Corporation Law or any other applicable law or (iv) such indemnification
is required to be made under subsection (d).

18.
<PAGE>

(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the Delaware General Corporation Law or any other applicable law.
The Board of Directors shall have the power to delegate the determination of
whether indemnification shall be given to any such person to such officers or
other persons as the Board of Directors shall determine.

(c) EXPENSES. The corporation shall advance to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director or
executive officer of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.

Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to an
executive officer of the corporation (except by reason of the fact that such
executive officer is or was a director of the corporation in which event this
paragraph shall not apply) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (ii) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, that
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the best
interests of the corporation.

(d) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law or any other applicable law for the corporation
to indemnify the claimant for the amount claimed. In connection with any claim
by an executive officer of the corporation (except in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such executive officer is or was a director of the corporation)
for advances, the corporation shall

19.
<PAGE>

be entitled to raise a defense as to any such action clear and convincing
evidence that such person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the corporation, or
with respect to any criminal action or proceeding that such person acted without
reasonable cause to believe that his conduct was lawful. Neither the failure of
the corporation (including its Board of Directors, independent legal counsel or
its stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law or any other applicable law, nor an actual determination
by the corporation (including its Board of Directors, independent legal counsel
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.

(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any applicable statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law, or by any other applicable law.

(f) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

(g) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law or any other applicable law, the corporation, upon
approval by the Board of Directors, may purchase insurance on behalf of any
person required or permitted to be indemnified pursuant to this Bylaw.

(h) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.

(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law. If this Section
43 shall be invalid due to the application of the indemnification provisions of
another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full to the full extent under any other applicable
law.

(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:

20.
<PAGE>

(1) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.

(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.

(3) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Bylaw with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.

(4) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without limitation,
situations where such person is serving at the request of the corporation as,
respectively, a director, executive officer, officer, employee, trustee or agent
of another corporation, partnership, joint venture, trust or other enterprise.

(5) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.

ARTICLE XII

NOTICES

SECTION 44. NOTICES.

(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and

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<PAGE>

duly deposited in the United States mail, postage prepaid, and addressed to his
last known post office address as shown by the stock record of the corporation
or its transfer agent.

(b) NOTICE TO DIRECTORS. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by overnight
delivery service, facsimile, telex or telegram, except that such notice other
than one which is delivered personally shall be sent to such address as such
director shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such director.ECTOR.

(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the name
and address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.

(d) TIME NOTICES DEEMED GIVEN. All notices given by mail or by
overnight delivery service, as above provided, shall be deemed to have been
given as at the time of mailing, and all notices given by facsimile, telex or
telegram shall be deemed to have been given as of the sending time recorded at
time of transmission.

(e) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.

(f) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.

(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by
the corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.

(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever
notice is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of

22.
<PAGE>

the corporation, to any stockholder to whom (i) notice of two consecutive
annual meetings, and all notices of meetings or of the taking of action by
written consent without a meeting to such person during the period between
such two consecutive annual meetings, or (ii) all, and at least two, payments
(if sent by first class mail) of dividends or interest on securities during a
twelve-month period, have been mailed addressed to such person at his address
as shown on the records of the corporation and have been returned
undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice
to such person shall have the same force and effect as if such notice had
been duly given. If any such person shall deliver to the corporation a
written notice setting forth his then current address, the requirement that
notice be given to such person shall be reinstated. In the event that the
action taken by the corporation is such as to require the filing of a
certificate under any provision of the Delaware General Corporation Law, the
certificate need not state that notice was not given to persons to whom
notice was not required to be given pursuant to this paragraph.

ARTICLE XIII

AMENDMENTS

SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the voting stock of the
corporation entitled to vote. The Board of Directors shall also have the power
to adopt, amend, or repeal Bylaws.

ARTICLE XIV

LOANS TO OFFICERS

SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance
may be with or without interest and may be unsecured, or secured in such manner
as the Board of Directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in these Bylaws shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.

23.

<PAGE>

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

NEWGEN RESULTS CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies as follows:

1. The name of the Corporation is Newgen Results Corporation.

2. The Corporation's original Certificate of Incorporation was filed with
the Secretary of State on _________________, 1998.

3. The Amended and Restated Certificate of Incorporation of this
Corporation, in the form attached hereto as Exhibit A, has been duly adopted by
the Board of Directors and by the stockholders of the corporation in accordance
with Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware.

4. The Amended and Restated Certificate of Incorporation so adopted reads
in full as set forth in Exhibit A attached hereto and hereby incorporated by
reference.

IN WITNESS WHEREOF, Newgen Results Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by its President and Chief
Executive Officer and attested to by its Secretary this ____ day of
____________, 1998.

-------------------------------------
Gerald L. Benowitz
President and Chief Executive Officer
ATTEST:

- ----------------------------
Samuel Simkin
Secretary

<PAGE>

EXHIBIT A

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NEWGEN RESULTS CORPORATION

The name of this corporation is NEWGEN RESULTS CORPORATION.

II.

The address of the registered office of the corporation in the State of
Delaware is 9 East Loockerman Street, City of Dover, County of Kent, and the
name of the registered agent of the corporation in the State of Delaware at such
address is National Registered Agents, Inc.

III.

The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.

IV.

The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.

1.
<PAGE>

For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

A. 1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.

2. Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, following the
closing of the initial public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "1933 Act"),
covering the offer and sale of Common Stock to the public (the "Initial Public
Offering"), the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the closing
of the Initial Public Offering, the term of office of the Class I directors
shall expire and Class I directors shall be elected for a full term of three
years. At the second annual meeting of stockholders following the Closing of
the Initial Public Offering, the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders following the closing of the Initial
Public Offering, the term of office of the Class III directors shall expire and
Class III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.

Notwithstanding the foregoing provisions of this Article, each
director shall serve until his successor is duly elected and qualified or until
his death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.

3. Subject to the rights of the holders of any series of Preferred
Stock, the Board of Directors or any individual director may be removed from
office at any time (i) with cause by the affirmative vote of the holders of a
majority of the voting power of all the then-outstanding shares of voting stock
of the corporation, entitled to vote at an election of directors (the "Voting
Stock") or (ii) without cause by the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of all the
then-outstanding shares of the Voting Stock.

4. Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by

2.
<PAGE>

law, be filled only by the affirmative vote of a majority of the directors then
in office, even though less than a quorum of the Board of Directors, and not by
the stockholders. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the director
for which the vacancy was created or occurred and until such director's
successor shall have been elected and qualified.

B. 1. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the Voting Stock. The Board of Directors shall
also have the power to adopt, amend, or repeal Bylaws.

2. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the corporation
except by written consent to the extent provided for in the Bylaws or at an
annual or special meeting of stockholders called in accordance with the Bylaws;
and following the closing of the Initial Public Offering no action shall be
taken by the stockholders by written consent.

VI.

A. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.

VII.

A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.

3.
<PAGE>

B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.

<PAGE>

NEWGEN RESULTS CORPORATION

1996 EQUITY INCENTIVE PLAN

AS ADOPTED AUGUST 2,1996

1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options and Restricted Stock.
Capitalized terms not defined in the text are defined in Section 22. This
Plan is intended to be a written compensatory benefit plan within the meaning
of Rule 701 promulgated under the Securities Act.

2. SHARES SUBJECT TO THE PLAN.

2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 17, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 96,590 Shares or such lesser number of Shares as permitted
under Section 260.140.45 of Title 10 of the California Code of Regulations.
Subject to Sections 2.2 and 17, Shares will again be available for grant and
issuance in connection with future Awards under this Plan that: (a) are subject
to issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option, or (b) are subject to an
Award that otherwise terminates without Shares being issued. At all times the
Company will reserve and keep available a sufficient number of Shares as will be
required to satisfy the requirements of all Awards granted under this Plan.

2.2 ADJUSTMENT OF SHARES. In the event that the number of outstanding
Shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then (a) the number of
Shares reserved for issuance under this Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the shareholders of the Company and
compliance with applicable securities laws; PROVIDED, HOWEVER, that fractions of
a Share will not be issued but will either be paid in cash at Fair Market Value
of such fraction of a Share or will be rounded up to the nearest whole Share,
as determined by the Committee.

3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees)
of the Company or of a Parent or Subsidiary of the Company. All other Awards
may be granted to employees, officers, directors and consultants of the
Company or any Parent or Subsidiary of the Company; PROVIDED such consultants
render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. A person may be granted more
than one Award under this Plan.

4. ADMINISTRATION.

4.1 COMMITTEE AUTHORITY. This Plan will be administered by the
Committee or the Board acting as the Committee. Subject to the general purposes,
terms and conditions of this Plan, and to the direction of the Board, the
Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;

(b) prescribe, amend and rescind rules and regulations relating to
this Plan;

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<PAGE>

(d) determine the form and terms of Awards;

(e) determine the number of Shares or other consideration subject to
Awards;

(f) determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of
the Company;

(g) grant waivers of Plan or Award conditions;

(h) determine the vesting, exercisability and payment of Awards;

(i) correct any defect, supply any omission, or reconcile any
inconsistency in this Plan, any Award, any Award Agreement, any
Exercise Agreement or any Restricted Stock Purchase Agreement;

(j) determine whether an Award has been earned; and

(k) make all other determinations necessary or advisable for the
administration of this Plan.

4.2 COMMITTEE DISCRETION. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.

5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:

5.1 FORM OF OPTION GRANT . Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

5.2 DATE OF GRANT. The date of grant of an Option will be the date on which
the Committee makes the determination to grant such Option, unless otherwise
specified by the Committee. The Stock Option Agreement and a copy of this Plan
will be delivered to the Participant within a reasonable time after the granting
of the Option.

5.3 EXERCISE PERIOD. Options may be exercisable immediately (subject to
repurchase pursuant to Section 11 of this Plan) or may be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement governing such Option; PROVIDED, HOWEVER, that no
Option will be exercisable after the expiration of ten (10) years from the
date the Option is granted; and PROVIDED FURTHER that no ISO granted to a
person who directly or by attribution owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") will be
exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for Options to become exercisable at
one time or from time to time, periodically or otherwise, in such number of
Shares or percentage of Shares as the Committee determines. Subject to
earlier termination of the Option as provided herein, each Participant shall
have the right to exercise an Option

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<PAGE>

granted hereunder at the rate of at least twenty percent (20%) per year over
five (5) years from the date such Option is granted.

5.4 EXERCISE PRICE. The Exercise Price of an Option will be determined by
the Committee when the Option is granted and may not be less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO will not be less than 100% of the Fair Market Value
of the Shares on the date of grant and (ii) the Exercise Price of any Option
granted to a Ten Percent Shareholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 7 of this Plan.

5.5 METHOD OF EXERCISE. Options may be exercised only by delivery to the
Company of a written stock option exercise agreement (the "EXERCISE AGREEMENT")
in a form approved by the Committee (which need not be the same for each
Participant), stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price, and any applicable taxes, for the number of
Shares being purchased.

5.6 TERMINATION. Subject to earlier termination pursuant to Subsection 17.1
and notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:

(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options, only to the extent that such Options
would have been exercisable upon the Termination Date, no
later than three (3) months after the Termination Date (or
such shorter time period, not less than thirty (30) days, as
may be specified in the Stock Option Agreement) or such longer
time period not exceeding five (5) years after the Termination
Date as may be determined by the Committee, with any exercise
beyond three (3) months after the Termination Date deemed to
be an NQSO, but in any event, no later than the expiration
date of the Options.

(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three (3)
months after a Termination other than because of Participant's
death or Disability) then Participant's Options may be
exercised, only to the extent that such Options would have
been exercisable by Participant, on the Termination Date and
must be exercised by Participant (or Participant's legal
representative or authorized assignee), no later than twelve
(12) months after the Termination Date (or such shorter time
period, not less than six (6) months, as may be specified in
the Stock Option Agreement) or such longer time period not
exceeding five (5) years after the Termination Date as may be
determined by the Committee, with any exercise beyond (a)
three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's
death or disability, within the meaning of Section 22(e)(3) of
the Code, or (b) twelve (12) months after the Termination Date
when the Termination is for Participant's death or disability,
within the meaning of Section 22(e)(3) of the Code, deemed to
be an NQSO, but in any event no later than the expiration date
of the Options.

5.7 LIMITATIONS ON EXERCISE. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.

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<PAGE>

5.8 LIMITATIONS ON ISOs. The aggregate Fair Market Value (determined as
of the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under this Plan
or under any other incentive stock option plan of the Company or any Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market
Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year
will be NQSOs. In the event that the Code or the regulations promulgated
thereunder are amended after the Effective Date (as defined in Section 18
below) of this Plan to provide for a different limit on the Fair Market Value
of Shares permitted to be subject to ISOs, then such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.

5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify, extend
or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; PROVIDED, HOWEVER, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.

5.10 NO DISQUALIFICATION. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the Purchase Price, the restrictions to which the
Shares will be subject, and all other terms and conditions of the Restricted
Stock Award, subject to the following:

6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by
the Participant's execution and delivery of the Restricted Stock Purchase
Agreement and full payment for the Shares to the Company within thirty (30)
days from the date the Restricted Stock Purchase Agreement is delivered to
the person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company
within thirty (30) days, then the offer will terminate, unless otherwise
determined by the Committee.

6.2 PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee and will be at
least 85% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted or at the time the purchase is consummated, except in
the case of a sale to a Ten Percent Shareholder, in which case the Purchase
Price will be 100% of the Fair Market Value on the date the Restricted Stock
Award is granted or at the time the purchase is consummated. Payment of the
Purchase Price may be made in accordance with Section 7 of this Plan.

6.3 RESTRICTIONS. Restricted Stock Awards may be subject to the
restrictions set forth in Section 11 of this Plan or such other restrictions
not inconsistent with Section 25102(o) of the California Corporations Code.

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<PAGE>

7. PAYMENT FOR SHARE PURCHASES.

7.1 PAYMENT. Payment for Shares purchased pursuant to this Plan my be made
in cash (by check) or, where expressly approved for the Participant by the
Committee and where permitted by law:

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note
has been fully paid with respect to such shares); or (2) were
obtained by Participant in the public market;

(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are not
employees or directors of the Company will not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;

(d) by waiver of compensation due or accrued to the Participant for
services rendered;

(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:

(1) through a "same day sale" commitment from the Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise Price, and
whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company; or

(2) through a "margin" commitment from the Participant and an NASD
Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the
NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or

(f) by any combination of the foregoing.

7.2 LOAN GUARANTEES. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of
a third-party loan to the Participant.

8. WITHHOLDING TAXES.

8.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will
be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.

8.2 STOCK WITHHOLDING. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is

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<PAGE>

obligated to pay the Company the amount required to be withheld, the Committee
may in its sole discretion allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld, determined on the date that the
amount of tax to be withheld is to be determined (the "TAX DATE"). All elections
by a Participant to have Shares withheld for this purpose will be made in
accordance with the requirements established by the Committee for such elections
and be in writing in a form acceptable to the Committee.

9. PRIVILEGES OF STOCK OWNERSHIP.

9.1 VOTING AND DIVIDENDS. No Participant will have any of the
rights of a shareholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a shareholder and have all the rights of a shareholder
with respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to such Shares;
PROVIDED, that if such Shares are Restricted Stock, then any new, additional
or different securities the Participant may become entitled to receive with
respect to such Shares by virtue of a stock dividend, stock split or any
other change in the corporate or capital structure of the Company will be
subject to the same restrictions as the Restricted Stock; provided, further,
that the Participant will have no right to retain such stock dividends or
stock distributions with respect to Unvested Shares that are repurchased
pursuant to Section 11.

9.2 FINANCIAL STATEMENTS. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding, or as otherwise required or permitted
under Section 260.140.46 of Title 10 of the California Code of Regulations.
Notwithstanding the foregoing, the Company will not be required to provide
such financial statements to Participants whose services in connection with
the Company assure them access to equivalent information.

10. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution. During the lifetime of the
Participant an Award will be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant.

11. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement
(a) a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by Section 25102(o) of the California Corporations
Code, and/or (b) a right to repurchase Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after
Participant's Termination Date for cash and/or cancellation of purchase money
indebtedness, at: (A) with respect to Vested Shares, the higher of the
Exercise Price or Purchase Price, as the case may be, or the Fair Market
Value of such Shares on Participant's Termination Date, PROVIDED, that such
right of repurchase terminates when the Company's securities become publicly
traded; or (B) with respect to Unvested Shares, the Participant's Exercise
Price or Purchase Price, as the case may be, PROVIDED, that such right of
repurchase at the Exercise Price or Purchase Price, as the case may be,
lapses at the rate of at least twenty percent (20%) per year over five (5)
years from: (i) the date of grant of the Option or (ii) in the case of
Restricted Stock, the date the Participant purchases the Shares. If such
right of repurchase of Unvested Shares is assigned, the assignee must pay the
Company upon assignment of the right, cash equal to the difference between
the Exercise Price or Purchase Price, as the case may be, and the Fair
Market Value of the Shares, if the Exercise Price or Purchase Price, as the
case may be, is less than the Fair Market Value of the Shares; PROVIDED,
HOWEVER, that in the case of Options, the assignee need not pay the Company
upon assignment of the right if the assignee is a one hundred percent (100%)
owned subsidiary of the Company or is the parent of the Company owning one
hundred percent (100%) of the Company.

12. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or

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<PAGE>

advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.

13. ESCROW: PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; PROVIDED, HOWEVER, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.

14. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash. Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.

15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. This Plan is intended
to comply with Section 25102(o) of the California Corporations Code. Any
provision of the Plan which is inconsistent with Section 25102(o) shall, without
further act or amendment by the Company or the Board, be reformed to comply with
the requirements of Section 25102(o). An Award will not be effective unless such
Award is in compliance with all applicable federal and state securities laws,
rules and regulations of any governmental body, and the requirements of any
stock exchange or automated quotation system upon which the Shares may then be
listed or quoted, as they are in effect on the date of grant of the Award and
also on the date of exercise or other issuance. Notwithstanding any other
provision in this Plan, the Company will have no obligation to issue or deliver
certificates for Shares under this Plan prior to (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or
advisable, and/or (b) compliance with any exemption, completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.

16. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.

17. CORPORATE TRANSACTIONS.

17.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (OTHER
THAN a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the shareholders of
the Company

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<PAGE>

or their relative stock holdings and the Awards granted under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
will be binding on all Participants), (c) a merger in which the Company is the
surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder which merges, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
or (d) the sale of substantially all of the assets of the Company, any or all
outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement will be
binding on all Participants. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to shareholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions and other provisions no less favorable to the Participant than
those which applied to such outstanding Shares immediately prior to such
transaction described in this Subsection 17.1. In the event such successor
corporation (if any) refuses to assume or substitute Awards, as provided above,
pursuant to a transaction described in this Subsection 17.1, then
notwithstanding any other provision in this Plan to the contrary, such Awards
will expire on such transaction at such time and on such conditions as the Board
will determine.

17.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 17, in
the event of the occurrence of any transaction described in Section 17.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation or sale of assets.

17.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied
to an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had
applied the rules of this Plan to such grant. In the event the Company
assumes an award granted by another company, the terms and conditions of such
award will remain unchanged (EXCEPT that the exercise price and the number
and nature of shares issuable upon exercise of any such option will be
adjusted appropriately pursuant to Section 424(a) of the Code). In the event
the Company elects to grant a new Option rather than assuming an existing
option, such new Option may be granted with a similarly adjusted Exercise
Price.

18. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective on
the date that it is adopted by the Board (the "EFFECTIVE DATE"). This Plan will
be approved by the shareholders of the Company (excluding Shares issued pursuant
to this Plan), consistent with applicable laws, within twelve (12) months before
or after the Effective Date. Upon the Effective Date, the Board may grant Awards
pursuant to this Plan; PROVIDED, HOWEVER, that no Option may be exercised prior
to shareholder approval of this Plan. In the event that shareholder approval is
not obtained within twelve (12) months before or after the date this Plan is
adopted by the Board, all Awards granted hereunder will be canceled, any Shares
issued pursuant to any Award will be canceled and any purchase of Shares
hereunder will be rescinded.

19. TERM OF PLAN/G0VERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the Effective Date or,
if earlier, the date of shareholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of
the State of California.

20. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; PROVIDED, HOWEVER, that the Board will not, without
the approval of the shareholders of the Company, amend this Plan in any
manner that requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans.

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<PAGE>

21. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the shareholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.

22. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:

"AWARD" means any award under this Plan, including any Option or
Restricted Stock Award.

"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

"BOARD" means the Board of Directors of the Company.

"CODE" means the Internal Revenue Code of 1996, as amended.

"COMMITTEE" means the committee appointed by the Board to administer
this Plan, or if no committee is appointed, the Board.

"COMPANY" means Newgen Results Corporation, or any successor
corporation.

"DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.

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

"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

"FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:

(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the
date of determination as reported in THE WALL STREET JOURNAL;

(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which the Common Stock is listed or admitted to trading as
reported in THE WALL STREET JOURNAL;

(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading
on a national securities exchange, the average of the closing
bid and asked prices on the date of determination as reported
by THE WALL STREET JOURNAL (or, if not so reported, as
otherwise reported by any newspaper or other source as the
Board may determine); or

(d) if none of the foregoing is applicable, by the Committee in
good faith.

"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.

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<PAGE>

"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.

"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

"PARTICIPANT" means a person who receives an Award under this Plan.

"PLAN" means this Newgen Results Corporation 1996 Equity Incentive
Plan, as amended from time to time.

"PURCHASE PRICE" the price at which a Participant may purchase
Restricted Stock.

"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.

"SEC" means the Securities and Exchange Commission.

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

"SHARES" means shares of the Company's Common Stock, reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 17, and any
successor security.

"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

"TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the
Company or a Parent or Subsidiary of the Company. An employee will not be
deemed to have ceased to provide services in the case of (i) sick leave, (ii)
military leave, or (iii) any other leave of absence approved by the
Committee, provided that such leave is for a period of not more than 90 days
unless reemployment upon the expiration of such leave is guaranteed by
contract or statute, or unless provided otherwise pursuant to formal policy
adopted from time to time by the Company and issued and promulgated to
employees in writing. In the case of any employee on an approved leave of
absence, the Committee may make such provisions respecting suspension of
vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option
be exercised after the expiration of the term set forth in the Stock Option
Agreement. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which
the Participant ceased to provide services (the "TERMINATION DATE").

"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.

"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.

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<PAGE>

AMENDMENT TO
1996 EQUITY INCENTIVE PLAN
OF
NEWGEN RESULTS CORPORATION

Upon approval of the Board of Directors and shareholders of Newgen Results
Corporation (the "Company"), the Company's 1996 Equity Incentive Plan is amended
as follows:

I. SECTION 2.1 IS AMENDED TO READ AS FOLLOWS:

"2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 17, the total
number of Shares reserved and available for grant and issuance pursuant to this
Plan will be 700,000 Shares or such lesser number of Shares as permitted under
Section 260.140.45 of Title 10 of the California Code of Regulations. Subject to
Sections 2.2 and 17, Shares will again be available for grant and issuance in
connection with future Awards under this Plan that: (a) are subject to issuance
upon exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option, or (b) are subject to an Award that
otherwise terminates without Shares being issued. At all times the Company will
reserve and keep available a sufficient number of Shares as will be required to
satisfy the requirements of all Awards granted under this Plan."

CERTIFICATE OF SECRETARY

I, the undersigned, certify that I am the presently elected and acting Secretary
of Newgen Results Corporation, a California corporation, and the above amendment
to the corporation's 1996 Equity Incentive Plan was adopted by unanimous written
consent of the Board of Directors on November 19, 1997 and by written consent of
the shareholders on November 19, 1997.

/s/ Samuel Simkin
--------------------------------------
Samuel Simkin, Secretary

<PAGE>

EXHIBIT A

STOCK OPTION EXERCISE AGREEMENT

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<PAGE>

No.________

NEWGEN RESULTS CORPORATION

1996 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement ("AGREEMENT") is made and entered into as of
the date of grant set forth below (the "DATE OF GRANT") by and between Newgen
Results Corporation, a California corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company's 1996 Equity
Incentive Plan (the "PLAN").

PARTICIPANT: _____________________________

SOCIAL SECURITY NUMBER: _____________________________

ADDRESS: _____________________________

_____________________________

TOTAL OPTION SHARES: _____________________________

EXERCISE PRICE PER SHARE: _____________________________

DATE OF GRANT: _____________________________

FIRST VESTING DATE: _____________________________

EXPIRATION DATE: _____________________________

TYPE OF STOCK OPTION

(CHECK ONE): [ ] INCENTIVE STOCK OPTION

[ ] NONQUALIFIED STOCK OPTION

1. GRANT OF OPTION. The Company hereby grants to Participant an option
(the "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above (the "SHARES") at the Exercise Price Per Share set
forth above (the "EXERCISE PRICE"), subject to all of the terms and
conditions of this Agreement and the Plan. If designated as an Incentive
Stock Option above, the Option is intended to qualify as an "incentive stock
option" ("ISO") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "CODE").

2. EXERCISE PERIOD.

2.1 EXERCISE PERIOD OF OPTION. Provided Participant continues to
provide services to the Company or any Subsidiary or Parent of the Company,
the Option will become vested and exercisable as to portions of the Shares as
follows: (a) This Option shall not vest nor be exercisable with respect to
any of the Shares until _________, 199_ (the "FIRST VESTING DATE")
[NOTE: NO LATER THAN THE LAST DAY OF THE 12TH MONTH AFTER THE DATE OF GRANT];
(b) on the First Vesting Date the Option will become vested and exercisable
as to twenty percent (20%) of the Shares and (c) thereafter each year on the
anniversary of the First Vesting Date the Option shall vest as to an
additional twenty percent (20%) of the Shares until this Option is vest with
respect to 100% of the Shares. If application of the vesting percentage
causes a fractional share, such share shall be rounded up to the nearest
whole share.

<PAGE>

2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED
SHARES." Unvested Shares may not be sold or otherwise transferred by
Participant without the Company's prior written consent.

2.3 EXPIRATION. The Option shall expire on the Expiration Date set
forth above and must be exercised, if at all, on or before the Expiration
Date;

3. TERMINATION.

3.1 TERMINATION FOR ANY REASON EXCEPT DEATH OR DISABILITY. If
Participant is Terminated for any reason, except death or Disability, the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the Termination Date, may be exercised by
Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date.

3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later
than twelve (12) months after the Termination Date, but in any event no later
than the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of
the Code; or (b) twelve (12) months after the Termination Date when the
termination is for Participant's death or disability, within the meaning of
Section 22(e)(3) of the Code, is deemed to be an NQSO.

3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement
shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any
time, with or without cause.

4. MANNER OF EXERCISE.

4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death or
incapacity, Participant's executor, administrator, heir or legatee, as the
case may be) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as EXHIBIT A, or in such other form as
may be approved by the Company from time to time (the "EXERCISE AGREEMENT"),
which shall set forth, INTER ALIA, Participant's election to exercise the
Option, the number of Shares being purchased, any restrictions imposed on the
Shares and any representations, warranties and agreements regarding
Participant's investment intent and access to information as may be required
by the Company to comply with applicable securities laws. If someone other
than Participant exercises the Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise the Option.

4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option
may not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.

4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law:

(a) by cancellation of indebtedness of the Company to the participant;

(b) by surrender of shares of the Company's Common Stock that either:
(1) have been owned by Participant for more than six (6) months and
have been paid for within the meaning of SEC Rule 144 (and, if such
shares were purchased from the Company by use of a

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<PAGE>

promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the open public
market; and (3) are clear of all liens, claims, encumbrances or
security interests;

(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are not
employees or directors of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;

(d) by waiver of compensation due or accrued to Participant for
services rendered;

(e) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company, OR (2) through
a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to pledge
the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly
to the Company; or

(f) by any combination of the foregoing.

4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes
upon exercise of the Option by requesting that the Company retain Shares with
a Fair Market Value equal to the minimum amount of taxes required to be
withheld. In such case, the Company shall issue the net number of Shares to
the Participant by deducting the Shares retained from the Shares issuable
upon exercise.

4.5 ISSUANCE OF SHARES. Provided that the Exercise agreement and
payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate
legends affixed thereto.

5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is
an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer
of such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the
Company on the compensation income recognized by Participant from the early
disposition by payment in cash or out of the current wages or other
compensation payable to Participant.

6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Agreement which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is

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<PAGE>

under no obligation to register or qualify the Shares with the Securities and
Exchange Commission, any state securities commission or any stock exchange to
effect such compliance.

7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.

8. COMPANY'S REPURCHASE OPTION FOR VESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Vested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in this Section (the "REPURCHASE OPTION") if Participant is Terminated (as
defined in the Plan) for any reason, or no reason, including without limitation
Participant's death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without cause.

8.1 TERMINATION AND TERMINATION DATE. In case of any dispute as to
whether Participant is Terminated, the Committee shall have discretion to
determine whether Participant has been Terminated and the effective date of
such Termination (the "TERMINATION DATE").

8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety (90)
days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Participant's Vested Shares by giving Participant written
notice of exercise of the Repurchase Option.

8.3 CALCULATION OF REPURCHASE PRICE FOR VESTED SHARES. The Company
or its assignee shall have the option to repurchase from Participant (or from
Participant's personal representative as the case may be) the Vested Shares
at the higher of the Participant's Exercise Price, proportionately adjusted
for any stock split or similar change in the capital structure of the Company
as set forth in Section 2.2 of the Plan, or the Fair Market Value of such
shares on the Participant's Termination Date.

8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of
Participant to the Company or such assignee, or by any combination thereof.
The repurchase price shall be paid without interest within sixty (60) days
after exercise of the Repurchase Option.

8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Exercise
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of
the Company) to terminate Participant's employment or other relationship with
Company (or the Parent or Subsidiary of the Company) at any time, for any
reason or no reason, with or without cause.

8.6 TERMINATION OF REPURCHASE OPTION. The Company's Repurchase
Option for Vested Shares will terminate when the Company's securities become
publicly traded.

9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold
or otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of
such Vested Shares (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Vested Shares
to be sold or transferred (the "OFFERED SHARES") on the terms and conditions
set forth in this Section (the "RIGHT OF FIRST REFUSAL").

9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered Shares
shall deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other
transferee ("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be
transferred to each Proposed Transferee; (iv) the bona fide cash price or
other consideration for which the Holder proposes to transfer the Offered
Shares (the "OFFERED PRICE"); and (v) that

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<PAGE>

the Holder will offer to sell the Offered Shares to the Company and/or its
assignee(s) at the Offered Price as provided in this Section.

9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after the date of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase the Offered
Shares proposed to be transferred to any one or more of the Proposed
Transferees named in the Notice, at the purchase price determined as
specified below.

9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.

9.4 PAYMENT. Payment of the purchase price for Offered Shares will
be payable, at the option of the Company and/or its assignee(s) (as
applicable), by check or by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or to such assignee,
in the case of a purchase of Offered Shares by such assignee) or by any
combination thereof. The purchase price will be paid without interest within
sixty (60) days after the Company's receipt of the Notice, or, at the option
of the Company and/or its assignee(s), in the manner and at the time(s) set
forth in the Notice.

9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are
not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Offered Shares
to that Proposed Transferee at the Offered Price or at a higher price,
PROVIDED that such sale or other transfer is consummated within 120 days
after the date of the Notice, and PROVIDED FURTHER, that (i) any such sale or
other transfer is effected in compliance with all applicable securities laws
and (ii) the Proposed Transferee agrees in writing that the provisions of
this Section will continue to apply to the Offered Shares in the hands of
such Proposed Transferee. If the Offered Shares described in the Notice are
not transferred to the Proposed Transferee within such 120 day period, then a
new Notice must be given to the Company, and the Company will again be
offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.

9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary in
this Section, the following transfers of Vested Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Vested
Shares during Participant's lifetime by gift or on Participant's death by
will or intestacy to Participant's "immediate family" (as defined below) or
to a trust for the benefit of Participant or Participant's immediate family,
provided that each transferee or other recipient agrees in a writing
satisfactory to the Company that the provisions of this Section will continue
to apply to the transferred Vested Shares in the hands of such transferee or
other recipient; (ii) any transfer of Vested Shares made pursuant to a
statutory merger or statutory consolidation of the Company with or into
another corporation or corporations (except that the Right of First Refusal
and Repurchase Option will continue to apply thereafter to such Vested
Shares, in which case the surviving corporation of such merger or
consolidation shall succeed to the rights of the Company under this Section
unless the agreement of merger or consolidation expressly otherwise
provides); or (iii) any transfer of Vested Shares pursuant to the winding up
and dissolution of the Company. As used herein, the term "IMMEDIATE FAMILY"
will mean Participant's spouse, the lineal descendant or antecedent, father,
mother, brother or sister, adopted child or grandchild of the Participant or
the Participant's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Participant or the Participant's spouse.

10. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Date of Grant of some of the federal and California tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.

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<PAGE>

10.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there will
be no regular federal or California income tax liability upon the exercise of
the Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as a
tax preference item for federal income tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.

10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant 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 Shares on the
date of exercise over the Exercise Price. The Company will be required to
withhold from Participant's compensation or collect from Participant and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

10.3 DISPOSITION OF SHARES. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of the Option for Vested Shares and, in the case of an ISO, are
disposed of more than two years after the Date of Grant, any gain realized on
disposition of the Shares will be treated as long term capital gain for
federal and California income tax purposes. If Shares purchased under an ISO
are disposed of within the applicable one year or two year period, 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 Fair
Market Value of the Shares on the date of exercise over the Exercise Price.
The Company may be required to withhold from Participant's compensation or
collect from Participant and pay to the applicable taxing authorities an
amount equal to a percentage of this compensation income at the time of
exercise.

11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until Participant
exercises the Option and pays the Exercise Price.

12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final
and binding on the Company and Participant.

13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties
and supersede all prior undertakings and agreements with respect to the
subject matter hereof.

14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed
to the Corporate Secretary of the Company at its principal corporate offices.
Any notice required to be given or delivered to Participant shall be in
writing and addressed to Participant at the address indicated above or to
such other address as such party may designate in writing from time to time
to the Company. All notices shall be deemed to have been given or delivered
upon: personal delivery; three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested); one (1)
business day after deposit with any return receipt express courier (prepaid);
or one (1) business day after transmission by facsimile, rapifax or
telecopier.

15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement including its rights to repurchase Shares under the
Right of First Refusal. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.

16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined
by a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.

-6-

<PAGE>

17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the Plan and this Agreement. Participant has read and understands the terms
and provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of the Option or
disposition of the Shares and that Participant should consult a tax adviser
prior to such exercise or disposition.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the date set forth below.

NEWGEN RESULTS CORPORATION PARTICIPANT

By:
----------------------------------- ---------------------------------
(Signature) (Signature)

- -------------------------------------- ---------------------------------
(Please print name) (Please print name)

- --------------------------------------
(Please print title)

- --------------------------------------
(Date)

-7-

<PAGE>

NEWGEN RESULTS CORPORATION

1998 EQUITY INCENTIVE PLAN

ADOPTED AUGUST 14, 1998

APPROVED BY STOCKHOLDERS _________, 1998

1. PURPOSES.

(a) The purpose of the 1998 Equity Incentive Plan ("Plan") is to
provide a means by which selected Employees and Directors and Consultants may
be given an opportunity to benefit from increases in value of the common
stock of the Company ("Common Stock") through the granting of (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv)
rights to purchase restricted stock, and (v) stock appreciation rights, all
as defined below.

(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company
and its Affiliates, to secure and retain the services of new Employees,
Directors and Consultants, and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its Affiliates.

(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof,
including Incentive Stock Options and Nonstatutory Stock Options, or (ii)
stock bonuses or rights to purchase restricted stock granted pursuant to
Section 7 hereof, or (iii) stock appreciation rights granted pursuant to
Section 8 hereof. All Options shall be separately designated Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and in such form
as issued pursuant to Section 6, and a separate certificate or certificates
will be issued for shares purchased on exercise of each type of Option.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f) respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

(e) "COMPANY" means Newgen Results Corporation, a Delaware corporation.

<PAGE>

(f) "CONCURRENT STOCK APPRECIATION RIGHT" OR "CONCURRENT RIGHT" mean a
right granted pursuant to subsection 8(b)(ii) of the Plan.

(g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. The Participant's Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. For example, a change
in status from an Employee of the Company to a Consultant of an Affiliate or
a Director of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

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

(j) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. 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 the Common
Stock of the Company determined as follows:

(i) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in 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 Board deems reliable;

(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

<PAGE>

(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) "INDEPENDENT STOCK APPRECIATION RIGHT" OR INDEPENDENT RIGHT" means
a right granted pursuant to subsection 8(b)(iii) of the Plan.

(p) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice
of issuance as a national market security on an interdealer quotation system
if such securities exchange or interdealer quotation system has been
certified in accordance with the provisions of Section 25100(o) of the
California Corporate Securities Law of 1968.

(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does
not receive compensation (directly or indirectly) from the Company or its
parent or subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would
not be required under Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act of 1933 ("Regulation S-K"), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K, and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or
(ii) is otherwise considered a "non-employee director" for purposes of Rule
16b-3.

(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

(s) "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.

(t) "OPTION" means a stock option granted pursuant to the Plan.

(u) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.

(v) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan.

(w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated
corporation" at any time, and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in
any capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.

<PAGE>

(x) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

(y) "PLAN" means this Newgen Results Corporation 1998 Equity Incentive
Plan.

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

(aa) "STOCK APPRECIATION RIGHT" means any of the various types of rights
which may be granted under Section 8 of the Plan.

(bb) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and any right to acquire restricted stock, and a Stock
Appreciation Right.

(cc) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.

(dd) "TANDEM STOCK APPRECIATION RIGHT" OR "TANDEM RIGHT" means a right
granted pursuant to subsection 8(b)(i) of the Plan.

3. ADMINISTRATION.

(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).

(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted
stock, a Stock Appreciation Right, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock
pursuant to a Stock Award; whether a person shall be permitted to receive
stock upon exercise of an Independent Stock Appreciation Right; and the
number of shares with respect to which a Stock Award shall be granted to each
such person.

(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.

(iii) To amend the Plan or a Stock Award as provided in Section 14.

<PAGE>

(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of two or more members of the Board. In the
discretion of the Board, a Committee may consist solely of two or more
Outside Directors, in accordance with Code Section 162(m), or solely of two
or more Non-Employee Directors, in accordance with Rule 16(b)-3. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.

4. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate one million five hundred thousand
(1,500,000) shares of the Common Stock, subject to the following sentence.
An aggregate one million (1,000,000) shares shall initially be authorized for
issuance pursuant to Stock Awards; provided, however, such total shall
increase automatically, as and to the extent that options to purchase Common
Stock outstanding as of the Effective Date under the Company's 1996 Equity
Incentive Plan terminate or expire prior to exercise, by the number of shares
underlying such terminated or expired options, subject to a maximum increase
of 500,000 shares (bringing the maximum total to an aggregate 1,500,000
shares). If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full (or
vested in the case of Restricted Stock), the stock not acquired under such
Stock Award shall revert to and again become available for issuance under the
Plan. Shares subject to Stock Appreciation Rights exercised in accordance
with Section 8 of the Plan shall not be available for subsequent issuance
under the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5. ELIGIBILITY.

(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be
granted only to Employees, Directors or Consultants.

(b) No person shall be eligible for the grant of an Option or an award
to purchase restricted stock if, at the time of grant, such person owns (or
is deemed to own pursuant to Section 424(d) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or of any of its Affiliates unless the exercise price
of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of such

<PAGE>

stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant, or in the case of a
restricted stock purchase award, the purchase price is at least one hundred
percent (100%) of the Fair Market Value of such stock at the date of grant.

(c) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options and
Stock Appreciation Rights covering more than three hundred thousand (300,000)
shares of the Common Stock in any calendar year. This subsection 5(c) shall
not apply until (i) the earliest of: (A) the first material modification of
the Plan (including any increase to the number of shares reserved for
issuance under the Plan in accordance with Section 4); (B) the issuance of
all of the shares of Common Stock reserved for issuance under the Plan; (C)
the expiration of the Plan; or (D) the first meeting of stockholders at which
directors are to be elected that occurs after the close of the third calendar
year following the calendar year in which occurred the first registration of
an equity security under Section 12 of the Exchange Act; or (ii) such other
date required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder.

6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted and the
exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to
the Option on the date the Option is granted. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, at the time of the grant of
the Option, (A) by delivery to the Company of other Common Stock of the
Company, (B) according to a deferred payment arrangement, except that payment
of the common stock's "par value" (as defined in the Delaware General
Corporation Law) shall not be made by deferred payment, or other arrangement
(which may include, without limiting the generality of the foregoing, the use
of other Common Stock of the Company) with the person to whom the Option is
granted or to whom the Option is transferred pursuant to subsection 6(d), or
(C) in any other form of legal consideration that may be acceptable to the
Board.

<PAGE>

In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

(d) TRANSFERABILITY. Prior to the Listing Date an Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person. After the Listing Date, a Nonstatutory Stock
Option may be transferred to the extent provided in the Option Agreement;
provided that if the Option Agreement does not expressly permit the transfer
of a Nonstatutory Stock Option, the Nonstatutory Stock Option shall not be
transferable except by will, by the laws of descent and distribution or
pursuant to a domestic relations order satisfying the requirements of Rule
16b-3 and shall be exercisable during the lifetime of the person to whom the
Option is granted only by such person or any transferee pursuant to a
domestic relations order. Notwithstanding the foregoing, the person to whom
the Option is granted may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event
of the death of the Optionee, shall thereafter be entitled to exercise the
Option.

(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
such period and/or any prior period as to which the Option became vested but
was not fully exercised, provided however that prior to the Listing Date an
Option granted to a non-officer Employee shall vest at least twenty percent
(20%) of the shares per year. The Option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Board may deem appropriate.
The provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.

(f) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of termination, unless
otherwise provided in the Option Agreement) but only within such period of
time ending on the earlier of (i) the date thirty (30) days after the
termination of the Optionee's Continuous Service (or after the Listing Date
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionee does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Service
(other than upon the Optionee's death or disability) would result in
liability under Section 16(b) of the Exchange Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the

<PAGE>

Option Agreement, or (ii) the tenth (10th) day after the last date on which
such exercise would result in such liability under Section 16(b) of the
Exchange Act. Finally, an Optionee's Option Agreement may also provide that
if the exercise of the Option following the termination of the Optionee's
Continuous Service (other than upon the Optionee's death or disability) would
be prohibited at any time solely because the issuance of shares would violate
the registration requirements under the Act, then the Option shall terminate
on the earlier of (i) the expiration of the term of the Option set forth in
the first paragraph of this subsection 6(f), or (ii) the expiration of a
period of thirty (30) days (or such longer or shorter period provided in the
Option Agreement) after the termination of the Optionee's Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.

(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise it at the date of termination), but only within such period of time
ending on the earlier of (i) the date six (6) months following such
termination (or after the Listing Date such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under 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 and again become available for issuance under the Plan.

(h) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option after the termination of,
the Optionee's Continuous Service, the Option may be exercised (to the extent
the Optionee was entitled to exercise the Option at the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option
upon the Optionee's death pursuant to subsection 6(d), but only within the
period ending on the earlier of (i) the date twelve (12) months following the
date of death (or after the Listing Date such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death,
the Optionee was not entitled to exercise his or her entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares
so purchased may be subject to a repurchase right in favor of the Company or
to any other restriction the Board determines to be appropriate.

(j) RIGHT OF REPURCHASE. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
repurchase all or any part of the vested shares acquired by the Optionee
pursuant to the exercise of the Option. The terms of such

<PAGE>

repurchase option shall comply with the requirements of Section 260.140.42 of
Title 10 of the California Code of Regulations.

(k) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
exercise a right of first refusal following receipt of notice from the
Optionee of the intent to transfer all or any part of the shares exercised
pursuant to the Option. Except as expressly provided in this subsection
6(k), such right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company.

(l) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation) to
include as part of any Option Agreement a provision entitling the Optionee to
a further Option (a "Re-Load Option") in the event the Optionee exercises the
Option evidenced by the Option agreement, in whole or in part, by
surrendering other shares of Common Stock in accordance with this Plan and
the terms and conditions of the Option Agreement. Any such Re-Load Option (i)
shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (ii) shall have an
expiration date which is the same as the expiration date of the Option the
exercise of which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Re-Load
Option which is granted to a 10% stockholder (as described in subsection
5(c)), shall have an exercise price which is equal to one hundred ten percent
(110%) of the Fair Market Value of the stock subject to the Re-Load Option on
the date of exercise of the original Option and shall have a term which is no
longer than five (5) years.

Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the
time of the grant of the original Option; PROVIDED, HOWEVER, that the
designation of any Re-Load Option as an Incentive Stock Option shall be
subject to the one hundred thousand dollars ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subsection 12(d) of
the Plan and in Section 422(d) of the Code. There shall be no Re-Load
Options on a Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under subsection 4(a) and shall be subject
to such other terms and conditions as the Board or Committee may determine
which are not inconsistent with the express provisions of the Plan regarding
the terms of Options.

7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:

<PAGE>

(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value
on the date such award is made. Notwithstanding the foregoing, the Board or
the Committee may determine that eligible participants in the Plan may be
awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company for its benefit.

(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of
descent and distribution or, after the Listing Date and if the agreement so
provides, pursuant to a domestic relations order satisfying the requirements
of Rule 16b-3 so long as stock awarded under such agreement remains subject
to the terms of the agreement.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
restricted stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the Committee,
according to a deferred payment arrangement, except that payment of the
common stock's "par value" (as defined in the Delaware General Corporation
Law) shall not be made by deferred payment, or other arrangement with the
person to whom the stock is sold; or (iii) in any other form of legal
consideration that may be acceptable to the Board or the Committee in its
discretion. Notwithstanding the foregoing, the Board or the Committee to
which administration of the Plan has been delegated may award stock pursuant
to a stock bonus agreement in consideration for past services actually
rendered to the Company or for its benefit.

(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee, provided however that prior to the Listing Date, stock sold or
awarded to a non-officer Employee shall vest at least twenty percent (20%) of
the shares per year. Prior to the Listing Date the terms of such repurchase
option shall otherwise comply with the requirements of Section 260.140.42 of
Title 10 of the California Code of Regulations.

(e) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have
not vested as of the date of termination under the terms of the stock bonus
or restricted stock purchase agreement between the Company and such person.

8. STOCK APPRECIATION RIGHTS.

(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights under
the Plan to Employees or Directors of or Consultants to, the Company or its
Affiliates. To exercise any outstanding Stock Appreciation Right, the holder
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Award Agreement evidencing such right. Except as
provided in

<PAGE>

subsection 5(c), no limitation shall exist on the aggregate amount of cash
payments the Company may make under the Plan in connection with the exercise
of a Stock Appreciation Right.

(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:

(i) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between the
exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution. The
appreciation distribution payable on the exercised Tandem Right shall be in
cash (or, if so provided, in an equivalent number of shares of stock based on
Fair Market Value on the date of the Option surrender) in an amount up to the
excess of (A) the Fair Market Value (on the date of the Option surrender) of
the number of shares of stock covered by that portion of the surrendered
Option in which the Optionee is vested over (B) the aggregate exercise price
payable for such vested shares.

(ii) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights
will be granted appurtenant to an Option and may apply to all or any portion
of the shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock
to which the Concurrent Right pertains. The appreciation distribution payable
on an exercised Concurrent Right shall be in cash (or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date
of the exercise of the Concurrent Right) in an amount equal to such portion
as shall be determined by the Board or the Committee at the time of the grant
of the excess of (A) the aggregate Fair Market Value (on the date of the
exercise of the Concurrent Right) of the vested shares of stock purchased
under the underlying Option which have Concurrent Rights appurtenant to them
over (B) the aggregate exercise price paid for such shares.

(iii) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights
will be granted independently of any Option and shall, except as specifically
set forth in this Section 8, be subject to the same terms and conditions
applicable to Nonstatutory Stock Options as set forth in Section 6. They
shall be denominated in share equivalents. The appreciation distribution
payable on the exercised Independent Right shall be not greater than an
amount equal to the excess of (A) the aggregate Fair Market Value (on the
date of the exercise of the Independent Right) of a number of shares of
Company stock equal to the number of share equivalents in which the holder is
vested under such Independent Right, and with respect to which the holder is
exercising the Independent Right on such date, over (B) the aggregate Fair
Market Value (on the date of the grant of the Independent Right) of such
number of shares of Company stock. The appreciation distribution payable on
the exercised Independent Right shall be in cash or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date
of the exercise of the Independent Right.

<PAGE>

9. CANCELLATION AND RE-GRANT OF OPTIONS.

(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the
consent of any adversely affected holders of Options and/or Stock
Appreciation Rights, the cancellation of any outstanding Options and/or Stock
Appreciation Rights under the Plan and the grant in substitution therefor of
new Options and/or Stock Appreciation Rights under the Plan covering the same
or different numbers of shares of stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value for a
Nonstatutory Stock Option, one hundred percent (100%) of the Fair Market
Value for an Incentive Stock Option or, in the case of an Incentive Stock
Option (any Option if effected prior to the Listing Date) held by a 10%
stockholder (as described in subsection 5(c)), not less than one hundred ten
percent (110%) of the Fair Market Value per share of stock on the new grant
date. Notwithstanding the foregoing, the Board or the Committee may grant an
Option and/or Stock Appreciation Rights with an exercise price lower than
that set forth above if such Option and/or Stock Appreciation Right is
granted as part of a transaction to which section 424(a) of the Code applies.

(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the maximum award
of Options or Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(c) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original
and the substituted Options and Stock Appreciation Rights shall be counted
against the maximum awards of Options and Stock Appreciation Rights permitted
to be granted pursuant to subsection 5(c) of the Plan. The provisions of
this subsection 9(b) shall be applicable only to the extent required by
Section 162(m) of the Code.

10. COVENANTS OF THE COMPANY.

(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.

(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities
Act of 1933, as amended (the "Securities Act") either the Plan, any Stock
Award or any stock issued or issuable pursuant to any such Stock Award. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such Stock Awards unless and until such authority is
obtained.

<PAGE>

11. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

12. MISCELLANEOUS.

(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest pursuant to subsection 6(e), 7(d) or 8(a),
notwithstanding the provisions in the Stock Award stating the time at which
it may first be exercised or the time during which it will vest.

(b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall be deemed
to be the holder of, or to have any of the rights of a holder with respect
to, any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or
any Affiliate or to continue serving as a Consultant and Director, or shall
affect the right of the Company or any Affiliate to terminate the employment
of any Employee with or without notice and with or without cause, or the
right to terminate the relationship of any Consultant pursuant to the terms
of such Consultant's agreement with the Company or Affiliate or service as a
Director pursuant to the Company's Bylaws and the laws of the state in which
the Company is incorporated.

(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.

(e) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred in accordance
with the Plan, as a condition of exercising or acquiring stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as to
such person's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock
Award; and (ii) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the Stock Award
for such person's own account and not with any present intention of selling
or otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (A)
the issuance of the shares upon the exercise or acquisition of stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or

<PAGE>

(B) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under
the then applicable securities laws. The Company may, upon advice of counsel
to the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means or by a combination
of such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold shares from the shares of the Common Stock otherwise issuable to the
participant as a result of the exercise or acquisition of stock under the
Stock Award; or (iii) delivering to the Company owned and unencumbered shares
of the Common Stock of the Company.

(g) Throughout the term of any Stock Award, the Company shall deliver
to the holder of such Stock Award, not later than one hundred twenty (120)
days after the close of each of the Company's fiscal years during the term of
such Stock Award, a balance sheet and an income statement. This subsection
shall not apply (i) after the Listing Date, or (ii) when issuance is limited
to key employees whose duties in connection with the Company assure them
access to equivalent information.

13. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the receipt
of consideration by the Company), the Plan will be appropriately adjusted in
the class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the maximum number of shares subject to award to any
person during any calendar year pursuant to subsection 5(c), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee,
the determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated
as a "transaction not involving the receipt of consideration by the Company.")

(b) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then outstanding Stock Awards
shall be terminated if not exercised (if applicable) prior to such event.

<PAGE>

immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, then
any surviving corporation or acquiring corporation shall assume any Stock
Awards outstanding under the Plan or shall substitute similar stock awards
(including an award to acquire the same consideration paid to the
shareholders in the transaction described in this subsection 13(c) for those
outstanding under the Plan). In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute
similar stock awards for those outstanding under the Plan, then with respect
to Stock Awards held by Participants whose Continuous Service has not
terminated, the vesting of such Stock Awards (and, if applicable, the time
during which such Stock Awards may be exercised) shall be accelerated in
full, and the Stock Awards shall terminate if not exercised (if applicable)
at or prior to such event. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not
exercised (if applicable) prior to such event.

14. AMENDMENT OF THE PLAN AND STOCK AWARDS.

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of Section 422 of the Code, Rule
16b-3 or any Nasdaq or securities exchange listing requirements.

(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.

Rights and obligations under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.

(d) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.

15. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board

<PAGE>

or approved by the stockholders of the Company, whichever is earlier. No
Stock Awards may be granted under the Plan while the Plan is suspended or
after it is terminated.

(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.

16. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on adoption by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.

<PAGE>

NEWGEN RESULTS CORPORATION
1998 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

Pursuant to the Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Newgen Results Corporation (the "Company") has
granted you an option under its 1998 Equity Incentive Plan (the "Plan") to
purchase the number of shares of the Company's Common Stock indicated in the
Grant Notice at the exercise price indicated in the Grant Notice. Defined
terms not explicitly defined in this Stock Option Agreement but defined in
the Plan shall have the same definitions as in the Plan.

The details of your option are as follows:

1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in the Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.

2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares subject
to your option and your exercise price per share referenced in the Grant
Notice may be adjusted from time to time for Capitalization Adjustments, as
provided in the Plan.

3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in the
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise"
of your option is permitted) and subject to the provisions of this option,
you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all
or part of your option, including the nonvested portion of your option;
provided, however, that:

(a) a partial exercise of your option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested
shares;

(b) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company's form of Early Exercise
Stock Purchase Agreement;

(c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and

(d) if your option is an incentive stock option, then, as provided
in the Plan, to the extent that the aggregate Fair Market Value (determined
at the time of grant) of stock with respect to which your option plus all
other incentive stock options you hold are exercisable for the first time by
you during any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), the options or
portions thereof that exceed

<PAGE>

such limit (according to the order in which they were granted) shall be
treated as nonstatutory stock options.

4. METHOD OF PAYMENT. Payment of the exercise price is due in full
upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY THE GRANT NOTICE, which may include one or more of the following:

(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board which, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the
sales proceeds.

(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery
of already-owned shares of Common Stock, held for the period required to
avoid a charge to the Company's reported earnings (generally six months) or
were not acquired, directly or indirectly from the Company, owned free and
clear of any liens, claims, encumbrances or security interests, and valued at
its Fair Market Value on the date of exercise. "Delivery" for these
purposes, in the sole discretion of the Company at the time your option is
exercised, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, your option may not be exercised by tender to
the Company of Common Stock to the extent such tender would constitute a
violation of the provisions of any law, regulation or agreement restricting
the redemption of the Company's stock.

5. WHOLE SHARES. Your option may only be exercised for whole shares.

6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, your option may not be exercised unless the shares
issuable upon exercise of your option are then registered under the
Securities Act or, if such shares are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the
registration requirements of the Securities Act. The exercise of your option
must also comply with other applicable laws and regulations governing the
option, and the option may not be exercised if the Company determines that
the exercise would not be in material compliance with such laws and
regulations.

7. TERM. The term of your option commences on the Date of Grant and
expires upon the EARLIEST of the following:

(a) Thirty (30) days after the termination of your Continuous
Service for any reason, provided that if during any part of such thirty-day
period the option is not exercisable solely because of the condition set
forth in paragraph 6, the option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate
period of thirty (30) days after the termination of your Continuous Service;

<PAGE>

(b) twelve (12) months after the termination of your Continuous
Service due to Disability;

(c) eighteen (18) months after your death if you die either during
your Continuous Service or within thirty (30) days after your Continuous
Service terminates;

(d) the Expiration Date indicated in the Grant Notice; or

(e) the tenth (10th) anniversary of the Date of Grant.

If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option,"
the Code requires that at all times beginning on the date of grant of the
option and ending on the day three (3) months before the date of the option's
exercise, you must be an employee of the Company or an Affiliate, except in
the event of your death or your Disability. The Company has provided for
extended exercisability of your option under certain circumstances for your
benefit, but cannot guarantee that your option will necessarily be treated as
an "incentive stock option" if you provide services to the Company or an
Affiliate as a Consultant or Director or if you exercise your option more
than three (3) months after the date your employment with the Company or an
Affiliate terminates.

8. EXERCISE.

(a) You may exercise the vested portion of your option (and the
unvested portion of your option if the Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

(b) By exercising your option you agree that, as a condition to
any exercise of your option, the Company may require you to enter an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to which
the shares are subject at the time of exercise, or (3) the disposition of
shares acquired upon such exercise.

(c) If your option is an incentive stock option, by exercising
your option you agree that you will notify the Company in writing within
fifteen (15) days after the date of any disposition of any of the shares of
the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after
such shares of Common Stock are transferred upon exercise of your option.

9. TRANSFERABILITY. Your option is not transferable, except by will
or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.

<PAGE>

10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company
or an Affiliate, their respective shareholders, Boards of Directors, Officers
or Employees to continue any relationship that you might have as a Director
or Consultant for the Company or an Affiliate.

11. WITHHOLDING OBLIGATIONS.

(a) At the time your option is exercised, in whole or in part, or
at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board to the extent permitted by the Company), any
sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise
in connection with your option.

(b) Upon your request and subject to approval by the Company, in
its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of
Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares having a Fair Market Value, determined by the Company
as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law. If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise
of your option, share withholding pursuant to the preceding sentence shall
not be permitted unless you make a proper and timely election under Section
83(b) of the Code, covering the aggregate number of shares of Common Stock
acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the
filing of such election, shares shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise of your option
that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.

(c) Your option is not exercisable unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly,
you may not be able to exercise your option when desired even though your
option is vested, and the Company shall have no obligation to issue a
certificate for such shares or release such shares from any escrow provided
for herein.

12. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the
last address you provided to the Company.

13. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all

<PAGE>

interpretations, amendments, rules and regulations which may from time to
time be promulgated and adopted pursuant to the Plan. In the event of any
conflict between the provisions of your option and those of the Plan, the
provisions of the Plan shall control.

<PAGE>

NEWGEN RESULTS CORPORATION

1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

ADOPTED ON AUGUST 14, 1998

APPROVED BY STOCKHOLDERS

ON _____________, 1998

1. PURPOSE.

(a) The purpose of the 1998 Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which each director of Newgen Results
Corporation (the "Company") who is not otherwise at the time of grant an
employee of or consultant to the Company or of any Affiliate of the Company
(each such person being hereinafter referred to as a "Non-Employee Director")
will be given an opportunity to purchase stock of the Company.

(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended from time to time (the "Code").

(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company.

2. ADMINISTRATION.

(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to
a committee, as provided in subparagraph 2(b).

(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee").
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.

3. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in

<PAGE>

the aggregate one hundred fifty thousand (150,000) shares of the Company's
common stock. If any option granted under the Plan shall for any reason
expire or otherwise terminate without having been exercised in full, the
stock not purchased under such option shall again become available for the
Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

4. ELIGIBILITY.

Options shall be granted only to Non-Employee Directors of the Company.

5. NON-DISCRETIONARY GRANTS.

(a) On the effective date of the Company's initial firmly underwritten
public offering pursuant to an effective registration statement under the
Securities Act (as defined below) (the "IPO Date"), each person who is then a
Non-Employee Director, automatically shall be granted an option to purchase
six thousand (6,000) shares of common stock of the Company on the terms and
conditions set forth herein.

(b) Each person who is, after the IPO Date, elected for the first time
to be a Non-Employee Director automatically shall, upon the date of his or
her initial election to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an option (an "Inaugural Option") to
purchase six thousand (6,000) shares of common stock of the Company on the
terms and conditions set forth herein.

(c) On the date of each annual meeting of the stockholders of the
Company after the IPO Date (other than any such annual meeting held in 1998),
each Non-Employee Director automatically shall receive the grant of an option
to purchase two thousand (2,000) shares of common stock of the Company on the
terms and conditions set forth herein.

6. OPTION PROVISIONS.

Each option shall be subject to the following terms and conditions:

(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date
("Expiration Date") ten (10) years from the date of grant. If the optionee's
continuous service as a Non-Employee Director, employee of or consultant to
the Company or any Affiliate of the Company, terminates for any reason or for
no reason, the option shall terminate on the earlier of the Expiration Date
or the date twelve (12) months following the date of termination of all such
service; PROVIDED, HOWEVER, that if such termination of service is due to the
optionee's death, the option shall terminate on the earlier of the Expiration
Date or eighteen (18) months following the date of the optionee's death. In
any and all circumstances, an option may be exercised following termination
of the optionee's

<PAGE>

service as described above only as to that number of shares as to which it
was exercisable as of the date of termination of such service under the
provisions of subparagraph 6(e).

(b) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the
date such option is granted.

(c) Payment of the exercise price of each option is due in full in cash
upon any exercise. Notwithstanding the foregoing, this option may be
exercised pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board which results in the receipt of cash (or check)
by the Company either prior to the issuance of shares of the Company's common
stock or pursuant to the terms of irrevocable instructions issued by the
optionee prior to the issuance of shares of the Company's common stock.

(d) An option shall not be transferable except by will or by the laws
of descent and distribution, or pursuant to a qualified domestic relations
order satisfying the requirements of Rule 16b-3 under the Securities Exchange
Act of 1934 ("Rule 16b-3") and shall be exercisable during the lifetime of
the person to whom the option is granted only by such person (or by his
guardian or legal representative) or transferee pursuant to such an order.
Notwithstanding the foregoing, the optionee may, by delivering written notice
to the Company in a form satisfactory to the Company, designate a third party
who, in the event of the death of the optionee, shall thereafter be entitled
to exercise the option.

(e) Each Inaugural Option shall become exercisable in installments over
a period of three years from the date of grant; one-third of the shares shall
vest on the first anniversary of the date of grant. An option that is not an
Inaugural Option shall vest in full on the first anniversary of the date of
grant. Notwithstanding the foregoing, no option shall vest unless the
optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director, employee of or consultant to
the Company or any Affiliate of the Company, whereupon such option shall
become fully exercisable in accordance with its terms with respect to that
portion of the shares represented by that installment.

(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising
any such option: (i) to give written assurances satisfactory to the Company
as to the optionee's knowledge and experience in financial and business
matters; and (ii) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the option for
such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (i) the issuance
of the shares upon the exercise of the option has been registered under a
then-currently-effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (ii), as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may require any optionee to provide such other
representations, written assurances or information which the Company shall
determine is

<PAGE>

necessary, desirable or appropriate to comply with applicable securities laws
as a condition of granting an option to the optionee or permitting the
optionee to exercise the option. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are
not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Securities
Act.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.

(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; PROVIDED, HOWEVER, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any option granted
under the Plan, or any stock issued or issuable pursuant to any such option.
If, after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such options.

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.

9. MISCELLANEOUS.

(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to such option
unless and until such person has satisfied all requirements for exercise of
the option pursuant to its terms.

(b) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal
years during the option term, upon request, such financial and other
information regarding the Company as comprises the annual report to the

<PAGE>

stockholders of the Company provided for in the Bylaws of the Company and
such other information regarding the Company as the holder of such option may
reasonably request.

(c) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the
service of the Company or any Affiliate in any capacity or shall affect any
right of the Company, its Board or stockholders or any Affiliate to remove
any Non-Employee Director pursuant to the Company's Bylaws and the provisions
of the Delaware General Corporation Law (or the applicable laws of the
Company's state of incorporation if the Company's state of incorporation
should change in the future).

(d) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have
any right, title or interest in or to any option reserved for the purposes of
the Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.

(e) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer
shares to a Non-Employee Director, or to evidence the removal of any
restrictions on transfer, that such Non-Employee Director make arrangements
satisfactory to the Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or
transfer, or such removal or lapse, is made available to the Company for
timely payment of such tax.

(f) As used in this Plan, "fair market value" means, as of any date,
the value of the common stock of the Company determined as follows :

(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("Nasdaq") System, the Fair Market Value of a share
of common stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in 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 Board deems reliable;

(ii) If the common stock is quoted on the Nasdaq System (but not
on the National Market System thereof) or 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 bid and 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 Board 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 Board.

<PAGE>

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price
per share of stock subject to outstanding options. Such adjustments shall be
made by the Board or the Committee, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible securities
of the Company shall not be treated as a "transaction not involving the
receipt of consideration by the Company.")

(b) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then outstanding options shall be
terminated if not exercised (if applicable) prior to such event.

(c) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale of substantially all of the assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise, then with
respect to options held by persons whose continuous service as a Non-Employee
Director, employee of or consultant to the Company or any Affiliate of the
Company, has not terminated, the vesting of such options (and, if applicable,
the time during which such options may be exercised) shall be accelerated in
full, and the options shall terminate if not exercised (if applicable) at or
prior to such event. With respect to any other options outstanding under the
Plan, such options shall terminate if not exercised (if applicable) prior to
such event.

(d) CHANGE IN CONTROL--SECURITIES ACQUISITION. In the event of an
acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or an Affiliate) of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors, then with respect to options held by persons whose
continuous service as a Non-Employee Director, employee of or consultant to
the Company or any Affiliate of the Company, has not terminated, the vesting
of such options (and, if applicable, the time during which such options may
be exercised) shall be accelerated in full.

<PAGE>

11. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan
and/or some or all outstanding options granted under the Plan, PROVIDED,
HOWEVER, that the Board shall not amend the Plan more than once every six (6)
months, with respect to the provisions of the Plan which relate to the
amount, price and timing of grants, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules thereunder. Except as provided in paragraph 10
relating to adjustments upon changes in stock, no amendment shall be
effective unless approved by the stockholders of the Company within twelve
(12) months before or after the adoption of the amendment, where the
amendment will:

(i) Increase the number of shares which may be issued under the
Plan;

(ii) Modify the Plan in any way (including the requirements as to
eligibility for participation in the Plan) if such modification requires
stockholder approval in order for the Plan to comply with the requirements of
Rule 16b-3.

(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate at the time that all of the
shares of the Company's common stock reserved for issuance under the Plan
have been issued. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.

(b) Rights and obligations under any option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted.

(c) The Plan shall terminate upon the occurrence of any of the events
described in subparagraphs 10(b) through 10(d) above.

13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.

(a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by
the stockholders of the Company.

(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.

<PAGE>

NEWGEN RESULTS CORPORATION

EMPLOYEE STOCK PURCHASE PLAN

ADOPTED AUGUST 14, 1998

APPROVED BY THE STOCKHOLDERS ON ________, 1998

1. PURPOSE.

(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of Newgen Results Corporation, a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.

(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended (the "Code").

(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company.

(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b) of
the Code.

2. ADMINISTRATION.

(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration
to a Committee, as provided in subparagraph 2(c). Whether or not the Board
has delegated administration, the Board shall have the final power to
determine all questions of policy and expediency that may arise in the
administration of the Plan.

(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).

(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.

(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective.

<PAGE>

(iv) To amend the Plan as provided in paragraph 13.

(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company and its Affiliates and to carry out the intent that the Plan be
treated as an "employee stock purchase plan" within the meaning of Section
423 of the Code.

(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee").
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.

3. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate three hundred fifty thousand
(350,000) shares of the Company's common stock (the "Common Stock"). If any
right granted under the Plan shall for any reason terminate without having
been exercised, the Common Stock not purchased under such right shall again
become available for the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

4. GRANT OF RIGHTS; OFFERING.

(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the
Plan to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all employees granted rights to purchase
stock under the Plan shall have the same rights and privileges. The terms
and conditions of an Offering shall be incorporated by reference into the
Plan and treated as part of the Plan. The provisions of separate Offerings
need not be identical, but each Offering shall include (through incorporation
of the provisions of this Plan by reference in the document comprising the
Offering or otherwise) the period during which the Offering shall be
effective, which period shall not exceed twenty-seven (27) months beginning
with the Offering Date, and the substance of the provisions contained in
paragraphs 5 through 8, inclusive.

(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right
with a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a

<PAGE>

higher exercise price (or a later-granted right, if two rights have identical
exercise prices) will be exercised.

5. ELIGIBILITY.

(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in
subparagraph 5(b), an employee of the Company or any Affiliate shall not be
eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee has been in the employ of the Company or any Affiliate for such
continuous period preceding such grant as the Board or the Committee may
require, but in no event shall the required period of continuous employment
be equal to or greater than two (2) years. In addition, unless otherwise
determined by the Board or the Committee and set forth in the terms of the
applicable Offering, no employee of the Company or any Affiliate shall be
eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee's customary employment with the Company or such Affiliate is
for at least twenty (20) hours per week and at least five (5) months per
calendar year.

(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company
or designated Affiliate will, on a date or dates specified in the Offering
which coincides with the day on which such person becomes an eligible
employee or occurs thereafter, receive a right under that Offering, which
right shall thereafter be deemed to be a part of that Offering. Such right
shall have the same characteristics as any rights originally granted under
that Offering, as described herein, except that:

(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of
the exercise price of such right;

(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering;
and

(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before
the end of the Offering, he or she will not receive any right under that
Offering.

(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns
stock possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Company or of any Affiliate. For
purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code
shall apply in determining the stock ownership of any employee, and stock
which such employee may purchase under all outstanding rights and options
shall be treated as stock owned by such employee.

(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock
of the Company or any Affiliate to accrue at a rate which exceeds

<PAGE>

twenty-five thousand dollars ($25,000) of fair market value of such stock
(determined at the time such rights are granted) for each calendar year in
which such rights are outstanding at any time.

(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that
the Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.

6. RIGHTS; PURCHASE PRICE.

(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to
the number of shares of Common Stock of the Company purchasable with a
percentage designated by the Board or the Committee not exceeding fifteen
percent (15%) of such employee's Earnings (as defined in subparagraph 7(a))
during the period which begins on the Offering Date (or such later date as
the Board or the Committee determines for a particular Offering) and ends on
the date stated in the Offering, which date shall be no later than the end of
the Offering. The Board or the Committee shall establish one or more dates
during an Offering (the "Purchase Date(s)") on which rights granted under the
Plan shall be exercised and purchases of Common Stock carried out in
accordance with such Offering.

(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition,
in connection with each Offering that contains more than one Purchase Date,
the Board or the Committee may specify a maximum aggregate number of shares
which may be purchased by all eligible employees on any given Purchase Date
under the Offering. If the aggregate purchase of shares upon exercise of
rights granted under the Offering would exceed any such maximum aggregate
number, the Board or the Committee shall make a pro rata allocation of the
shares available in as nearly a uniform manner as shall be practicable and as
it shall deem to be equitable.

(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or

(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.

7. PARTICIPATION; WITHDRAWAL; TERMINATION.

(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within
the time specified in the Offering, in such form as the Company provides.
Each such agreement shall authorize payroll deductions of up to the maximum
percentage specified by the Board or the Committee of such employee's
Earnings during the Offering. "Earnings" is defined as an employee's regular
salary

<PAGE>

or wages (including amounts thereof elected to be deferred by the employee,
that would otherwise have been paid, under any arrangement established by the
Company intended to comply with Section 401(k), Section 402(e)(3), Section
125, Section 402(h), or Section 403(b) of the Code, and also including any
deferrals under a non-qualified deferred compensation plan or arrangement
established by the Company), which shall include or exclude (as provided for
each Offering) the following items of compensation: bonuses, commissions,
overtime pay, incentive pay, profit sharing, other remuneration paid directly
to the employee, the cost of employee benefits paid for by the Company or an
Affiliate, education or tuition reimbursements, imputed income arising under
any group insurance or benefit program, traveling expenses, business and
moving expense reimbursements, income received in connection with stock
options, contributions made by the Company or an Affiliate under any employee
benefit plan, and similar items of compensation, as determined by the Board
or Committee. The payroll deductions made for each participant shall be
credited to an account for such participant under the Plan and shall be
deposited with the general funds of the Company. A participant may reduce
(including to zero) or increase such payroll deductions, and an eligible
employee may begin such payroll deductions, after the beginning of any
Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for
in the Offering and only if the participant has not had the maximum amount
withheld during the Offering.

(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering.
Upon such withdrawal from the Offering by a participant, the Company shall
distribute to such participant all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without interest, and
such participant's interest in that Offering shall be automatically
terminated. A participant's withdrawal from an Offering will have no effect
upon such participant's eligibility to participate in any other Offerings
under the Plan but such participant will be required to deliver a new
participation agreement in order to participate in subsequent Offerings under
the Plan.

(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's
employment with the Company and any designated Affiliate, for any reason, and
the Company shall distribute to such terminated employee all of his or her
accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire stock for the terminated employee),
under the Offering, without interest.

(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution,
or by a beneficiary designation as provided in paragraph 14 and, otherwise
during his or her lifetime, shall be exercisable only by the person to whom
such rights are granted.

<PAGE>

8. EXERCISE.

(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional
payments specifically provided for in the Offering (without any increase for
interest) will be applied to the purchase of whole shares of stock of the
Company, up to the maximum number of shares permitted pursuant to the terms
of the Plan and the applicable Offering, at the purchase price specified in
the Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of accumulated payroll
deductions remaining in each participant's account after the purchase of
shares which is less than the amount required to purchase one share of stock
on the final Purchase Date of an Offering shall be held in each such
participant's account for the purchase of shares under the next Offering
under the Plan, unless such participant withdraws from such next Offering, as
provided in subparagraph 7(b), or is no longer eligible to be granted rights
under the Plan, as provided in paragraph 5, in which case such amount shall
be distributed to the participant after such final Purchase Date, without
interest. The amount, if any, of accumulated payroll deductions remaining in
any participant's account after the purchase of shares which is equal to the
amount required to purchase whole shares of stock on the final Purchase Date
of an Offering shall be distributed in full to the participant after such
Purchase Date, without interest.

(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and
other securities and other laws applicable to the Plan. If on a Purchase
Date in any Offering hereunder the Plan is not so registered or in such
compliance, no rights granted under the Plan or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until
the Plan is subject to such an effective registration statement and such
compliance, except that the Purchase Date shall not be delayed more than
twelve (12) months and the Purchase Date shall in no event be more than
twenty-seven (27) months from the Offering Date. If on the Purchase Date of
any Offering hereunder, as delayed to the maximum extent permissible, the
Plan is not registered and in such compliance, no rights granted under the
Plan or any Offering shall be exercised and all payroll deductions
accumulated during the Offering (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to the
participants, without interest.

9. COVENANTS OF THE COMPANY.

(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.

(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to issue and sell shares of stock upon
exercise of the rights granted under the Plan. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance

<PAGE>

and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such rights
unless and until such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.

11. RIGHTS AS A STOCKHOLDER.

A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights hereunder are recorded in the books of the Company.

12. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan and outstanding rights
will be appropriately adjusted in the class(es) and maximum number of shares
subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights. Such adjustments shall be made
by the Board or the Committee, the determination of which shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")

(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4)
the acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or any comparable successor provisions (excluding any
employee benefit plan, or related trust, sponsored or maintained by the
Company or any Affiliate of the Company) of the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty
percent (50%) of the combined voting power entitled to vote in the election
of directors, then, as determined by the Board in its sole discretion (i) any
surviving or acquiring corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated payroll
deductions may be used to purchase Common Stock immediately prior to the
transaction or event described above and the participants' rights under the
ongoing Offering terminated.

<PAGE>

13. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:

(i) Increase the number of shares reserved for rights under the
Plan;

(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule
16b-3")); or

(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.

It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to employee stock
purchase plans and/or to bring the Plan and/or rights granted under it into
compliance therewith.

(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan,
except with the consent of the person to whom such rights were granted, or
except as necessary to comply with any laws or governmental regulations, or
except as necessary to ensure that the Plan and/or rights granted under the
Plan comply with the requirements of Section 423 of the Code.

14. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to the end
of an Offering but prior to delivery to the participant of such shares and
cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death during an Offering.

(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver
such shares and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its sole discretion, may
deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse,

<PAGE>

dependent or relative is known to the Company, then to such other person as
the Company may designate.

15. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is
suspended or after it is terminated.

(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of
the Plan, except as expressly provided in the Plan or with the consent of the
person to whom such rights were granted, or except as necessary to comply
with any laws or governmental regulation, or except as necessary to ensure
that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.

16. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on the same day that the Company's
initial public offering of shares of common stock becomes effective (the
"Effective Date"), but no rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the stockholders of the
Company within twelve (12) months before or after the date the Plan is
adopted by the Board or the Committee, which date may be prior to the
Effective Date.

<PAGE>

NEWGEN RESULTS CORPORATION

RESTATED INVESTORS' RIGHTS AGREEMENT

This Restated Investors' Rights Agreement (this "Agreement") is made and
entered into as of November 26, 1997 by and among Newgen Results Corporation, a
California corporation (the "Company"), Bernard Simkin, an individual, Murray
Simkin, an individual, K&S Imports, Inc., a California corporation, and Johari
Investment Company Ltd., a corporation organized under the laws of the province
of British Columbia, Canada (collectively the "Prior Investors"), and the
persons and entities listed on Exhibit A attached hereto (hereinafter
collectively the "Investors").

RECITALS

A. Certain of the Investors hold shares of the Company's Series A
Preferred Stock (the "Series A Stock") and such Investors and the Prior
Investors possess rights pursuant to that certain Investors' Rights Agreement
dated August 7, 1996 (the "Prior Agreement").

B. The undersigned Investors who hold Series A Stock and the Prior
Investors desire to terminate the Prior Agreement and to accept the rights
created pursuant hereto in lieu of the rights granted to them under the Prior
Agreement.

C. Certain of the Investors have agreed to purchase from the Company, and
the Company has agreed to sell to certain of the Investors, shares of the
Company's Series B Preferred Stock ("Series B Stock") on the terms and
conditions set forth in that certain Series B Preferred Stock Purchase
Agreement, dated of even date herewith by and among the Company and such
Investors (the "Series B Agreement").

D. In connection with their purchase of Series B Stock, such Investors
desire certain information and registration rights and rights of first refusal,
all as more fully set forth herein.

E. In connection with the consummation of the sale of the Series B Stock,
the Company, the Investors and the Prior Investors desire to provide for rights
to be granted to and covenants to be made with Investors acquiring Series B
Stock, and the Investors and the Prior Investors who are parties to the Prior
Agreement hereby agree that the Prior Agreement shall be superseded and replaced
in its entirety by this Agreement.

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

<PAGE>

1. INFORMATION RIGHTS AND CERTAIN COVENANTS.

1.1 FINANCIAL INFORMATION. The Company covenants and agrees that,
commencing on the date of this Agreement, for so long as any Investor holds in
any combination at least 45,000 shares of Series A Stock, Series B Stock
(collectively, "Preferred Stock") and/or shares of Common Stock of the Company
("Common Stock") issued upon the conversion of such shares of Preferred Stock
(collectively "Conversion Stock") the Company will:

(a) ANNUAL REPORTS. Furnish to such Investor, as soon as practicable
and in any event within 120 days after the end of each fiscal year of the
Company, a consolidated Balance Sheet as of the end of such fiscal year, a
consolidated Statement of Income and a consolidated Statement of Cash Flows of
the Company and its subsidiaries, if any, for such year, setting forth in each
case in comparative form the figures from the Company's previous fiscal year (if
any), all prepared in accordance with generally accepted accounting principles
and practices, consistently applied throughout all periods presented (except as
noted thereon), and audited by nationally recognized independent certified
public accountants;

(b) QUARTERLY REPORTS. Furnish to such Investor as soon as
practicable, and in any event within 45 days of the end of each fiscal quarter
of the Company (except the last quarter of the Company's fiscal year), an
unaudited consolidated Balance Sheet as of the end of such fiscal quarter, an
unaudited consolidated Statement of Income and an unaudited consolidated
Statement of Cash Flows of the Company and its subsidiaries, if any, for such
quarter, all prepared in accordance with generally accepted accounting
principles and practices, consistently applied throughout all periods presented
(except as noted thereon), subject to normal year-end audit adjustments and the
absence of footnotes from unaudited financial statements;

(c) MONTHLY REPORTS. Furnish to such Investor as soon as
practicable, and in any event within 45 days of the end of each calendar month
(except the last month of the Company's fiscal year), an unaudited consolidated
Balance Sheet as of the end of such calendar month, an unaudited consolidated
Statement of Income and an unaudited consolidated Statement of Cash Flows of the
Company and its subsidiaries, if any, for such month, setting forth in each case
in comparative form the actual figures for such period and the budgeted figures
for such period, all prepared in accordance with generally accepted accounting
principles and practices, consistently applied throughout all periods presented
(except as noted thereon), subject to normal year-end audit adjustments and the
absence of footnotes from unaudited financial statements; and

<PAGE>

(d) ANNUAL BUDGET. Furnish to such Investor as soon as practicable
and in any event no later than 30 days prior to the close of each fiscal year of
the Company, an annual operating plan for the next immediate fiscal year.

(e) CONFIDENTIALITY. Each Investor agrees to hold all information
received pursuant to this Section in confidence, and not to use or disclose any
of such information to any third party, except to the extent such information
may be made publicly available by the Company and except as required by law;
provided however, that Investors may make such disclosures on a confidential
basis as are reasonably necessary to their limited partners, affiliates, agents,
attorneys or accountants to monitor and protect their investment in the Company.

1.2 INSPECTION RIGHTS. The Company shall permit each Investor holding at
least 45,000 shares of Preferred Stock, Conversion Stock, or any combination
thereof, at such Investor's expense, to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers and accountants, all
at such reasonable times as may be requested by such Investor. Each Investor
agrees to hold all information obtained from such inspections in confidence
pursuant to the terms of Section 1.1(e).

1.3 ATTENDANCE AT BOARD MEETINGS. The Company shall use reasonable, good
faith efforts to provide each of Trident Capital Management, L.L.C., BankAmerica
Ventures and BA Venture Partners II (collectively "Observer Investors"), for so
long as each such entity together with its affiliates owns at least 100,000
shares of Preferred Stock, Conversion Stock, or any combination thereof, with
notice, either in writing or by telephone, of all meetings of the Board of
Directors (the "Board") or Board Committees at the same time and in the same
manner that Board members receive notice. The Company will also provide
Observer Investors with a copy of any written consents of the Board or any Board
Committee ("Consents"). Observer Investors shall, at such Observer Investors'
own expense, be permitted to attend all meetings of the Board or Board
Committees as observers; provided however, that the members of the Board (or
Board Committee as applicable) may, without prior notice exclude Observer
Investors from attending any part of the meeting that the Board (or Board
Committee as applicable) determines in good faith is of such a sensitive,
confidential or privileged nature that Observer Investors should not be present.
In the event that Observer Investors attend any meeting of the Board or Board
Committee or receive any Consents, they agree to hold all information obtained
from such meetings or Consents in confidence pursuant to the terms of Section
1.1(e). In no event shall the failure to give Observer Investors notice of a
meeting of the Board or Board Committee, Consent or the exclusion of Observer
Investors from any part of any meeting pursuant to this Section be deemed to
invalidate any actions taken at such meetings or in such Consents.

3.
<PAGE>

1.4 VCOC RIGHTS. The organizational documents of Capstone Ventures, a
Delaware limited partnership, Information Associates, L.P., a Delaware limited
partnership, Information Associates, C.V., a Netherlands Antilles limited
partnership, Information Associates - II, L.P., a Delaware limited partnership,
and IA - II Affiliates Fund, L.L.C., a Delaware limited liability company
(individually, a "Fund" and collectively, the "Funds"), require that each of the
Funds have and maintain the status of a "venture capital operating company" as
defined in the Department of Labor Regulations, Section 25101.3-101(d) (the
"Regulations"). The Regulations require that a venture capital operating
company must have direct contractual rights to participate substantially in or
substantially influence the conduct of management of its portfolio companies.
Accordingly, in addition to the other rights provided under this Agreement and
any other written agreement with each of the Funds, each Fund shall have the
separate and individual right to consult with management concerning the
Company's finances, operations and strategy. In addition, if any of the Funds
are not represented on the Board, the Company shall invite a representative of
such Fund(s) to attend (at such Fund(s) expense) all meetings of the Board (and
committees of the Board) in a nonvoting observer capacity and, in this respect,
shall give such representative(s) copies of all notices, minutes, consents, and
other materials that it provides to its directors; provided however, that the
members of the Board (or Board Committee as applicable) may, without prior
notice, exclude any of the Funds from attending any part of any meeting or
delete any written materials provided to members of the Board (or Board
Committee as applicable) that the Board (or Board Committee as applicable)
determines in good faith is of such a sensitive, confidential or privileged
nature that the representative(s) of the Funds should not be present or, in the
case of written materials, should not review. Any information provided to any
of the Funds under this Section 1.4 shall be held in confidence pursuant to the
terms of Section 1.1(e). In no event shall the failure to give the Funds any
written materials, notice of any meeting of the Board or Board Committee, or the
exclusion of the Funds from any meeting of the Board or Board Committee pursuant
to this Section be deemed to invalidate any actions taken at such meetings or by
written consent.

1.5 TERMINATION OF CERTAIN RIGHTS. The Company's obligations under
Sections 1.1, 1.2, 1.3 and 1.4 above will terminate upon the closing of a public
offering by the Company that meets the criteria for automatic conversion of the
Preferred Stock set forth in Article VI, Section E.2.(a) of the Company's
Amended and Restated Articles of Incorporation, as they may be further amended
or restated from time to time (the "Articles of Incorporation").

1.6 SMALL BUSINESS ADMINISTRATION MATTERS.

(a) The proceeds from the purchase of the Series B Stock pursuant to
the Series B Agreement by BankAmerica Ventures (the "Proceeds") shall be used by
the Company for working capital, repayment of loans, and other general corporate
purposes.

4.
<PAGE>

The Company shall provide to representatives of BankAmerica Ventures and the
Small Business Administration (the "SBA") reasonable access to its books and
records for the purpose of confirming such use of the Proceeds or for other
purposes related to the qualification of the financing provided by BankAmerica
Ventures to the Company.

(b) For a period of one year following the Initial Closing (as
defined in the Series B Agreement), the Company shall not change the nature of
its business activity if such change would render the Company ineligible, within
the meaning of 13 C.F.R. Section 107.720.

(c) So long as BankAmerica Ventures holds any securities of the
Company, the Company will comply at all times with the non-discrimination
requirements of 13 C.F.R. Parts 112, 113 and 117.

(d) Within 45 days after the end of each fiscal year, and at any
other time reasonably requested by BankAmerica Ventures, the Company shall
deliver to BankAmerica Ventures a written assessment in form and substance
satisfactory to BankAmerica Ventures, of the economic impact of BankAmerica
Ventures' investment in the Company, specifying (a) the full-time equivalent
jobs created or retained in connection with the investment, and (b) the impact
of the investment on the Company's business, in terms of revenue and profits,
and on taxes paid by the Company and its employees. In the event that the
Company reasonably incurs out-of-pocket expenses in excess of $1,000 in
preparing such written assessment at BankAmerica Ventures' request, BankAmerica
Ventures shall reimburse the Company for all such reasonable expenses. Upon
request the Company promptly (and in any event within 20 days of such request)
shall furnish to BankAmerica Ventures all information (i) reasonably requested
by BankAmerica Ventures in order for BankAmerica Ventures to comply with the
requirements of 13 C.F.R. Section 107.620 or to prepare and file SBA Form 468
and (ii) reasonably requested or required by any governmental agency asserting
jurisdiction over BankAmerica Ventures. Any submission of financial information
pursuant to this Section 1.6 and Section 1.1 shall be under cover of a
certificate executed by the Company's president, chief executive officer, chief
financial officer or treasurer certifying that such information (i) relates to
the Company, (ii) to the best of the Company's knowledge is accurate and (iii)
if applicable, has been audited by the Company's independent auditors.

(e) In the event that BankAmerica Ventures determines that it has a
Regulatory Problem (as defined below), it shall have the right to transfer its
Preferred Stock to an affiliate of BankAmerica Ventures (or an entity reasonably
acceptable to the Company) without regard to any restrictions on transfer set
forth in the Series A Preferred Stock Purchase Agreement dated August 7, 1996,
the Series B Agreement or any agreement executed and delivered in connection
therewith, provided that the transferee agrees to become a party to each such
agreement, and provided further, that such transfer

5.
<PAGE>

complies with applicable federal and state securities laws. The Company shall
take all actions as may be reasonably requested by BankAmerica Ventures in order
to (i) effectuate and facilitate any transfer by BankAmerica Ventures of its
Preferred Stock then held by it to any such affiliate (or an entity reasonably
acceptable to the Company) designated by BankAmerica Ventures, (ii) permit
BankAmerica Ventures (or any of its affiliates) to exchange all or any portion
of any voting securities of the Company then held by BankAmerica Ventures (or
any affiliate), on a share-for-share basis, into non-voting securities of the
Company, which non-voting securities shall be identical in all respects to the
voting securities exchanged therefor (except for voting rights and that the
non-voting securities shall be convertible or exchangeable for voting securities
on such terms as may be necessary in light of regulatory requirements then
prevailing), and (iii) amend this Agreement and any other agreements as may be
necessary to effectuate and reflect the foregoing. The parties to this
Agreement agree to vote all of the Company's securities held by them in favor of
such amendments and actions. For purposes of this Section 1.6, a "Regulatory
Problem" means any set of circumstances wherein it has been asserted by any
governmental regulatory agency with jurisdiction over BankAmerica Ventures that
BankAmerica Ventures is not entitled to hold, or exercise any significant right
with respect to, the Preferred Stock or the currently unissued Common Stock of
the Company into which the shares of Preferred Stock are convertible.

1.7 KEY-PERSON INSURANCE. Subject to the approval of the Board of
Directors, the Company will use its best efforts to obtain and maintain in full
force and effect term life insurance in the amount of $2,000,000 on the life of
Gerald Benowitz naming the Company as beneficiary.

2. REGISTRATION RIGHTS.

2.1 DEFINITIONS. For purposes of this Section 2:

(a) REGISTRATION. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.

(b) REGISTRABLE SECURITIES. The term "Registrable Securities" means:
(1) all the shares of Common Stock of the Company issued or issuable upon the
conversion of any shares of Preferred Stock, (2) any shares of Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, all such
shares of Common Stock described in clause (1) of this subsection (b), (3) for
purposes of piggyback registration rights under Section 2.3 only, all shares of
Common Stock of the Company issued to the Prior

6.
<PAGE>

Investors prior to August 7, 1996 or issuable upon conversion, if any, of such
shares of Common Stock, and (4) for purposes of piggyback registration rights
under Section 2.3 only, any shares of Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, all such shares of Common Stock described in
clause (3) of this subsection (b); excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which rights under
this Section 2 are not assigned in accordance with this Agreement, any
Registrable Securities sold to the public or sold pursuant to Rule 144
promulgated under the Securities Act ("Rule 144") or shares of Common Stock held
by all of any Holder of less than 1% of the outstanding Common Stock of the
Company if all of such shares are available for sale pursuant to Rule 144 in any
ninety (90) day period.

(c) REGISTRABLE SECURITIES THEN OUTSTANDING. The number of shares of
"Registrable Securities then outstanding" shall mean the number of shares of
Common Stock which are Registrable Securities and are then (1) issued and
outstanding and (2) issuable pursuant to the exercise or conversion of then
outstanding and then exercisable options, warrants or convertible securities.

(d) HOLDER. For purposes of this Section 2 and Sections 3 and 4
hereof, the term "Holder" means any person owning of record Registrable
Securities that have not been sold to the public or pursuant to Rule 144
promulgated under the Securities Act or any assignee of record of such
Registrable Securities to whom rights under this Section 2 have been duly
assigned in accordance with this Agreement; PROVIDED HOWEVER, that for purposes
of this Agreement, a record holder of shares of Preferred Stock convertible into
such Registrable Securities shall be deemed to be the Holder of such Registrable
Securities; and PROVIDED FURTHER, that the Company shall in no event be
obligated to register shares of Preferred Stock and that Holders of Registrable
Securities will not be required to convert their shares of Preferred Stock into
Common Stock in order to exercise the registration rights granted hereunder,
until immediately before the closing of the offering to which the registration
relates; and provided, further, that the definition of "Holder" as used in
Sections 2.2 and 2.4 of this Agreement shall not include the Prior Investors.

(e) FORM S-3. The term "Form S-3" means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.

(f) SEC. The term "SEC" or "Commission" means the U.S. Securities
and Exchange Commission.

7.
<PAGE>

(g) SECURITIES ACT. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, or any similar federal statute and the rules
and regulations of the SEC thereunder, all as shall be in effect at the time.

2.2 DEMAND REGISTRATION.

(a) REQUEST BY HOLDERS. If the Company shall receive at any time
after August 6, 1998 a written request from the Holders of at least thirty-five
percent (35%) the Registrable Securities then outstanding that the Company file
a registration statement under the Securities Act covering the registration of
Registrable Securities pursuant to this Section 2.2, then the Company shall,
within 10 business days of the receipt of such written request, give written
notice of such request ("Request Notice") to all Holders, and use its best
efforts to effect, as soon as practicable, the registration under the Securities
Act of all Registrable Securities which Holders request to be registered and
included in such registration by written notice given by such Holders to the
Company within 20 days after receipt of the Request Notice, subject only to the
limitations of this Section 2.2; PROVIDED that the Registrable Securities
requested by all Holders to be registered pursuant to such request must have an
anticipated aggregate public offering price (before any underwriting discounts
and commissions) of not less than $7,500,000 (or $15,000,000 if such requested
registration is the initial public offering of the Company's stock registered
under the Securities Act).

(b) UNDERWRITING. If the Holders initiating the registration request
under this Section 2.2 ("Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2 and the Company shall include such information in the
written notice referred to in subsection 2.2(a). In such event, the right of
any Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting by a majority in interest of the
Holders, but subject to the Company's reasonable approval. Notwithstanding any
other provision of this Section 2.2, if the managing underwriter(s) advise(s)
the Company in writing that marketing factors require a limitation of the number
of securities to be underwritten then the Company shall so advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of Registrable Securities that may be included
in the underwriting shall be reduced as required by the underwriter(s) and
allocated among the Holders of Registrable

8.
<PAGE>

Securities on a pro rata basis according to the number of Registrable Securities
then outstanding held by each Holder requesting registration (including the
Initiating Holders); PROVIDED HOWEVER, that the number of shares of Registrable
Securities to be included in such underwriting and registration shall not be
reduced unless all other securities of the Company are first entirely excluded
from the underwriting and registration. Any Registrable Securities excluded and
withdrawn from such underwriting shall be withdrawn from the registration.

(c) MAXIMUM NUMBER OF DEMAND REGISTRATIONS. The Company is obligated
to effect only two (2) such registrations pursuant to this Section 2.2.

(d) DEFERRAL. Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting the filing of a registration statement pursuant to
this Section 2.2, a certificate signed by the President or Chief Executive
Officer of the Company stating that in the good faith judgment of the Board, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, then the Company shall have the right to
defer such filing for a period of not more than 120 days after receipt of the
request of the Initiating Holders; PROVIDED HOWEVER, that the Company may not
utilize this right more than once in any twelve (12) month period.

(e) EXPENSES. All expenses incurred in connection with a
registration pursuant to this Section 2.2, including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders (but excluding
underwriters' discounts and commissions), shall be borne by the Company. Each
Holder participating in a registration pursuant to this Section 2.2 shall bear
such Holder's proportionate share (based on the total number of shares sold in
such registration other than for the account of the Company) of all discounts,
commissions or other amounts payable to underwriters or brokers in connection
with such offering. Notwithstanding the foregoing, the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to this Section 2.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered, unless the Holders of a majority of the Registrable Securities then
outstanding agree to forfeit their right to one (1) demand registration pursuant
to this Section 2.2 (in which case such right shall be forfeited by all Holders
of Registrable Securities); PROVIDED FURTHER, HOWEVER, that if at the time of
such withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company not known to the Holders at the
time of their request for such registration and have withdrawn their request for
registration with reasonable promptness after learning of such material adverse
change, then the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant to this Section 2.2.

9.
<PAGE>

2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least 30 days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to any registration
under Section 2.2 or Section 2.4 of this Agreement or to any employee benefit
plan or a corporate reorganization) and will afford each such Holder an
opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall, within 20 days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Securities
such Holder wishes to include in such registration statement. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.

(a) UNDERWRITING. If a registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering,
then the Company shall so advise the Holders of Registrable Securities. In
such event the right of any such Holder's Registrable Securities to be
included in a registration pursuant to this Section 2.3 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting
agreement in customary form with the managing underwriter(s) selected for
such underwriting. Notwithstanding any other provision of this Agreement if
the managing underwriter(s) determine(s) in good faith that marketing factors
require a limitation of the number of shares to be underwritten, then the
managing underwriter(s) may exclude shares (including Registrable Securities)
from the registration and the underwriting. The number of shares that may be
included in the registration and the underwriting shall be allocated first to
the Company. After shares have been allocated to the Company, the remaining
shares that may be included in the registration and underwriting shall be
allocated on a one-for-one basis as between two groups. These two groups are
(i) the Prior Investors, and (ii) the holders of Registrable Securities to
the extent their Registrable Securities are derived from Preferred Stock.
Among the Holders requesting inclusion of their Registrable Securities in
such registration statement within these two groups, shares shall be
allocated on a pro rata basis based on the total number of Registrable
Securities held by each such Holder in that group. The right of the
underwriters to exclude shares (including Registrable Securities) from the
registration and the underwriting. The number of shares that may bei ncluded
in the registration and the underwriting shall be allocated first to the
Company. After shares have been allocated to the Company, the remaining
shares that may be included in the registration and underwriting shall be
allocated on a one-for-one basis as between two groups. These two groups are
(i) the Prior Investors, and (ii) the holders of Registrable Securities to
the extent their Registrable Securities are derived from Preferred Stock.
Among the Holders requesting inclusion of their Registrable Securities in
such registration statement within these two groups, shares shall be
allocated on a pro rata basis based on the total number of Registrsble
securities held by each such HOlder in that group. The right of the
underwriters to exclude shares (including Registrable Securities)

10.
<PAGE>

from the registration and underwriting as described above shall be restricted
so that the number of Registrable Securities included in any such
registration is not reduced below twenty-five percent (25%) of the shares
included in the registration, except for a registration relating to the
Company's initial public offering from which all Registrable Securities may
be excluded. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the underwriter, delivered at least seven (7) business
days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder which is a
partnership or corporation, the partners, retired partners and shareholders
of such Holder, or the estates and family members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing
persons shall be deemed to be a single "Holder", and any pro rata reduction
with respect to such "Holder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such "Holder", as defined in this sentence.

(b) EXPENSES. All expenses incurred in connection with a
registration pursuant to this Section 2.3 (excluding underwriters' and brokers'
discounts and commissions), including, without limitation all federal and "blue
sky" registration and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company and reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the
Company.

2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, then the Company will:

(a) NOTICE. Promptly give written notice of the proposed
registration and the Holder's or Holders' request therefor, and any related
qualification or compliance, to all other Holders of Registrable Securities; and

(b) REGISTRATION. As soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 20 days after receipt of such written notice from the Company;
PROVIDED HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:

11.
<PAGE>

(1) if Form S-3 is not available for such offering by the
Holders;

(2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $500,000;

(3) if the Company shall furnish to the Holders a certificate
signed by the President or Chief Executive Officer of the Company stating that
in the good faith judgment of the Board, it would be seriously detrimental to
the Company and its shareholders for such Form S-3 Registration to be filed and
it is therefore essential to defer the filing of such Form S-3 Registration
Statement, then the Company shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than 120 days after receipt
of the request of the Holder or Holders under this Section 2.4; PROVIDED
HOWEVER, that the Company may not utilize this right more than once in any
twelve (12) month period; or

(4) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.

(c) EXPENSES. The Company shall pay all expenses incurred in
connection with each registration requested pursuant to this Section 2.4,
(excluding underwriters' or brokers' discounts and commissions), including
without limitation all filing, registration and qualification, printers' and
accounting fees and the reasonable fees and disbursements of one counsel for the
selling Holder or Holders and counsel for the Company.

(d) NOT DEMAND REGISTRATION. Form S-3 registrations shall not be
deemed to be demand registrations as described in Section 2.2 above.

2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:

(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 120 days.

(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with
such registration

12.
<PAGE>

statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.

(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by them that
are included in such registration.

(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a "comfort"
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering
and reasonably satisfactory to a majority in interest of the

13.
<PAGE>

Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.

2.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2.2, 2.3 or
2.4 that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be reasonably required to
timely effect the registration of their Registrable Securities.

2.7 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.

2.8 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Section 2.2, 2.3 or 2.4:

(a) BY THE COMPANY. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the shareholders, partners, officers
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended, (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):

(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto;

(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, or

(iii) any violation or alleged violation by the Company of the
Securities Act, the 1934 Act, any federal or state securities law or
any rule or regulation promulgated under the Securities Act, the 1934
Act or any federal or state securities law in connection with the
offering covered by such registration statement;

14.
<PAGE>

and the Company will reimburse each such Holder, shareholder, partner, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action: PROVIDED HOWEVER,
that the indemnity agreement contained in this subsection 2.8(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, shareholder, partner,
officer, director, underwriter or controlling person of such Holder.

(b) BY SELLING HOLDERS. To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, and any other
Holder selling securities under such registration statement or any of such other
Holder's shareholders, partners, directors or officers or any person who
controls such Holder within the meaning of the Securities Act or the 1934 Act,
against any losses, claims, damages or liabilities (joint or several) to which
the Company or any such director, officer, controlling person, or other such
Holder, shareholder, partner or director, officer or controlling person of such
other Holder may become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, or other Holder,
shareholder, partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED HOWEVER, that the indemnity agreement
contained in this subsection 2.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; and PROVIDED FURTHER, that the total amounts
payable in indemnity by a Holder under this Section 2.8(b) in respect of any
Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.

(c) NOTICE. Promptly after receipt by an indemnified party under
this Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any

15.
<PAGE>

indemnifying party under this Section 2.8, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; PROVIDED
HOWEVER, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.8.

(d) DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that insofar
as they relate to any Violation made in a preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act; PROVIDED
HOWEVER, that this condition shall only apply where the indemnified party had an
obligation to provide the Final Prospectus to such person.

(e) CONTRIBUTION. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.8 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.8; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable

16.
<PAGE>

Securities offered by and sold under the registration statement bears to the
public offering price of all securities offered by and sold under such
registration statement, and the Company and other selling Holders are
responsible for the remaining portion; provided, however, that, in any such
case, (A) no such Holder will be required to contribute any amount in excess of
the net proceeds received from the Registrable Securities offered and sold by
such Holder pursuant to such registration statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.

(f) SURVIVAL. The obligations of the Company and Holders under this
Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.

2.9 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that it shall
not, to the extent requested by the Company or an underwriter of securities of
the Company, sell or otherwise transfer or dispose of any Registrable Securities
or other shares of stock of the Company then owned by such Holder (other than to
donees or partners of the Holder who agree to be similarly bound) for up to 180
days following the effective date of the first registration statement of the
Company filed under the Securities Act and for up to 90 days following the
effective date of all subsequent registration statements of the Company filed
under the Securities Act; PROVIDED HOWEVER, that:

(a) such agreement shall be applicable only to registration
statements which cover securities to be sold on behalf of the Company in an
underwritten public offering; and

(b) all executive officers and directors enter into similar
agreements and the Company uses all reasonable efforts to obtain similar
agreements from all other holders of at least one percent (1%) of the Company's
then outstanding voting agreements.

In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop transfer instructions with respect to
the Registrable Securities and such other shares of stock of each Holder (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.

2.10 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:

17.
<PAGE>

(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;

(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); and

(c) So long as a Holder owns any Registrable Securities, to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company for an offering of its securities to the general public), and of
the Securities Act and the 1934 Act (at any time after it has become subject to
the reporting requirements of the 1934 Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration (at any time after the Company has become subject to the
reporting requirements of the 1934 Act).

2.11 TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have no
obligations pursuant to Sections 2.2 through 2.4 with respect to: (i) any
request or requests for registration made by any Holder on a date more than five
(5) years after the closing date of the Company's initial public offering; or
(ii) any Registrable Securities proposed to be sold by a Holder in a
registration pursuant to Section 2.2, 2.3 or 2.4 if, (A) the Company has
completed an initial public offering of its Common Stock and is subject to the
provisions of the 1934 Act and (B) in the opinion of counsel to the Company, all
such Registrable Securities proposed to be sold by a Holder may be sold in a
three-month period without registration under the Securities Act pursuant to
Rule 144 under the Securities Act.

2.12 NO FUTURE REGISTRATION RIGHTS. The Company shall not grant future
registration rights without the consent of the holders of at least
three-quarters (3/4) of the Conversion Stock issued or issuable upon conversion
of the Preferred Stock voting together as a class, unless subordinate to the
registration rights granted in connection herewith.

3. RIGHT OF FIRST REFUSAL.

3.1 GENERAL. Each Holder (as defined in Section 2.1(d) (which term shall
include the Prior Investors for purposes of this Section 3)) of at least 45,000
shares of

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<PAGE>

Preferred Stock, Conversion Stock, Common Stock, or any combination thereof, any
party to whom such Holder's rights under this Section 3 have been duly assigned
in accordance with Section 4.1(c), each Prior Investor and any party to whom
such Prior Investor's rights under this Section 3 have been duly assigned in
accordance with Section 4.1(c) (each such Holder or assignee and each Prior
Investor or assignee being hereinafter referred to as a "Rights Holder") has the
right of first refusal to purchase such Rights Holder's Pro Rata Share (as
defined below), of all (or any part) of any "New Securities" (as defined in
Section 3.2) that the Company may from time to time issue after the date of this
Agreement. A Rights Holder's "Pro Rata Share" for purposes of this right of
first refusal is the ratio of (a) the number of shares of Common Stock of the
Company equal to the sum of (i) the total number of shares of Common Stock of
the Company then held by the Rights Holder plus (ii) the total number of shares
of Common Stock of the Company into which the shares of Preferred Stock then
held by the Rights Holder are then convertible plus (iii) the number of shares
of Common Stock of the Company subject to all options and warrants then held by
the Rights Holder, to (b) a number of shares of Common Stock of the Company
equal to the sum of (i) the total number of shares of Common Stock of the
Company then outstanding plus (ii) the total number of shares of Common Stock of
the Company into which all then outstanding shares of Preferred Stock are then
convertible plus (iii) the number of shares of Common Stock of the Company
reserved for issuance under stock purchase and stock option plans of the Company
and outstanding warrants up to 700,000; PROVIDED HOWEVER, that if at least one
member of the Board elected by the holders of Series A Stock voting as a
separate class and at least one member of the Board elected by holders of
Series B Stock voting as a separate class, has approved an increase of such
reserved number beyond 700,000, then the limitation of 700,000 set forth herein
shall be increased to such larger number.

3.2 NEW SECURITIES. "New Securities" shall mean any Common Stock or
Preferred Stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or Preferred Stock and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or Preferred Stock; provided, however, that
the term "New Securities" does not include:

(i) shares of the Company's Common Stock (and/or options or
warrants therefor) issued to employees, officers, directors, contractors,
advisors or consultants of the Company pursuant to incentive agreements or plans
approved by the Board; PROVIDED HOWEVER, that if such shares and/or options or
warrants therefor are issued to any of the Prior Investors or any affiliate or
family member thereof (excluding Sam Simkin for so long as he is an employee of
the Company), Board approval of such incentive agreements or plans includes at
least one member elected by the holders of Series A Preferred Stock voting as a
separate class and at least one member elected by the holders of Series B Stock
voting as a separate class;

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(ii) shares of Series B Preferred Stock issued under the Series
B Agreement, as such agreement may be amended;

(iii) any securities issuable upon conversion of or with respect
to any then outstanding shares of Series A Stock or Series B Stock of the
Company or Common Stock or other securities issuable upon conversion thereof;

(iv) 106,024 shares of Common Stock of the Company issuable
upon exercise of options to purchase securities outstanding on the date of this
Agreement ("Warrant Securities"):

(v) shares of the Company's Common Stock or Preferred Stock
issued in connection with any stock split or stock dividend;

(vi) securities offered by the Company to the public pursuant
to a registration statement filed under the Securities Act;

(vii) shares of the Company's Common Stock (and/or options or
warrants therefor) issued or issuable to parties providing the Company with
equipment leases, real property leases, loans, credit lines, guaranties of
indebtedness, cash price reductions or similar financing pursuant to agreements
or other arrangements approved by the Board; provided however, that if such
shares and/or options or warrants are issued to any of the Prior Investors or
any affiliate or family member thereof, Board approval of such agreements or
other arrangements includes at least one member elected by the holders of Series
A Stock voting as a separate class and at least one member elected by the
holders of Series B Stock voting as a separate class;

(viii) securities issued pursuant to the acquisition of
another corporation or entity by the Company by consolidation, merger, purchase
of all or substantially all of the assets, or other reorganization in which the
Company acquires, in a single transaction or series of related transactions, all
or substantially all of the assets of such other corporation or entity or fifty
percent (50%) or more of the voting power of such other corporation or entity or
fifty percent (50%) or more of the equity ownership of such other entity; or

(ix) securities issued pursuant to any plans or agreements
approved by the Board, including at least one member elected by the holders of
the Series A Stock voting as a separate class and at least one member elected by
the holders of Series B Stock voting as a separate class.

3.3 PROCEDURES. In the event that the Company proposes to undertake an
issuance of New Securities, it shall give to each Rights Holder written notice
of its intent to issue New Securities (the "Notice"), describing the type of New
Securities and the

20.
<PAGE>

price and the general terms upon which the Company proposes to issue such New
Securities. Each Rights Holder shall have 10 days from the receipt of any such
Notice to agree in writing to purchase such Rights Holder's Pro Rata Share of
such New Securities for the price and upon the general terms specified in the
Notice by giving written notice to the Company and stating therein the quantity
of New Securities to be purchased (not to exceed such Rights Holder's Pro Rata
Share). If any Rights Holder fails to so agree in writing within such 10 day
period to purchase such Rights Holder's full Pro Rata Share of an offering of
New Securities (a "Nonpurchasing Holder"), then such Nonpurchasing Holder shall
forfeit the right hereunder to purchase that part of his Pro Rata Share of such
New Securities that he did not so agree to purchase and the Company shall
promptly give each Rights Holder who has timely agreed to purchase his full Pro
Rata Share of such offering of New Securities (a "Purchasing Holder") written
notice of the failure of any Nonpurchasing Holder to purchase such Nonpurchasing
Rights Holder's full Pro Rata Share of such offering of New Securities (the
"Overallotment Notice"). Each Purchasing Holder shall have a right of
overallotment such that such Purchasing Holder may agree to purchase a portion
of the Nonpurchasing Holders' unpurchased Pro Rata Shares of such offering on a
pro rata basis according to the relative Pro Rata Shares of the Purchasing
Rights Holders, at any time within 5 days after receiving the Overallotment
Notice.

3.4 FAILURE TO EXERCISE. In the event that the Rights Holders fail to
exercise in full the right of first refusal within such 10 plus 5 day period,
then the Company shall have 120 days thereafter to sell the New Securities with
respect to which the Rights Holders' rights of first refusal hereunder were not
exercised, at a price and upon general terms specified in the Company's Notice
to the Rights Holders. In the event that the Company has not issued and sold
the New Securities within such 120 day period, then the Company shall not
thereafter issue or sell any New Securities without again first offering such
New Securities to the Rights Holders pursuant to this Section 3.

3.5 TERMINATION. This right of first refusal shall terminate (i)
immediately before the closing of a public offering by the Company that meets
the criteria for automatic conversion of the Preferred Stock set forth in
Article VI, Section E.2.(a) of the Articles of Incorporation, or (ii) upon (a)
the sale of all or substantially all the assets of the Company or (b) an
acquisition of the Company by another corporation or entity by consolidation,
merger or other reorganization in which the holders of the Company's outstanding
voting stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) or more of
the voting power of the corporation or other entity surviving such transaction.

4. ASSIGNMENT AND AMENDMENT.

4.1 ASSIGNMENT. Notwithstanding anything herein to the contrary:

21.
<PAGE>

(a) INFORMATION RIGHTS. The rights of an Investor under Section 1.1
or 1.2 hereof may be assigned to a party who acquires from an Investor (or an
Investor's permitted assigns) at least 45,000 shares of Preferred Stock,
Conversion Stock, or any combination thereof.

(b) REGISTRATION RIGHTS. The registration rights of a Holder under
Section 2 hereof may be assigned only to (i) a party who acquires at least
45,000 shares of Preferred Stock, Conversion Stock, Common Stock, or any
combination thereof, (ii) a partner or retired partner of any Holder, where such
Holder is a partnership or a member or retired member of any Holder where such
Holder is a limited liability corporation, (iii) a member of the "immediate
family" (as defined below) of any Holder that is an individual, (iv) a trust
established for the benefit of any Holder that is an individual, or (v) an
affiliated fund of any Holder that is a venture capital fund; or (vi) an
affiliate of a Holder that is a corporation; provided, however that no party may
be assigned any of the foregoing rights unless the Company is given written
notice by the assigning party at the time of such assignment stating the name
and address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned: and provided further that any
such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 4, by agreeing in writing to be bound by the terms hereof. As used
herein, the term "immediate family" will mean the Holder's spouse, lineal
descendant or antecedent, father, mother, brother or sister, adopted child or
grandchild, or the spouse of any child, adopted child, grandchild, or adopted
grandchild of the Holder.

(c) REFUSAL RIGHTS. The rights of first refusal of a Rights Holder
under Section 3 hereof may be assigned only to a party who acquires from a
Holder at least 45,000 shares of Preferred Stock, Conversion Stock, Common
Stock, or any combination thereof; PROVIDED HOWEVER that no party may be
assigned any of the foregoing rights unless the Company is given written notice
by the assigning party at the time of such assignment stating the name and
address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned; and PROVIDED FURTHER that any
such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 4, by agreeing in writing to be bound by the terms hereof.

4.2 AMENDMENT OF RIGHTS. Subject to Section 4.3, any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, the Investors
(and/or any of their permitted successors or assigns) holding more than
three-quarters (3/4) of the then outstanding shares of Preferred Stock and
Conversion Stock, and the Prior Investors (and/or any of their permitted
successors or assigns) holding more than a majority of the Registrable
Securities then

22.
<PAGE>

held or beneficially owned by such Prior Investors (and/or any of their
permitted successors or assigns). Any amendment or waiver effected in
accordance with this Section 4.2 shall be binding upon each Investor, each
Holder, each Prior Investor, each permitted successor or assign of such
Investor, Holder or Prior Investor and the Company.

4.3 NEW INVESTORS. Notwithstanding anything herein to the contrary, if
pursuant to Section 2.2 of the Series B Agreement, additional parties purchase
shares of Series B Stock as "New Investors" thereunder, then each such New
Investor shall become a party to this Agreement as an "Investor" hereunder,
without the need for any consent, approval or signature of any Investor when
such New Investor has both: (i) purchased shares of Series B Stock under the
Series B Agreement and paid the Company all consideration payable for such
shares and (ii) executed one or more counterpart signature pages to this
Agreement as an "Investor", with the Company's consent.

5. GENERAL PROVISIONS.

5.1 NOTICES. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if deposited in the U.S. mail by registered or
certified mail, return receipt requested, postage prepaid, as follows:

(a) if to an Investor, at such Investor's respective address as set
forth on Exhibit A hereto and if to a Prior Investor, at such Prior Investor's
respective address as also set forth on Exhibit A hereto.

(b) if to the Company, at Newgen Results Corporation, 12680 High
Bluff Drive, Suite 300, San Diego, California, 92130.

Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder. Notice shall conclusively be
deemed to have been given when personally delivered or when deposited in the
mail in the manner set forth above.

5.2 ENTIRE AGREEMENT. This Agreement, together with all the Exhibits
hereto, constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.

5.3 GOVERNING LAW. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of California as
applied to

23.
<PAGE>

agreements among California residents entered into and to be performed entirely
within California, excluding that body of law relating to conflict of laws and
choice of law.

5.4 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.

5.5 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.

5.6 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 4.1, the
provisions of this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto.

5.7 CAPTIONS. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.

5.8 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

5.9 COSTS AND ATTORNEYS' FEES. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action suit or
other proceeding, including any and all appeals or petitions therefrom.

5.10 ADJUSTMENTS FOR STOCK SPLITS, ETC. Wherever in this Agreement there
is a reference to a specific number of shares of Common Stock or Preferred Stock
of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.

5.11 AGGREGATION OF STOCK. All shares held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

24.

<PAGE>

[THIS SPACE INTENTIONALLY LEFT BLANK]

25.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

COMPANY: NEWGEN RESULTS CORPORATION

By: /s/ Gerald Benowitz
--------------------------------------------
Gerald Benowitz,
President and Chief Executive Officer

INVESTORS AND
PRIOR INVESTORS:
K&S IMPORTS, INC.

By: /s/ Sam Simkin
--------------------------------------------
Sam Simkin, President

JOHARI INVESTMENT COMPANY LTD.

By: /s/ Gary Simkin
--------------------------------------------
Gary Simkin, President

/s/ Bernard Simkin
--------------------------------------------
Bernard Simkin

/s/ Murray Simkin
--------------------------------------------
Murray Simkin

RESTATED INVESTORS' RIGHTS AGREEMENT

<PAGE>

INFORMATION ASSOCIATES, L.P.

By: Trident Capital Management, L.L.C.,
its general partner

By: /s/ John Moragne
--------------------------------------------
Title: Managing Director
------------------------------------------

INFORMATION ASSOCIATES, C.V.

By: Trident Capital Management, L.L.C.,
its investment general partner

By: /s/ John Moragne
--------------------------------------------
Title: Managing Director
------------------------------------------

INFORMATION ASSOCIATES - II, L.P.

By: Trident Capital Management - II, L.L.C.,
its general partner

By: /s/ John Moragne
--------------------------------------------
Title: Managing Direcotr
------------------------------------------

IA - II AFFILIATES FUND, L.L.C.

By: /s/ John Moragne
--------------------------------------------
Title: Managing Director
------------------------------------------

RESTATED INVESTORS' RIGHTS AGREEMENT

<PAGE>

CAPSTONE VENTURES
By: Capstone Management L.L.C.,
its General Partner

By: /s/ Eugene Fischer
-------------------------------------------
Eugene Fischer, Managing Member

BANKAMERICA VENTURES

By: /s/ Jess R. Marzak
-------------------------------------------
Jess R. Marzak, Managing Director

BA VENTURE PARTNERS II

By: /s/ Jess R. Marzak
-------------------------------------------
Jess R. Marzak, General Partner

BANCAMERICA ROBERTSON STEPHENS

By: /s/ John P. Rohal
-------------------------------------------
Print Name: John P. Rohal
------------------------------------
Title: Dir. of Research
-----------------------------------------

GC&H INVESTMENTS

By: /s/ John L. Cardoza
-------------------------------------------
John L. Cardoza, Executive Partner

RESTATED INVESTORS' RIGHTS AGREEMENT

<PAGE>

SILICON VALLEY BANK

By: /s/ John W. Otterson
-------------------------------------------
Print Name: John W. Otterson
------------------------------------
Title: SVP
-----------------------------------------

SF GROWTH FUND

By: /s/ Kevin J. Makley
-------------------------------------------
Print Name: Kevin J. Makley
------------------------------------
Title: President
-----------------------------------------

/s/ Duncan Naylor
------------------------------------------------
Duncan Naylor

ELAINE MCKAY REVOCABLE TRUST

By: /s/ Robert McKay
-------------------------------------------
Print Name: Robert McKay
------------------------------------
Title: co-Trustee
-----------------------------------------

RESTATED INVESTORS' RIGHTS AGREEMENT

<PAGE>

BAYVIEW INVESTORS, LTD.

By: /s/ Terry R. Otton
------------------------------------------
Print Name:
-----------------------------------
Title:
----------------------------------------

RESTATED INVESTORS' RIGHTS AGREEMENT

<PAGE>

EXHIBIT A

SCHEDULE OF INVESTORS

Name and Address
- -------------------------------

K&S Imports, Inc.
4722 Sun Valley Road
Del Mar, CA 92014

Johari Investment Co.
6289 Carnarvon Street
Vancouver, B.C.
Canada V6N1K3
Attn: Gary Simkin, President

Bernard Simkin
P.O. Box 9532
Rancho Santa Fe, CA 92067

Murray Simkin
P.O. Box 7102
Rancho Santa Fe, CA 92067

Information Associates, L.P.
c/o Trident Capital Management, L.L.C.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

Information Associates, C.V.
c/o Trident Capital Management, L.L.C.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

<PAGE>

Name and Address
- -------------------------------

Information Associates - II, L.P.
c/o Trident Capital Management - II, L.L.C.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

IA - II Affiliates Fund, L.L.C.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

Capstone Ventures
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025
Attn: Eugene Fischer

BancAmerica Robertson Stephens
555 California Street, Suite 2600
San Francisco, CA 94104

BankAmerica Ventures
950 Tower Lane, Suite 700
Foster City, CA 94404
Attn: Jess Marzak

BA Venture Partners II
c/o BankAmerica Ventures
950 Tower Lane, Suite 700
Foster City, CA 94404
Attn: Jess Marzak

GC&H Investments
One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580
Attn: John L. Cardoza

<PAGE>

Name and Address
- -------------------------------

Silicon Valley Bank
5414 Oberlin Drive, Suite 230
San Diego, CA 92121
Attn: John W. Otterson

SF Growth Fund
c/o Kevin J. Makley
Saint Francis High School
1885 Miramonte Avenue
Mountain View, CA 94040

Duncan Naylor
1268 Estate Drive
Los Altos, CA 94024

Elaine McKay Revocable Trust
c/o Robert McKay
383 Rhode Island Street
San Francisco, CA 94103

<PAGE>

NEWGEN RESULTS CORPORATION

RESTATED INVESTORS' RIGHTS AGREEMENT

NOVEMBER __, 1997

<PAGE>

TABLE OF CONTENTS

PAGE

<S> <C>
1. Information Rights and Certain Covenants. . . . . . . . . . . . . . . . . . . .2
1.1 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.3 Attendance at Board Meetings . . . . . . . . . . . . . . . . . . . . . .3
1.4 VCOC Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
1.5 Termination of Certain Rights. . . . . . . . . . . . . . . . . . . . . .4
1.6 Small Business Administration Matters. . . . . . . . . . . . . . . . . .4
1.7 Key-Person Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .6
2. Registration Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Demand Registration. . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.3 Piggyback Registrations. . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Form S-3 Registration. . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Furnish Information. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.7 Delay of Registration. . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.9 "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . . . . . 17
2.10 Rule 144 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.11 Termination of the Company's Obligations . . . . . . . . . . . . . . . 18
2.12 No Future Registration Rights. . . . . . . . . . . . . . . . . . . . . 18
3. Right of First Refusal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 New Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Failure to Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4. Assignment and Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Amendment of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 New Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Successors and Assigns.. . . . . . . . . . . . . . . . . . . . . . . . 24
5.7 Captions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.8 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

i.
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

PAGE

<S> <C>

5.9 Costs and Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . 24
5.10 Adjustments for Stock Splits, etc. . . . . . . . . . . . . . . . . . . 24
5.11 Aggregation of Stock.. . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>

ii.

<PAGE>

NEWGEN RESULTS CORPORATION

RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT

This Agreement is made and entered into as of November 26, 1997 (the
"Effective Date") by and among Newgen Results Corporation, a California
corporation (the "Company"), Bernard Simkin, an individual, Murray Simkin, an
individual, K&S Imports, Inc., a California corporation, and Johari Investment
Company Ltd., a corporation organized under the laws of the province of British
Columbia, Canada (collectively the "Prior Investors"), the persons and entities
listed on Exhibit A attached hereto (hereafter collectively the "Preferred
Investors"), and those shareholders of the Company listed on Exhibit B attached
hereto (the "Shareholders"). This Agreement amends and restates the Right of
First Refusal and Co-Sale Agreement, dated as of August 7, 1996, by and among
certain of the parties hereto (the "Prior Agreement"). As a result, the parties
to the Prior Agreement, each of whom is also a party to this Agreement, hereby
agree that the Prior Agreement is superseded by this Agreement and that the
Prior Agreement shall have no further force or effect.

RECITALS

A. Certain of the Preferred Investors have agreed, contingent on
execution by all parties of this Agreement, to purchase shares of the Company's
Series B Preferred Stock (the "Series B Stock") pursuant to a Series B Preferred
Stock Purchase Agreement of even date herewith (the "Series B Agreement"). In
connection with their purchase of Series B Stock, such Preferred Investors
desire to receive the rights of first refusal and co-sale rights set forth
herein.

B. The Prior Investors are holders of shares of the Company's Common
Stock ("Common Stock") issued to them by the Company prior to August 7, 1996;
certain of the Preferred Investors are holders of shares of the Company's Series
A Preferred Stock (the "Series A Stock") issued to them by the Company in August
and December 1996; and the Shareholders are holders of Common Stock and/or own
options to purchase shares of Common Stock issued to them by the Company on
various dates since the Company's inception. Each of the foregoing holders of
the Company's securities is a party to the Prior Agreement. In order to induce
certain of the Preferred Investors to purchase shares of Series B Stock from the
Company and to enter into the Series B Agreement, each of the parties to the
Prior Agreement has agreed to grant the Preferred Investors who acquire Series B
Stock certain rights of first refusal and rights of co-sale, all on the terms
and conditions set forth in this Agreement.

<PAGE>

NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises herein contained, and for other consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following terms
have the following meanings:

1.1 "SHAREHOLDER SHARES" means and includes all shares of Common Stock
that are owned and held of record or beneficially by the Shareholders on the
Effective Date hereof, or such other securities of the Company for which such
shares are exchanged or into which such shares are converted by way of
recapitalization, reclassification, substitution or otherwise and any Common
Stock or other securities of the Company acquired and owned of record or
beneficially by the Shareholders after the Effective Date.

1.2 "PRIOR INVESTOR SHARES" means shares of Common Stock of the Company
owned of record or beneficially by any of the Prior Investors prior to August 7,
1996, or such other securities of the Company for which such shares are
exchanged or into which such shares are converted by way of recapitalization,
reclassification, substitution or otherwise and any Common Stock or other
securities of the Company acquired and owned of record or beneficially by the
Prior Investors after the Effective Date.

1.3 "COMMON STOCK EQUIVALENTS" means, at a given time, the then
outstanding shares of Common Stock and shares of Common Stock then issuable upon
the conversion of then outstanding shares of Preferred Stock of the Company.
For purposes of this Agreement, at a given time a shareholder of the Company is
deemed to own a number of Common Stock Equivalents equal to the number of
outstanding shares of Common Stock then owned by such shareholder of the Company
plus the number of shares of Common Stock then issuable upon the conversion of
the then outstanding shares of Preferred Stock of the Company owned and held of
record by such shareholder of the Company.

1.4 "OFFERED SHAREHOLDER SHARES" means all Shareholder Shares proposed to
be Transferred by a Shareholder to a particular transferee other than Excluded
Shares.

1.5 "OFFERED PRIOR INVESTOR SHARES" means all Prior Investor Shares
proposed to be Transferred by a Prior Investor to a particular transferee other
than Excluded Shares.

1.6 "EXCLUDED SHARES" means an aggregate of two percent (2%) per year of
the Shareholder Shares or Prior Investor Shares held by a Shareholder or a Prior
Investor (as applicable) on the date of this Agreement.

1.7 "TRANSFER" AND "TRANSFERRED" mean and include any sale, assignment,
encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by
bequest, devise

2.
<PAGE>

or descent, or other transfer or disposition of any kind, including but not
limited to transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, EXCEPT FOR:

(a) any bona fide pledge if the pledgee executes a counterpart copy
of this Agreement and becomes bound thereby as if such pledgee were a
Shareholder or Prior Investor (as applicable);

(b) if the Shareholder or Prior Investor is a natural person, any
transfers of Shareholder Shares or Prior Investor Shares during a Shareholder's
or Prior Investor's lifetime or on a Shareholder's or Prior Investor's death by
will or intestacy to such Shareholder's or Prior Investor's "immediate family"
(as defined below) or to a trust for the benefit of such Shareholder or Prior
Investor or Shareholder's or Prior Investor's immediate family, provided that
each transferee or other recipient executes a counterpart copy of this Agreement
and becomes bound thereby as a Shareholder or Prior Investor (as applicable).
As used herein, the term "immediate family" will mean the Shareholder's or Prior
Investor's spouse, lineal descendant or antecedent, father, mother, brother or
sister, adopted child or grandchild, or the spouse of any child, adopted child,
grandchild, or adopted grandchild of the Shareholder or Prior Investor;

(c) any transfer of Shareholder Shares by a Shareholder or Prior
Investor Shares by a Prior Investor made: (i) pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
entity; (ii) pursuant to the winding up and dissolution of the Company; or (iii)
at, and pursuant to, the "IPO" (as defined below);

(d) any transfers of Shareholder Shares to the Company, a Preferred
Investor or Prior Investor pursuant to the exercise by such person or entity of
its right of first refusal under Section 3;

(e) any transfers of Shareholder Shares to the Company; and

(f) any transfer of Prior Investor Shares by a Prior Investor to (i)
another Prior Investor, or to (ii) an entity owned or controlled by such Prior
Investor or a group of Prior Investors; PROVIDED HOWEVER, that in the case of
such an entity, it executes a counterpart copy of this Agreement and becomes
bound thereby as if such entity were a Prior Investor.

1.8 "IPO" means the first sale of the Company's Common Stock to the
general public that meets the criteria for automatic conversion of the Preferred
Stock of the Company under the Company's Articles of Incorporation, as they may
be amended or restated from time to time (the "Articles of Incorporation").

3.
<PAGE>

1.9 "INVESTOR'S PRO RATA SHARE" means, for purposes of the Investors'
Right of First Refusal that number of shares determined by multiplying the
number of Offered Shareholder Shares by a fraction (i) whose numerator is the
number of Common Stock Equivalents owned of record by such Investor at the
commencement of the Investors' Refusal Period and (ii) whose denominator is the
number of shares of Common Stock Equivalents owned of record by all Investors at
the commencement of the Investors' Refusal Period.

2. NOTICE OF PROPOSED TRANSFER.

2.1 NOTICE BY SHAREHOLDER. Before any Shareholder may effect any Transfer
of any Shareholder Shares other than Excluded Shares, such Shareholder (the
"Selling Shareholder") must give to the Company, the Preferred Investors and the
Prior Investors a written notice signed by the Selling Shareholder (the "Selling
Shareholder's Notice") stating (a) the Selling Shareholder's bona fide intention
to transfer such Offered Shareholder Shares; (b) the number of shares of Offered
Shareholder Shares proposed to be transferred to each proposed purchaser or
other transferee ("Proposed Transferee"); (c) the name, address and
relationship, if any, to the Selling Shareholder of each Proposed Transferee;
and (d) the bona fide cash price or, in reasonable detail, other consideration,
per share for which the Selling Shareholder proposes to transfer such Offered
Shareholder Shares to each Proposed Transferee (the "Offered Price"). Upon the
request of the Company, any Preferred Investor or Prior Investor, the
Shareholder will promptly furnish to the Company, the Preferred Investors and
Prior Investors such other information as may be reasonably requested to
establish that the offer and Proposed Transferee(s) are bona fide.

2.2 NOTICE BY PRIOR INVESTOR. Before any Prior Investor may effect any
Transfer of any Prior Investor Shares other than Excluded Shares, such Prior
Investor (the "Selling Prior Investor") must give to the Company and the
Preferred Investors a written notice signed by the Selling Prior Investor (the
"Selling Prior Investor Notice") stating (a) the Selling Prior Investor's bona
fide intention to transfer such Offered Prior Investor Shares; (b) the number of
shares of Offered Prior Investor Shares proposed to be transferred to each
proposed purchaser or other transferee ("Proposed Transferee"); (c) the name,
address and relationship, if any, to the Selling Prior Investor of each Proposed
Transferee; and (d) the bona fide cash price or, in reasonable detail, other
consideration, per share for which the Selling Prior Investor proposes to
transfer such Offered Prior Investor Shares to each Proposed Transferee (the
"Offered Price"). Upon the request of any Preferred Investor, the Selling Prior
Investor will promptly furnish to the Preferred Investors such other information
as may be reasonably requested to establish that the offer and Proposed
Transferee(s) are bona fide.

4.
<PAGE>

3. RIGHT OF FIRST REFUSAL.

3.1 COMPANY'S RIGHT OF FIRST REFUSAL. At any time within fifteen (15)
days after the date the Selling Shareholder's Notice is given to the Company
(the "Company's Refusal Period"), the Company may, by giving written notice to
the Selling Shareholder, elect to exercise a right of first refusal (the
"Company's Right of First Refusal") to purchase all (but not less than all) of
the Offered Shareholder Shares for the price and upon the general terms
specified in the Selling Shareholder's Notice and stating the quantity of
Offered Shareholder Shares to be purchased.

3.2 NON-PURCHASE BY COMPANY. If during the Company's Refusal Period the
Company does not exercise, or decides not to exercise, the Company's Right of
First Refusal in full with respect to the Offered Shareholder Shares, then on or
before the expiration of the Company's Refusal Period, the Company will promptly
give the Selling Shareholder and the Investors (as defined in Section 3.3)
written notice of its intention not to exercise the Company's Right of First
Refusal with respect to the Offered Shareholder Shares (the "Availability
Notice"), specifying the number of Offered Shareholder Shares not being
purchased by the Company pursuant to the Company's Right of First Refusal (and
the Proposed Transferee thereof), which Offered Shareholder Shares will then be
subject to the Investors' Right of First Refusal described below.

3.3 INVESTORS' RIGHT OF FIRST REFUSAL. If during the Company's Refusal
Period the Company does not exercise the Company's Right of First Refusal in
full with respect to the Offered Shareholder Shares, then each of the Preferred
Investors and Prior Investors (all such Preferred Investors and Prior Investors
hereinafter referred to collectively as "Investors") will then have a right of
first refusal (the "Investors' Right of First Refusal") to purchase their
Investor's Pro Rata Share (as defined in Section 1.9) of all (but not less than
all) of the Offered Shareholder Shares not purchased by Company under Section
3.2 above. The Investors' Right of First Refusal may be exercised as follows:

(a) ELECTIONS TO PURCHASE. Each Investor desiring to purchase any or
all of the Offered Shareholder Shares must, within the fifteen (15) day period
commencing on the first date after the expiration of the Company's Right of
First Refusal with respect to such Offered Shareholder Shares (the "Investors'
Refusal Period"), give written notice to the Company and the Selling Shareholder
of such Investor's election to purchase at least his or its Pro Rata Share of
such Offered Shareholder Shares, or a larger number of such Offered Shareholder
Shares ("Purchase Election"). No Investor will have a right to purchase any of
the Offered Shareholder Shares unless the Investors, in the aggregate, exercise
the collective Investors' Right of First Refusal to purchase all of the Offered
Shareholder Shares.

5.
<PAGE>

(b) COMPANY NOTICE. Within five (5) days after the expiration of the
Investors' Refusal Period, the Company will give the Selling Shareholder and
each Investor notice (the "Investors' Expiration Notice") (which Investors'
Expiration Notice may be given by the Company by telephone if confirmed in
writing within two (2) days after such telephonic notice is given), stating
either: (i) that all of the Offered Shareholder Shares were duly subscribed for
by Investors exercising their respective Investors' Right of First Refusal; (ii)
that Investors timely submitted Purchase Elections to purchase more shares of
Common Stock than the Offered Shareholder Shares, in which case subsection
3.3(c) will apply and the Investors' Expiration Notice will set forth the excess
number of shares subscribed for and the pro rata share of the Offered
Shareholder Shares (computed as provided in subsection 3.3(c)) of each Investor
who timely submitted a Purchase Election; or (iii) that Investors did not timely
submit Purchase Elections to purchase all of the Offered Shareholder Shares, in
which case subsection 3.3(d) will apply and the Investors' Expiration Notice
will set forth the total number of Offered Shareholder Shares not subscribed
for, the number of Offered Shareholder Shares subscribed for by each Investor,
the Investors eligible to purchase the unsubscribed for Offered Shareholder
Shares and each such Investor's pro rata share of such unsubscribed for Offered
Shareholder Shares (computed as provided in subparagraph 3.3(d)).

(c) EXCESS PURCHASE ELECTIONS. If the total number of shares of
Offered Shareholder Shares that Investors elect to purchase as specified in
timely given Investors' Purchase Elections exceeds the number of Offered
Shareholder Shares available for purchase, then the Investors' Expiration Notice
shall so notify each Investor who timely submitted a Purchase Election to
purchase such Offered Shareholder Shares as provided in Section 3.3(b) and
(unless the Investors agree otherwise in writing) each such Investor will have
the right to purchase, pursuant to this subsection, that Investor's "pro rata
share" of such Offered Shareholder Shares. For purposes of this subsection (c),
an Investor's "pro rata share" is the number of shares of Offered Shareholder
Shares available for purchase multiplied by a fraction (i) whose numerator is
the number of Common Stock Equivalents owned by such Investor at the
commencement of the Investor Refusal Period and (ii) whose denominator is the
total number of Common Stock Equivalents owned, at the commencement of the
Investor Refusal Period, by all Investors who timely delivered Purchase
Elections.

(d) OVERALLOTMENT OPTION. If the total number of shares of Offered
Shareholder Shares that Investors elect to purchase as specified is timely given
and Investors' Purchase Elections is fewer than the number of Offered
Shareholder Shares available for purchase, then in the Investors' Expiration
Notice the Company shall so notify each Investor and (unless the Investors agree
otherwise in writing) each Investor who timely submitted a Purchase Election for
such Offered Shares and gives the Company and Selling Shareholder written notice
of such Investor's election to do so within five (5) days after the Company
gives the Investors' Expiration Notice, may

6.
<PAGE>

purchase pursuant to this subsection (in addition to the Offered Shareholder
Shares specified in such Investor's Purchase Election) that number of Offered
Shareholder Shares that is such Investor's "pro rata share". For purposes of
this subsection (d) an Investor's "pro rata share" is obtained by multiplying
the number of shares of Offered Shareholder Shares that the Investors did not
elect to purchase pursuant to timely given Purchase Elections (the "Available
Offered Shares") by a fraction (i) whose numerator is the number of Common Stock
Equivalents owned by such Investor at the commencement of the Investor Refusal
Period and (ii) whose denominator is the total number of Common Stock
Equivalents owned, at the commencement of the Investor Refusal Period, by all
Investors who timely delivered Purchase Elections and who elect to purchase
Available Offered Shares pursuant to this subparagraph (d).

3.4 PURCHASE PRICE. The purchase price for the Offered Shareholder Shares
to be purchased by the Company or by an Investor exercising its respective Right
of First Refusal under this Agreement will be the Offered Price and will be
payable as set forth in Section 3.5 hereof. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration will be determined by the Board of Directors of the Company in
good faith, which determination will be binding upon the Company, the Investors
and the Selling Shareholder absent fraud or error.

3.5 PAYMENT. Payment of the purchase price for Offered Shareholder Shares
purchased by the Company exercising its Company Right of First Refusal will be
made within twenty-five (25) days after the date the Selling Shareholder Notice
is given to the Company. Payment of the purchase price for Offered Shareholder
Shares purchased by an Investor will be made within ten (10) days after the
Investors' Expiration Notice is given to all Investors. Payment of the purchase
price will be made, at the option of the Company or, as the case may be, by an
Investor, (a) in cash (by check), (b) by cancellation of all or a portion of any
outstanding indebtedness of the Selling Shareholder to the Company or such
Investor, as the case may be, or (c) by any combination of the foregoing.

3.6 RIGHTS OF SHAREHOLDER. Upon the date that payment in full is made for
the Offered Shareholder Shares purchased by the Company and/or the Investors
pursuant to their respective Rights of First Refusal hereunder, the Selling
Shareholder will have no further rights as a holder of such Offered Shareholder
Shares and the Selling Shareholder will forthwith cause all certificate(s)
evidencing such Offered Shareholder Shares to be surrendered to the Company for
cancellation, and, as to purchase by Investor(s), for transfer to the purchasing
Investor(s).

7.
<PAGE>

4. RIGHT OF CO-SALE.

4.1 RIGHT OF CO-SALE FOR OFFERED SHAREHOLDER SHARES. If the Company and
Investors have waived or failed to timely exercise their respective Rights of
First Refusal to purchase all of the Offered Shareholder Shares, each Preferred
Investor will have the right to participate in the sale of any Offered
Shareholder Shares not sold to the Company or to the Investors (the "Remaining
Offered Shareholder Shares") in the manner set forth herein (the "Right of
Co-Sale for Offered Shareholder Shares"). Pursuant to this Section 4, each
Preferred Investor may transfer to the Proposed Transferee(s) identified in the
Selling Shareholder's Notice up to such Preferred Investor's pro rata share of
the Remaining Offered Shareholder Shares (other than any Excluded Shares), by
giving written notice to the Selling Shareholder within ten (10) days after the
date the Investors' Expiration Notice is given to all Investors specifying the
number of shares and type of shares of stock in the Company that such Preferred
Investor desires to transfer to each Proposed Transferee by exercising the Right
of Co-Sale for Offered Shareholder Shares. For purposes of this Section 4.1, a
Preferred Investor's "pro rata share" will be defined as a fraction, the
numerator of which is the number of shares of Common Stock Equivalents then
owned by such Preferred Investor, and the denominator of which is the number of
shares of Common Stock Equivalents then owned by all Preferred Investors plus
the number of shares of Common Stock Equivalents held by the Selling Shareholder
who proposes the Transfer.

4.2 RIGHT OF CO-SALE FOR PRIOR INVESTOR SHARES. Upon receipt of a Selling
Prior Investor Notice, each Preferred Investor will have the right to
participate in the sale of any Offered Prior Investor Shares (the "Right of
Co-Sale for Prior Investor Shares"). Pursuant to this Section 4, each Preferred
Investor may transfer to the Proposed Transferee(s) identified in the Selling
Prior Investor Notice up to such Preferred Investor's pro rata share of the
Offered Prior Investor Shares (other than any Excluded Shares), by giving
written notice to the Selling Prior Investor within ten (10) days after the date
of the receipt of such Selling Prior Investor Notice; specifying the number of
shares and type of shares of stock in the Company that such Preferred Investor
desires to transfer to each Proposed Transferee by exercising the Right of
Co-Sale for Prior Investor Shares. For purposes of this Section 4.2, a
Preferred Investor's "pro rata share" will be defined as a fraction, the
numerator of which is the number of shares of Common Stock Equivalents then
owned by such Preferred Investor, and the denominator of which is the number of
shares of Common Stock Equivalents then owned by all Preferred Investors plus
the number of shares of Common Stock Equivalents held by the Selling Prior
Investor who proposes the Transfer.

4.3 CONSUMMATION OF CO-SALE. Each Preferred Investor, in exercising the
Right of Co-Sale for Remaining Offered Shareholder Shares or the Right of
Co-Sale for Offered Prior Investor Shares, may effect such Preferred Investor's
participation in such

8.
<PAGE>

Transfer by delivering to the Selling Shareholder or Selling Prior Investor (as
applicable) at the closing of the transfer of Remaining Offered Shareholder
Shares or Offered Prior Investor Shares to such transferee (the "Closing") one
or more certificates, properly endorsed for Transfer, representing the shares of
stock in the Company to be Transferred by such Preferred Investor. At the
Closing, such certificates or other instruments will be transferred and
delivered to the Proposed Transferee(s) set forth in the Selling Shareholder's
Notice or Selling Prior Investor Notice (as applicable) in consummation of the
transfer of the Remaining Offered Shareholder Shares or Offered Prior Investor
Shares pursuant to the terms and conditions specified in the Selling
Shareholder's Notice or Selling Prior Investor Notice, and the Selling
Shareholder or Selling Prior Investor (as applicable) will remit, or will cause
to be remitted, to the Preferred Investor within seven (7) days after such
Closing that portion of the proceeds of the Transfer to which the Preferred
Investor is entitled by reason of such Preferred Investor's participation in
such Transfer pursuant to the Right of Co-Sale for Remaining Offered Shareholder
Shares or the Right of Co-Sale for Offered Prior Investor Shares, as applicable.

5. RIGHT TO TRANSFER; REFUSAL TO TRANSFER.

5.1 SELLING SHAREHOLDER'S RIGHT TO TRANSFER. If the Company, on the one
hand and the Investors, on the other hand, have not elected pursuant to their
Investors' Right of First Refusal to purchase all of the Offered Shareholder
Shares, then, subject to the Preferred Investors' Right of Co-Sale for Offered
Shareholder Shares described in Section 4 hereof, the Selling Shareholder may
Transfer the Offered Shareholder Shares permitted to be sold by the Selling
Shareholder to any person named as a Proposed Transferee in the Selling
Shareholder's Notice, at the Offered Price or at a higher price, provided that
such Transfer (a) is consummated within one hundred twenty (120) days after the
date of the Selling Shareholder's Notice and (b) is in accordance with the terms
and conditions of this Agreement. If the Offered Shareholder Shares are
transferred in accordance with the terms and conditions of this Agreement, then
the transferee(s) of the Offered Shareholder Shares will (other than as provided
as to certain transferees required to become parties hereto as provided in
Section 1.7 hereof) thereafter hold such Offered Shareholder Shares free of the
Investors' Right of First Refusal, the Right of Co-Sale for Offered Shareholder
Shares and all other restrictions imposed by this Agreement. If the Offered
Shareholder Shares are not so transferred during such one hundred twenty (120)
day period, then the Selling Shareholder will not transfer any of such Offered
Shareholder Shares without complying again in full with the provisions of this
Agreement.

5.2 PRIOR INVESTOR'S RIGHT TO TRANSFER. If the Preferred Investors have
not elected to sell their full pro rata share of the Offered Prior Investor
Shares pursuant to their Right of Co-Sale for Offered Prior Investor Shares
described in Section 4 hereof, the Selling Prior Investor may Transfer the
Offered Prior Investor Shares permitted to be sold by the Selling Prior Investor
to any person named as a Proposed Transferee in the Selling

9.
<PAGE>

Prior Investor Notice, at the Offered Price or at a lower price, provided that
such Transfer (a) is consummated within one hundred twenty (120) days after the
date of the Selling Prior Investor Notice and (b) is in accordance with the
terms and conditions of this Agreement. If the Offered Prior Investor Shares
are transferred in accordance with the terms and conditions of this Agreement,
then the transferee(s) of the Offered Prior Investor Shares will (other than as
provided as to certain transferees required to become parties hereto as provided
in Section 1.7 hereof) thereafter hold such Offered Prior Investor Shares free
of the Preferred Investors' Right of Co-Sale for Offered Prior Investor Shares
and all other restrictions imposed by this Agreement. If the Offered Prior
Investor Shares are not so transferred during such one hundred twenty (120) day
period, then the Selling Prior Investor will not transfer any of such Offered
Prior Investor Shares without complying again in full with the provisions of
this Agreement.

5.3 REFUSAL TO TRANSFER. Any attempt by any Selling Shareholder to
transfer any Shareholder Shares or Prior Investor to transfer any Prior Investor
Shares in violation of any provision of this Agreement will be void. The
Company will not (a) transfer on its books any Shareholder Shares or Prior
Investor Shares that have been sold, gifted or otherwise transferred in
violation of this Agreement, or (b) treat as owner of such Shareholder Shares or
Prior Investor Shares, or accord the right to vote to or pay dividends to any
purchaser, donee or other transferee to whom such Shareholder Shares or Prior
Investor Shares may have been so transferred.

6. OTHER COVENANTS REGARDING TRANSFER.

6.1 MARKET STANDOFF AGREEMENT. In connection with any registration of the
Company's securities, upon the request of the Company or the underwriters
managing any registered public offering of the Company's securities, each
Shareholder so requested will not sell or otherwise dispose of any Shareholder
Shares without the prior written consent of the Company or such managing
underwriters, as the case may be, for a period of time (not to exceed 180 days)
after the effective date of such registration as the Company or the underwriters
may specify generally for shareholders who are officers or directors.

7. RESTRICTIVE LEGEND AND STOP-TRANSFER ORDERS.

7.1 LEGEND FOR SHAREHOLDERS. Each Shareholder understands and agrees that
the Company will cause the legend set forth below, or a legend substantially
equivalent thereto, to be placed upon any certificate(s) or other documents or
instruments evidencing ownership of Stock by the Shareholder:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RIGHTS OF FIRST REFUSAL AND

10.
<PAGE>

RIGHTS OF CO-SALE AS SET FORTH IN A RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT DATED AS OF NOVEMBER 26, 1997 ENTERED INTO BY
THE HOLDER OF THESE SHARES, THE COMPANY AND CERTAIN SHAREHOLDERS OF
THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY. SUCH RIGHTS OF FIRST REFUSAL AND RIGHTS OF
CO-SALE ARE BINDING ON TRANSFEREES OF THESE SHARES.

7.2 LEGEND FOR PRIOR INVESTORS. Each Prior Investor understands and
agrees that the Company will cause the legend set forth below, or a legend
substantially equivalent thereto, to be placed upon any certificate(s) or other
documents or instruments evidencing ownership of Prior Investor Shares by the
Prior Investor:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RIGHTS
OF CO-SALE AS SET FORTH IN A RESTATED RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT DATED AS OF NOVEMBER 26, 1997 ENTERED INTO BY
THE HOLDER OF THESE SHARES, THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. SUCH RIGHTS OF CO-SALE ARE
BINDING ON TRANSFEREES OF THESE SHARES.

7.3 STOP TRANSFER INSTRUCTIONS. Each Shareholder and Prior Investor
agrees, to ensure compliance with the restrictions referred to herein, that the
Company may issue appropriate "stop transfer" certificates or instructions and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its records.

8. TERMINATION, WAIVER AND AMENDMENT.

8.1 TERMINATION. The Company's and Investors' Right of First Refusal, and
the Preferred Investor's Right of Co-Sale for Offered Shareholder Shares and
Right of Co-Sale for Offered Prior Investor Shares will terminate upon the
earliest to occur of the following: (a) immediately prior to the closing of the
IPO; (b) the date on which this Agreement is terminated by a writing executed by
the Company, the holders of a majority of the Common Stock Equivalents then held
by all Prior Investors and the holders of at least three-quarters (3/4) of the
Common Stock Equivalents then held by all Preferred Investors (and their
permitted assigns); or (c) the dissolution of the Company.

11.
<PAGE>

8.2 WAIVER. The application of the Company's and Investors' Right of
First Refusal, and the Preferred Investor's Right of Co-Sale for Offered
Shareholder Shares and Right of Co-Sale for Offered Prior Investor Shares as to
any proposed Transfer by a Selling Shareholder or Selling Prior Investor of any
Shareholder Shares or Prior Investor Shares may be waived in advance of or after
such transfer by the written agreement of the Company, the holders of a majority
of the Common Stock Equivalents then held by all Prior Investors and the holders
of over three-quarters (3/4) of the Common Stock Equivalents then held by all
Preferred Investors (and their permitted assigns), in which case such waiver
will be binding as to all parties hereto.

8.3 AMENDMENT. This Agreement may be amended only by a written instrument
executed by the Company, the holders of a majority of the Common Stock
Equivalents then held by all Prior Investors and the holders of over
three-quarters (3/4) of the Common Stock Equivalents then held by all Preferred
Investors (and their permitted assigns), in which case such amendment will be
binding as to all parties hereto.

9. MISCELLANEOUS PROVISIONS.

9.1 NOTICES. Any notice required or permitted to be given to a party
pursuant to the provisions of this Agreement will be in writing and will be
effective and deemed given to such party under this Agreement on the earliest of
the following: (a) the date of personal delivery; (b) one (1) business day after
transmission by facsimile or telecopier, addressed to the other party at its
facsimile number or telecopier address, with confirmation of transmission; (c)
one (1) business day after deposit with a return receipt express courier for
United States deliveries, or three (3) business days after such deposit for
deliveries outside of the United States; or (d) three (3) business days after
deposit in the United States mail by registered or certified mail (return
receipt requested) for United States deliveries. All notices not delivered
personally or by facsimile will be sent with postage and/or other charges
prepaid and properly addressed to the party to be notified at the address set
forth below such party's signature on this Agreement or on Exhibit A hereto, or
at such other address as such other party may designate by ten (10) days advance
written notice to the other parties hereto. All notices for delivery outside
the United States will be sent by facsimile or by express courier. Any notice
given hereunder to more than one person will be deemed to have been given, for
purposes of counting time periods hereunder, on the date effectively given to
the last party required to be given such notice. Notices to the Company will be
marked "Attention: President."

9.2 BINDING ON SUCCESSORS AND ASSIGNS; INCLUSION WITHIN CERTAIN
DEFINITIONS. This Agreement, and the rights and obligations of the parties
hereunder, will inure to the benefit of, and be binding upon, their respective
successors, assigns, heirs, executors, administrators and legal representatives
and, except as otherwise expressly provided herein, any transferee of Offered
Shareholder Shares or Offered Prior Investor

12.
<PAGE>

Shares. Any permitted transferee of a Shareholder or Prior Investor who is
required to become a party hereto will be considered a "Shareholder" or "Prior
Investor" for purposes of this Agreement without the need for any consent,
approval or signature of any party hereto.

9.3 SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect, such provision will be
enforced to the maximum extent possible and such invalidity, illegality or
unenforceability will not affect any other provision of this Agreement, and this
Agreement will be construed as if such invalid, illegal or unenforceable
provision had (to the extent not enforceable) never been contained herein.

9.4 NEW INVESTORS. Notwithstanding anything herein to the contrary, if
additional parties purchase directly from the Company any shares of the
Company's Series B Preferred Stock, then each such new investor shall become a
party to this Agreement as a "Preferred Investor" hereunder, without the need
for any consent, approval or signature of any Preferred Investor, Prior Investor
or any Shareholder when such new investor has both: (a) purchased shares of
Series B Preferred Stock and paid the Company all consideration payable for such
shares and (b) executed one or more counterpart signature pages to this
Agreement.

9.5 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the internal laws of the State of California, excluding that
body of law pertaining to conflict of laws.

9.6 OBLIGATION OF COMPANY; BINDING NATURE OF EXERCISE. The Company agrees
to use its best efforts to enforce the terms of this Agreement, to inform each
Preferred Investor and Prior Investor of any breach hereof (to the extent the
Company has knowledge thereof) and to assist each Preferred Investor and Prior
Investor in the exercise of such party's rights and performance of such party's
obligations hereunder.

9.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all such counterparts together will constitute one and the same
instrument.

9.8 ENTIRE AGREEMENT. This Agreement, including all Exhibits hereto, each
of which is incorporated herein by reference, constitutes the entire agreement
of the parties with respect to the specific subject matter hereof and supersedes
in their entirety all other agreements or understandings between or among the
parties hereto with respect to such specific subject matter.

9.9 CONFLICT. In the event of any conflict between the terms of this
Agreement and the Company's Articles of Incorporation or its Bylaws, the terms
of the Company's

13.
<PAGE>

Articles of Incorporation or its Bylaws, as the case may be, will control. In
the event of any conflict between the terms of this Agreement and any other
agreement to which a Preferred Investor or Prior Investor is a party or by which
the Selling Shareholder is bound, the terms of this Agreement will control,
except insofar as this Agreement provides otherwise. In the event of any
conflict between the Company's books and records and this Agreement or any
notice delivered hereunder, the Company's books and records will control absent
fraud or error.

9.10 CALCULATION; BINDING EFFECT OF COMPANY NOTICES. All calculations of
an Investor's or Preferred Investor's pro rata share under any provision herein
will be made by the Company.

9.11 HEADINGS. The captions and headings of this Agreement are included
for ease of reference only and will be disregarded in interpreting or construing
this Agreement. Unless otherwise stated, all references herein to Sections and
Exhibits will refer to Sections of and Exhibits to this Agreement.

9.12 SHAREHOLDER PURCHASE AGREEMENT. In the event of any conflict between
the terms of this Agreement and the terms of the Memoranda of Understanding
dated as of April 15, 1994 between the Company, Johari Investment Company Ltd.,
K&S Imports Inc., Bernard Simkin and Murray Simkin on the one hand, and Gerald
Benowitz, Leslie Silver, James Roche and on the other hand, or the Memorandum of
Understanding dated as of August 15, 1994 between the Company, Johari Investment
Company Ltd., K&S Imports Inc., Bernard Simkin and Murray Simkin on the one
hand, and Jeffrey Davis on the other hand, (collectively the "Memoranda of
Understanding") the terms of this Agreement shall control. Notwithstanding the
foregoing, nothing in this Agreement shall be construed or understood to modify,
delete or supersede those provisions of the Memoranda of Understanding giving
the Company a right to repurchase Shareholder Shares in the event a
Shareholder's employment with the Company is terminated or those provisions
relating to purchase price adjustments to Shareholder Shares.

[THIS SPACE INTENTIONALLY LEFT BLANK]

14.
<PAGE>

IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement as of the date first written above.

COMPANY: NEWGEN RESULTS CORPORATION

By: /s/ Gerald Benowitz
-------------------------------------
Gerald Benowitz,
President and Chief Executive Officer

SHAREHOLDERS:

/s/ Gerald Benowitz
---------------------------------------
Gerald Benowitz

/s/ Leslie Silver
---------------------------------------
Leslie Silver

/s/ James Roche
---------------------------------------
James Roche

/s/ Jeffrey Davis
---------------------------------------
Jeffrey Davis

PRIOR INVESTORS:

K&S IMPORTS, INC.

By: /s/ Sam Simkin
------------------------------------
Sam Simkin, President

Address: 4722 Sun Valley Road
Del Mar, CA 92014

RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT

<PAGE>

JOHARI INVESTMENT COMPANY LTD.

By: /s/ Gary Simkin
------------------------------------
Gary Simkin, President

Address: 6289 Carnarvon Street
Vancouver, B.C. Canada V6N1K3

/s/ Bernard Simkin
---------------------------------------
Bernard Simkin

Address: P.O. Box 9532
Rancho Santa Fe, CA 92067

/s/ Murray Simkin
---------------------------------------
Murray Simkin

Address: P.O. Box 7102
Rancho Santa Fe, CA 92067

PREFERRED INVESTORS:

INFORMATION ASSOCIATES, L.P.

By: Trident Capital Management, L.L.C.
its general partner

By: /s/ John Moragne
------------------------------------
Title: Managing Director
---------------------------------

RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT

<PAGE>

INFORMATION ASSOCIATES, C.V.

By: Trident Capital Management, L.L.C.
its investment general partner

By: /s/ John Moragne
------------------------------------
Title: Managing Director
---------------------------------

INFORMATION ASSOCIATES - II, L.P.

By: Trident Capital Management - II,
L.L.C.
its general partner

By: /s/ John Moragne
------------------------------------
Title: Managing Director
---------------------------------

IA-II AFFILIATES FUND, L.L.C.

By: /s/ John Moragne
------------------------------------
Title: Managing Director
---------------------------------
Address: C/O Trident Capital, L.P.
2480 Sand Hill Road
Menlo Park, CA 94025

RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT

<PAGE>

CAPSTONE VENTURES
By: Capstone Management L.L.C.,
its General Partner

By:
-------------------------------------
Eugene Fischer, Managing Member

Address: 3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025

BANKAMERICA VENTURES

By:
-------------------------------------
Jess R. Marzak, Managing Director

Address: 950 Tower Lane, Suite 700
Foster City, CA 94404

BA VENTURE PARTNERS II

By:
-------------------------------------
Jess R. Marzak, General Partner

Address: c/o BankAmerica Ventures
950 Tower Lane, Suite 700
Foster City, CA 94404

BANCAMERICA ROBERTSON STEPHENS

By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------

Address: 555 California Street, Suite
2600
San Francisco, CA 94104

RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT

<PAGE>

GC&H INVESTMENTS

By: /s/ John L. Cardoza
-------------------------------------
John L. Cardoza, Executive Partner

Address: One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580

SF GROWTH FUND

By: /s/ Kevin J. Makley
-------------------------------------
Print Name: Kevin J. Makley
-----------------------------
Title: President
----------------------------------

Address: c/o Kevin J. Makley
Saint Francis High School
1885 Miramonte Avenue
Mountain View, CA 94040

/s/ Duncan Naylor
----------------------------------------
Duncan Naylor

Address: 1268 Estate Drive
Los Altos, CA 94024

ELAINE MCKAY REVOCABLE TRUST

By: /s/ Robert McKay
-------------------------------------
Print Name: Robert McKay
-----------------------------
Title: Co-Trustee
----------------------------------

Address: c/o Robert McKay
The McKay Foundation
303 Sacramento Street, Fourth
Floor
San Francisco, CA 94111

RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT

<PAGE>

BAYVIEW INVESTORS, LTD.

By: /s/ Terry R. Otton
-------------------------------------
Print Name: Terry R. Otton
-----------------------------
Title: Chief Financial Officer
----------------------------------
Address: c/o Robertson, Stephens &
Company
555 California Street, Suite
2600
San Francisco, CA 94104

RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT

<PAGE>

EXHIBIT A

SCHEDULE OF PREFERRED INVESTORS

Name and Address
- ---------------------------------

Information Associates, L.P.
C/O Trident Capital, L.P.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

Information Associates, C.V.
C/O Trident Capital, L.P.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

Information Associates - II, L.P.
C/O Trident Capital, L.P.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

IA-II Affiliates Fund, L.L.C.
C/O Trident Capital, L.P.
2480 Sand Hill Road
Menlo Park, CA 94025
Attn: John Moragne

Capstone Ventures
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025
Attn: Gene Fischer

BankAmerica Ventures
950 Tower Lane, Suite 700
Foster City, CA 94404

<PAGE>

Attn: Jess Marzak

BA Venture Partners II
c/o BankAmerica Ventures
950 Tower Lane, Suite 700
Foster City, CA 94404
Attn: Jess Marzak

BancAmerica Robertson Stephens
555 California Street, Suite 2600
San Francisco, CA 94104

GC&H Investments
One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580
Attn: John L. Cardoza

Name and Address
- --------------------------

SF Growth Fund
c/o Kevin J. Makley
Saint Francis High School
1885 Miramonte Avenue
Mountain View, CA 94040

Duncan Naylor
1268 Estate Drive
Los Altos, CA 94024

Elaine McKay Revocable Trust
c/o Robert McKay
The McKay Foundation
303 Sacramento Street, Fourth Floor
San Francisco, CA 94111

Bayview Investors, Ltd.
c/o Robertson, Stephens & Company
555 California Street
Suite 2600
San Francisco, CA 94104

<PAGE>

EXHIBIT B

SCHEDULE OF SHAREHOLDERS

Gerald Benowitz
5008 McGill Way
San Diego, CA 92130

Leslie Silver
4705 Reedley Terrace
San Diego, CA 92130

James Roche
12511 Montellano Terrace
San Diego, CA 92130

Jeffrey Davis
516 Acacia
Solana Beach, CA 92075

<PAGE>

LICENSE AGREEMENT
BETWEEN
SERVICE SYSTEMS DEVELOPMENT LIMITED PARTNERSHIP
AND
NEWGEN RESULTS CORPORATION
MADE AS OF
OCTOBER 11, 1995

<PAGE>

LICENSE AGREEMENT

THIS LICENSE AGREEMENT made as of the 11th day of October, 1995;

B E T W E E N:

SERVICE SYSTEMS DEVELOPMENT LIMITED PARTNERSHIP, a
limited partnership formed under the laws of the
Province of Ontario (hereinafter collectively called
the "Partnership"),

-and-

NEWGEN RESULTS CORPORATION, a corporation formed
under the laws of the State of California
(hereinafter called "Newgen"),

WHEREAS the Partnership owns certain computer-based programs which
address various functions within the service and parts departments of
automobile dealership;

AND WHEREAS the Partnership wishes to grant to Newgen a licence to
Enhance and use the said programs to provide Service Bureau Services subject
to and in accordance with the provisions of this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSES in consideration of the
mutual covenants and agreements contained in this Agreement, the parties
agree as follows:

ARTICLE 1 - INTERPRETATION

1.1 DEFINITIONS

Whenever used in this Agreement, unless the context otherwise
requires, the following terms shall have the respective meanings set out
below:

(a) "AFFILIATES" means The Simkins and an affiliate or associate (as
such terms are defined in the CANADA BUSINESS CORPORATIONS ACT,
R.S.C. 1985, c. C-44, as amended [the "CBCA"] of Newgen or The
Simkins; provided that an affiliate or associate of The Simkins
shall remain an Affiliate hereunder only so long as such Person
remains an affiliate or associate (as such terms are defined in the
CBCA) of The Simkins;

<PAGE>

- 2 -

(b) "AGREEMENT" means this licence agreement and all instruments
supplemental to or addition or confirmation of this agreement which
are executed by both parties;

(c) "COMPONENTS" means the following computer-based programs of the
Partnership which address various functions within the service
departments of automobiles dealerships namely "Service Rental Car
Management", "After Visit Follow-up", "Customer Management",
"Service Advisor Appointment Scheduling", "Repair Order and
Work-in-Process Control", "Labour Invoicing", "Technician
Productivity Management", "Technician Payroll", "Service Sales
Analysis", "Customer Problem Analysis", "VIP Service Management",
"Labour Time Guidelines", "Detailed Service History" and
"Telemarketing/Repair Order Writing", collectively and all
associated source and object codes, and technical, system and user
documentation related thereto, but the term "Components" does not
include any Existing Enhancements or Newgen Enhancements;

(d) "EFFECTIVE DATE" means October 11, 1995;

(e) "ENHANCEMENTS" means in relation to any computer programs and
related technical system and user documentation, updates, upgrades,
modifications, enhancements, improvements, revisions, adaptations,
derivative works, by-passes, corrections, new versions, new
releases, translations and customizations of such materials;

(f) "EXISTING ENHANCEMENTS" means all Enhancements made to the
Components by Newgen Dealer Services or any Affiliate as same
exists as of the Effective Date;

(g) "INTELLECTUAL PROPERTY RIGHTS" means all intellectual and industrial
property rights and includes rights to (i) inventions and patents
for inventions, including re-issue thereof and continuation and
continuations in part, (ii) copyrights, (iii) designs and
industrial designs, (iv) trade-marks (v) know-how, trade secrets
and confidential information, and (vi) other proprietary rights;

(h) "LICENSED COMPONENTS" means the Components and Existing Enhancements;

(i) "NEWGEN DEALER SERVICES" means Newgen Dealer Services (1992) Inc., a
corporation incorporated under the CBCA and which corporation
amalgamated with 173403 Canada Ltd.;

(j) "NEWGEN ENHANCEMENTS" means Enhancements made to the Licensed
Components by Newgen or any Affiliate after the Effective Date of
this Agreement, but the term "Newgen Enhancements" does not include
the Components;

(k) "NEWGEN SERVICES" means Newgen Services Inc., a corporation
incorporated under the laws of the State of California;

<PAGE>

- 3 -

(l) "PERSON" includes any entity included, without limitation, an
individual, a trust, partnership, firm, association, unincorporated
organization, corporation or governmental body;

(m) "SALES AND MAINTENANCE AGREEMENT" means the sales and
maintenance agreement between the Partnership and Newgen Dealer
Services made the first day of August, 1991, as amended by the
Sales and Maintenance Amending Agreement made the ninth day of
October, 1991, and the Consent Agreement made the ninth day of
November, 1995;

(n) "SALES AND MAINTENANCE SUB-LICENSE AGREEMENT" means the sales and
maintenance sub-license agreement between the Partnership, Newgen
Dealer Services and Newgen Services made the ninth day of October,
1991;

(o) "SERVICE BUREAU SERVICES" means the use of computer software to
provide computer based services for a third Person such as without
limitation, data processing services, shared processing services,
facilities management services, outsourcing services and remote
access services; and

(p) "THE SIMKINS" means individually and collectively Bernard Charles
Matthew Simkin, Gary Joseph Simkin, Murray Simkin, A.L. Simkin and
Sam Simkin.

1.2 HEADINGS

The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article or Section or other portion hereof
and include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles or
Sections are to Articles or Sections of this Agreement.

1.3 EXTENDED MEANINGS

In this Agreement words importing the singular number only shall
include the plural and VICE VERSA. The terms "provision" and "provisions"
refer to terms, conditions, provisions, covenants, obligations, undertakings,
warranties and representations in this Agreement.

ARTICLE 2 - GRANT OF RIGHTS AND OWNERSHIP

2.1 GRANT OF RIGHTS

Subject to the provisions of this Agreement including the
Partnership's right to terminate this Agreement pursuant to Section 6.2, the
Partnership hereby grants to Newgen, and Newgen hereby accepts from the
Partnership, a non-exclusive, perpetual and irrevocable license

<PAGE>

- 4 -

to (i) develop Enhancements to the Licensed Components, (ii) provide Service
Bureau Services using the Licensed Components and Enhancements, (iii)
reproduce, transmit electronically, and provide electronic access to and
copies or partial copies of the Licensed Components to third Persons in
relation to the foregoing, and (iv) sub-license the aforesaid rights to
Affiliates and other Persons. In the event Newgen grants a sub-license
hereunder to a third Person to exercise its license rights hereunder, it will
obtain from such person an agreement to maintain the Licensed Components in
confidence as required by Section 2.3.

2.2 OWNERSHIP OF COPYRIGHT

(a) Newgen acknowledges that the Partnership is the owner of all right,
title and interest and all Intellectual Property Rights in the Licensed
Components (including the Existing Enhancements).

(b) The parties agree that Newgen shall be the owner of all right, title
and interest and all Intellectual Property Rights in the Newgen Enhancements
and Newgen will have the sole and exclusive worldwide right to do and to
authorize others to do any or all of the acts which are conferred upon the
owner of a copyright, including the sole and exclusive worldwide right to
reproduce, distribute copies, develop Enhancements and otherwise commercially
exploit the Newgen Enhancements without the consent of the Partnership;
provided, however, that nothing herein shall confer upon Newgen any right to
commercially exploit the Licensed Components except as expressly provided
herein.

2.3 CONFIDENTIALITY

Newgen agrees to maintain the confidentiality of the source codes
to the Licensed Components, and not to release, disclose, divulge or permit
access to same by any third party, other than to Newgen or its Affiliates
and their employees, agents and contractors on a "need to know" basis.
Newgen shall require any of its Affiliates and their agents and contractors
who have access to any such source codes to maintain them in confidence.
Newgen shall take at least the same steps to prevent disclosure and
unauthorized use of the source codes as it takes with respect to its own
confidential information. Notwithstanding the foregoing, the obligations of
Newgen as set forth herein shall not apply in any respect to Licensed
Components or any other information, materials or works of authorship of the
Partnership (the "Information") which (i) are or become publicly known or
readily ascertainable by the public, through no wrongful act of Newgen, (ii)
are received by Newgen from a third Person without breaching an obligation to
the Partnership, (iii) are independently developed by or for Newgen, or (iv)
are disclosed to a third Person by the Partnership without similar
restrictions and obligations of confidentiality and non-disclosure.

2.4 CONSENT

The Partnership hereby consents to Newgen Dealer Services providing
Newgen with copies of the Licensed Components as the same exists as of the
Effective Date. This software (including related technical, system and user
documentation) shall be deemed for all purposes herein to constitute the
Licensed Components.

<PAGE>

- 5 -

ARTICLE 3 - LICENSE FEES

3.1 LICENSE FEES

Newgen agrees to pay to the Partnership a one time license fee in
the sum of one hundred and ten thousand dollars ($110,000). This sum shall be
payable as follows:

(a) $50,000 upon execution of this Agreement by both parties; and

(b) the balance of $60,000 in equal monthly installments of $3,333.33 per
month for eighteen consecutive months commencing with the first
monthly payment which shall be due on the first day of January, 1996
and paid upon execution of this Agreement by the parties.

3.2 SERVICE BUREAU SERVICES

Except as provided in Section 3.1, there is no obligation hereunder
to make any payment to the Partnership where Newgen or any Affiliate of
Newgen or any other Person provides any Service Bureau Service using the
Licensed Components or Newgen Enhancements.

3.3 OVERDUE AMOUNTS

All past due amount shall bear interest at an annual rate equal to
the lessor of twelve percent (12%) per annum and the Prime Rate plus two
percent (2%). For the purposes of this Section, "Prime Rate" means the rate
of interest per annum, established from time to time by the Bank of Montreal
as the reference rate of interest for the determination of interest rates
that such bank will charge to customers of varying degrees of credit worthiness
in Canada for Canadian dollar demand loans at Toronto, Ontario.

3.4 TAXES AND DUTIES

Newgen is responsible for and shall pay all income, sales, goods
and services or other taxes, duties, fees and other similar charges levied,
assessed or imposed upon or with respect to the performance by Newgen of its
obligations under this Agreement, but excluding any taxes on the income of
the Partnership.

ARTICLE 4 - WARRANTIES

4.1 WARRANTY AND LIABILITY DISCLAIMER

EXCEPT AS PROVIDED HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS
OR WARRANTIES OF ANY KIND TO THE OTHER. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, EXCEPT AS PROVIDED HEREIN, THE PARTNERSHIP MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE LICENSED COMPONENTS
OR THEIR USE, FUNCTION OR OWNERSHIP AND SHALL NOT BE LIABLE IN ANY MANNER FOR
ANY

<PAGE>

- 6 -

REPRESENTATION OR WARRANTY OR CONDITION OF ANY KIND, WHETHER EXPRESSED OR
IMPLIED OR COLLATERAL, OR WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABLE QUALITY OR
FITNESS FOR A PARTICULAR PURPOSE OR THAT THE LICENSED COMPONENTS WILL BE
ERROR FREE. THE PARTIES ALSO AGREE THAT NEITHER WILL HAVE ANY LIABILITY TO
THE OTHER FOR DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
HOWEVER CAUSED, EVEN IF THE OTHER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, EXCEPT FOR DAMAGES RESULTING FROM A FAILURE TO PAY UNDER SECTION 3.1.

4.2 WARRANTY

The Partnership represents and warrants to Newgen that to the best
of its knowledge: (i) it is the owner of all right, title and interest and
all Intellectual Property Rights in the Licensed Components, (ii) it has the
right to grant the rights set out in Article 2 and to enter into this
Agreement, (iii) it has not granted any other Person any rights inconsistent
with the rights granted herein, and (iv) to the best of its knowledge, without
enquiry, the Licensed Components do not infringe or violate any United States
or Canadian Intellectual Property Right or moral right of any third Person.

ARTICLE 5 - RELATIONSHIP

5.1 RELATIONSHIP OF PARTIES

The relationship of the Partnership and Newgen shall at all times
be and remain that of independent contractors. Newgen shall not represent
itself to be the agent, joint venturer, partner or employee of the
Partnership, or to be related to the Partnership.

ARTICLE 6 - TERM

6.1 TERM

This Agreement shall come into force on the Effective Date and
shall remain in full force and effect in each geographic region of the world
for a period which is the greater of fifty (50) years, and the date upon
which the copyright and all other Intellectual Property Rights in the
Licensed Components shall expire in such geographic region of the world.

6.2 TERMINATION

This Agreement may only be terminated in accordance with the
following provisions:

(a) at such time and on such conditions as the parties agree; or

<PAGE>

- 7 -

(b) if Newgen shall at any time fail to make any of the payments due to
the Partnership under Section 3.1, then the Partnership may serve
upon Newgen a notice of intention to terminate this Agreement which
notice shall specify such default; and if, within thirty (30) days
after the date of receipt of such notice, Newgen shall not have
cured all of the payment defaults indicated in such notice or
present a plan acceptable to the Partnership for curing of such
default, then, upon expiration of such thirty (30) day period, the
Partnership may, at its option, terminate this Agreement effective
immediately upon notice in writing to Newgen.

6.3 OBLIGATIONS ON TERMINATION

Unless otherwise agreed to by the parties upon the termination of
this Agreement pursuant to section 6.2, Newgen shall cease to be a licensee
of the Partnership hereunder and shall promptly: (i) return to the
Partnership, or certify the destruction of, all copies of Licensed Components
provided to it hereunder and in its possession or control; and (ii) cease to
provide Service Bureau Services using the Licensed Components.

6.4 SURVIVAL

All obligations of the parties which expressly or by their nature
survive the termination of this Agreement (including, without limitation,
the provisions of Sections 2.2, 2.3, 6.4, 7.6 and 7.8) shall continue in full
force and effect subsequent to and notwithstanding such termination and until
they are satisfied or by their nature expire.

ARTICLE 7 - GENERAL

7.1 JURISDICTION

This Agreement shall be governed by and interpreted in accordance
with the laws of the Province of Ontario and the applicable laws of Canada.

7.2 ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties relating to such subject matter, and there are no
warranties, representations or other agreements between the parties or any
Affiliates of the parties in connection with such subject matter except as
specifically set forth in this Agreement. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby.

<PAGE>

- 8 -

7.3 SEVERANCE

If any provision of this Agreement is declared invalid or
unenforceable such provision shall be severed from this Agreement and the
other provisions shall remain in full force and effect.

7.4 WAIVER OF AGREEMENT

A term or condition of this Agreement can be waived or modified only
by written consent of both parties. Forbearance or indulgence by either party
in any regard shall not constitute a waiver of the term or condition to be
performed, and either party may invoke any remedy available under this
Agreement or by law despite such forbearance or indulgence.

7.5 CURRENCY

All dollar amounts referred to in this Agreement are in Canadian
funds unless otherwise provided.

7.6 NOTICES

Any communication under this Agreement shall be in writing and
delivered personally or sent by registered mail, postage prepaid, or
transmitted by telecopier or other form of recorded communication tested
prior to transmission, addressed as follows:

If to the Partnership, at:

Service Systems Development Limited Partnership
70 East Beaver Creek Road
Unit 30
Richmond Hill, Ontario
L4B 3B2

ATTENTION: Nigel Bobet

Facsimile No.: (905) 889-8511

If to Newgen, at:

Newgen Results Corporation
12526 High Bluff Drive
Suite 150
San Diego, CA 92130
U.S.A.

ATTENTION: Bernard C. Simkin

<PAGE>

- 9 -

Facsimile No.: (619) 481-7879

Any communication so given shall be deemed to have been received on
the date on which it was delivered or transmitted by telecopier or other form
of recorded communication, or on the fifth (5th) day following the mailing of
such communication. Either party may change its address for purposes of
receipt of any such communication by giving notice of such change to the
other party in the manner prescribed above. In the event of actual or
threatened disruption of postal service, communications shall not be given by
mail.

7.7 ASSIGNMENT

Either party may assign or transfer this Agreement without the prior
written consent of the other upon the assignee or transferee, as the case
may be, undertaking to the other party to be bound by this Agreement to the
same extent as the assigning or transferring party is bound hereto, but any
such assignment or transfer shall not relieve the assigning or transferring
party of any of its duties or responsibilities hereunder and the assigning or
transferring party shall undertake in writing to indemnify and hold the other
party harmless against any breach by the assignee or transferee of any of
the provisions of this Agreement. This Agreement shall enure to the benefit
of and be binding upon the respective successors and assigns of the parties
hereto.

7.8 FURTHER ASSURANCES

The parties agree to cooperate with and assist each other and take
such action as may be reasonably necessary to implement and carry into
effect this Agreement to its full extent.

<PAGE>

- 10 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the
Effective Date.

SERVICE SYSTEMS DEVELOPMENT
LIMITED PARTNERSHIP, by its general
partner, SSD Service Systems Development
Limited

By: /s/ c/s
---------------------------------
(Authorized Signatory)

NEWGEN RESULTS CORPORATION

By: /s/ Sam Simkin c/s
---------------------------------
(Authorized Signatory)

<PAGE>

SILICON VALLEY BANK

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

by and between

SILICON VALLEY BANK

as Lender

NEWGEN RESULTS CORPORATION

as Borrower

Dated: March 10, 1998

<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS

Page
----
<S> <C> <C>
1. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting and Other Terms. . . . . . . . . . . . . . . . . . 8
2. LOAN AND TERMS OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . 8
2.1 Credit Extensions . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Overadvances. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Interest Rates, Payments, and Calculations. . . . . . . . . . 9
2.4 Crediting Payments. . . . . . . . . . . . . . . . . . . . . . 10
2.5 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Additional Costs. . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. CONDITIONS OF LOANS. . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Conditions Precedent to Initial Credit Extension. . . . . . . 11
3.2 Conditions Precedent to all Credit Extensions . . . . . . . . 11
4. CREATION OF SECURITY INTEREST. . . . . . . . . . . . . . . . . . . . 12
4.1 Grant of Security Interest. . . . . . . . . . . . . . . . . . 12
4.2 Delivery of Additional Documentation Required . . . . . . . . 12
4.3 Right to Inspect. . . . . . . . . . . . . . . . . . . . . . . 12
5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 12
5.1 Due Organization and Qualification. . . . . . . . . . . . . . 12
5.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . 12
5.3 No Prior Encumbrances . . . . . . . . . . . . . . . . . . . . 12
5.4 Bona Fide Eligible Accounts . . . . . . . . . . . . . . . . . 12
5.5 Merchantable Inventory. . . . . . . . . . . . . . . . . . . . 13
5.6 Intellectual Property . . . . . . . . . . . . . . . . . . . . 13
5.7 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 No Material Adverse Change in Financial Statements. . . . . . 13
5.10 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.11 Regulatory Compliance . . . . . . . . . . . . . . . . . . . . 13
5.12 Environmental Condition . . . . . . . . . . . . . . . . . . . 14
5.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.14 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 14
5.15 Government Consents . . . . . . . . . . . . . . . . . . . . . 14
5.16 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 14
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Government Compliance . . . . . . . . . . . . . . . . . . . . 14
6.3 Financial Statements, Reports, Certificates . . . . . . . . . 15
6.4 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 Principal Depository. . . . . . . . . . . . . . . . . . . . . 16
6.8 Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.9 Debt-Net Worth Ratio. . . . . . . . . . . . . . . . . . . . . 16
6.10 Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . . 16
6.11 Profitability . . . . . . . . . . . . . . . . . . . . . . . . 16
6.12 Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.13 Registration of Intellectual Property Rights. . . . . . . . . 16
6.14 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 17

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<PAGE>

TABLE OF CONTENTS (CONTD)

Page
----

7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Dispositions. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Changes in Business, Ownership, or Management,
Business Locations. . . . . . . . . . . . . . . . . . . . . 17
7.3 Mergers or Acquisitions . . . . . . . . . . . . . . . . . . . 17
7.4 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 Distributions . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 Investments . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.8 Transactions with Affiliates. . . . . . . . . . . . . . . . . 18
7.9 Intellectual Property Agreements. . . . . . . . . . . . . . . 18
7.10 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . 18
7.11 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.12 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 18
8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1 Payment Default . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Covenant Default. . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Material Adverse Change . . . . . . . . . . . . . . . . . . . 19
8.4 Attachment. . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . 19
8.7 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . 19
8.8 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.9 Misrepresentations. . . . . . . . . . . . . . . . . . . . . . 19
8.10 Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9. BANK'S RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 20
9.1 Rights and Remedies . . . . . . . . . . . . . . . . . . . . . 20
9.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 21
9.3 Accounts Collection . . . . . . . . . . . . . . . . . . . . . 21
9.4 Bank Expenses . . . . . . . . . . . . . . . . . . . . . . . . 22
9.5 Bank's Liability for Collateral . . . . . . . . . . . . . . . 22
9.6 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 22
9.7 Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11. CHOICE OF LAW AND VENUE. . . . . . . . . . . . . . . . . . . . . . . 23
12. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.1 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 23
12.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 23
12.3 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . 23
12.4 Severability of Provisions. . . . . . . . . . . . . . . . . . 23
12.5 Amendments in Writing, Integration. . . . . . . . . . . . . . 23
12.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 24
12.7 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 24

</TABLE>
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<PAGE>

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of
March 10, 1998 by and between SILICON VALLEY BANK ("Bank") and NEWGEN RESULTS
CORPORATION, a California corporation ("Borrower") and amends and restates in
its entirety the Loan and Security Agreement dated November 27, 1996 between
the Borrower and the Bank, as amended, supplemented and as otherwise modified
(the "Original Loan Agreement").

RECITALS

Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower. This Agreement sets forth the terms on which
Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank. Notwithstanding the execution of this Agreement, the following
shall continue in full force and effect and shall continue to secure all
present and future indebtedness, liabilities, guarantees and other
Obligations (as defined in this Agreement): All standard documents of Bank
entered into by the Borrower in connection with Letters of Credit; all
security agreements, collateral assignments and mortgages, including but not
limited to those relating to patents, trademarks, copyrights and other
intellectual property; all lockbox agreements and/or blocked account
agreements; and all UCC-1 financing statements and other documents filed with
governmental offices which perfect liens or security interests in favor of
Bank. In addition, in the event the Borrower has previously issued any stock
options, stock purchase warrants or securities to Silicon, the same and all
documents and agreements relating thereto shall also continue in full force
and effect.

AGREEMENT

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION

1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:

"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering
of services by Borrower, whether or not earned by performance, and any and
all credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing.

"Advance" or "Advances" means a loan advance under the Committed
Revolving Line.

"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls
or is controlled by or is under common control with such Person, and each of
such Person's senior executive officers, directors, partners and, for any
Person that is a limited liability company, such Persons, managers and
members.

"Bank Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan
Documents; and Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, (including fees and
expenses of appeal or review, or those incurred in any Insolvency Proceeding)
whether or not suit is brought.

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<PAGE>

"Borrower's Books" means all of Borrower's books and records
including, without limitation: ledgers; records concerning Borrower's assets
or liabilities, the Collateral, business operations or financial condition;
and all computer programs, or tape files, and the equipment, containing such
information.

"Borrowing Base" means an amount equal to 80% of Eligible
Accounts, as determined by Bank with reference to the most recent Borrowing
Base Certificate delivered by Borrower.

"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or
required to close.

"Closing Date" means the date of this Agreement.

"Code" means the California Uniform Commercial Code.

"Collateral" means the property described on EXHIBIT A attached
hereto.

"Committed Revolving Line" means a credit extension of up to
$3,000,000.

"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold
with recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the term "Contingent Obligation" shall not include
endorsements for collection or deposit in the ordinary course of business.
The amount of any Contingent Obligation shall be deemed to be an amount equal
to the stated or determined amount of the primary obligation in respect of
which such Contingent Obligation is made or, or if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith; provided, however, that such amount shall not
in any event exceed the maximum amount of the obligations under the guarantee
or other support management.

"Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.

"Credit Extension" means each Advance, Equipment Advance, Letter
of Credit, Term Loan, Exchange Contract or any other extension of credit by
Bank for the benefit of Borrower hereunder.

"Current Assets" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.

"Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Borrower and its
Subsidiaries, as at such date, plus, to the extent not already included
therein, all outstanding Credit Extensions made under this Agreement,
including all Indebtedness that is

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<PAGE>

payable upon demand or within one year from the date of determination
thereof unless such Indebtedness is renewable or extendable at the option of
Borrower or any Subsidiary to a date more than one year from the date of
determination, but excluding Subordinated Debt.

"Eligible Accounts" means those Accounts that arise in the
ordinary course of Borrower's business that comply with all of Borrower's
representations and warranties to Bank set forth in Sections 5.4; PROVIDED,
that standards of eligibility may be fixed and revised from time to time
by Bank in Bank's reasonable judgment and upon notification thereof to
Borrower in accordance with the provisions hereof. Unless otherwise agreed to
by Bank in writing, Eligible Accounts shall not include the following:

(a) Accounts that the account debtor has failed to pay
within ninety (90) days of invoice date;

(b) Accounts with respect to an account debtor, fifty
percent (50%) of whose Accounts the account debtor has failed to pay within
ninety (90) days of invoice date;

(c) Accounts with respect to an account debtor,
including Affiliates, whose total obligations to Borrower exceed
twenty-five percent (25%) of all Accounts, to the extent such obligations
exceed the aforementioned percentage, except as approved in writing by
Bank;

(d) Accounts with respect to which the account debtor does
not have its principal place of business in the United States;

(e) Accounts with respect to which the account debtor is a
federal, state, or local government entity or any department, agency, or
instrumentality thereof, except for those Accounts of the United States
or any department, agency or instrumentality thereof as to which the
payee has assigned its rights to payment thereof to Bank and the
assignment has been acknowledged, pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. 3727);

(f) Accounts with respect to which Borrower is liable to
the account debtor, but only to the extent of any amounts owing to the
account debtor (sometimes referred to as "contra" accounts, e.g.
accounts payable, customer deposits, credit accounts etc.);

(g) Accounts generated by demonstration or promotional
equipment, or with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, bill and hold, or
other terms by reason of which the payment by the account debtor may be
conditional:

(h) Accounts with respect to which the account debtor is an
Affiliate, officer, employee, or agent of Borrower;

(i) Accounts with respect to which the account debtor
disputes liability or makes any claim with respect thereto as to which
Bank believes, in its sole discretion, that there may be a basis for
dispute (but only to the extent of the amount subject to such dispute or
claim), or is subject to any Insolvency Proceeding, or becomes
insolvent, or goes out of business; and

(j) Accounts the collection of which Bank reasonably
determines to be doubtful.

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<PAGE>

"Eligible Foreign Accounts" means Accounts with respect to which the
account debtor does not have its principal place of business in the United
States and that are: (1) covered by credit insurance in form and amount, and by
an insurer satisfactory to Bank less the amount of any deductible(s) which may
be or become owing thereon; or (2) supported by one or more letters of credit
either advised or negotiated through Bank or in favor of Bank as beneficiary, in
an amount and of tenor, and issued by a financial institution, acceptable to
Bank; or (3) that Bank approves on a case-by-case basis.

"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.

"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.

"Indebtedness" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.

"Insolvency Proceeding" means any proceeding commenced by or against
any person or entity under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

"Intellectual Property Collateral" means

(a) Copyrights, Trademarks, Patents, and Mask Works:

(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;

(d) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right,
but not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;

(e) All licenses or other rights to use any of the Copyrights,
Patents, Trademarks, or Mask Works, and all license fees and royalties
arising from such use to the extent permitted by such license or rights;

(f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks, Patents, or Mask Works; and

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<PAGE>

(g) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing.

"Inventory" means all present and future inventory in which Borrower
has any interest, including merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and
description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is
temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title representing any of the above.

"Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.

"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

"Letter of Credit" means a letter of credit or similar undertaking
issued by Bank pursuant to Section 2.1.2.

"Letter of Credit Reserve" has the meaning set forth in Section 2.1.2.

"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.

"Loan Documents" means, collectively, this Agreement, any note or
notes executed by Borrower, and any other present or future agreement entered
into between Borrower and/or for the benefit of Bank in connection with this
Agreement, all as amended, extended or restated from time to time.

"Mask Works" means all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired;

"Material Adverse Effect" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.

"Maturity Date" means the Revolving Maturity Date.

"Negotiable Collateral" means all of Borrower's present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, document of title, and chattel paper.

"Obligations" means all debt, principal, interest, Bank Expenses and
other amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

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<PAGE>

"Patents" means all patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same.

"Payment Date" means the first calendar day of each month commencing
on the first such date after the Closing Date and ending on the Revolving
Maturity Date.

"Permitted Indebtedness" means:

(a) Indebtedness of Borrower in favor of Bank arising under this
Agreement or any other Loan Document;

(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;

(d) Indebtedness to trade creditors incurred in the ordinary
course of business:

and

(e) Indebtedness secured by Permitted Liens, provided that such
Indebtedness incurred in the future for the purchase price of or lease of
equipment shall not exceed in the aggregate a total of $200,000 at any time
outstanding.

"Permitted Investment" means:

(a) Investments existing on the Closing Date disclosed in the
Schedule;

(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State
thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from
either Standard & Poor's Corporation or Moody's Investors Service, Inc.,
and (iii) certificates of deposit maturing no more than one (1) year from
the date of investment therein issued by Bank; and

(c) Investments in Subsidiaries of the Borrower PROVIDED that
the aggregate amount of any and all such Investments at any one time shall
not exceed 10% of the Borrower's Tangible Net Worth.

"Permitted Liens" means the following:

(a) Any Liens existing on the Closing Date and disclosed in the
Schedule or arising under this Agreement or the other Loan Documents:

(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith
by appropriate proceedings and as to which adequate reserves are maintained
on Borrower's Books in accordance with GAAP, PROVIDED the same have no
priority over any of Bank's security interests;

(c) Liens (i) upon or in any Equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
Equipment or indebtedness

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<PAGE>

incurred solely for the purpose of financing the acquisition of such
Equipment, or (ii) existing on such equipment at the time of its
acquisition, PROVIDED that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;

(d) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, PROVIDED that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.

"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

"Prime Rate" means the variable rate of interest, per annum, most
recently announced by Bank, as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank.

"Quick Assets" means, as of any applicable date, the consolidated
cash, cash equivalents, accounts receivable and investments with maturities of
fewer than 90 days of Borrower determined in accordance with GAAP.

"Responsible Officer" means each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

"Revolving Maturity Date" Means the date that is one day prior to the
first anniversary of the date of this Agreement.

"Schedule" means the schedule of exceptions attached hereto, if any.

"Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms acceptable to Bank
(and identified as being such by Borrower and Bank).

"Subsidiary" means with respect to any Person, corporation,
partnership, company association, joint venture, or any other business entity of
which more than fifty percent (50%) of the voting stock or other equity
interests is owned or controlled, directly or indirectly, by such Person or one
or more Affiliates of such Person.

"Tangible Net Worth" means as of any applicable date, the
consolidated total assets of Borrower and its Subsidiaries MINUS, without
duplication, (i) the sum of any amounts attributable to (a) goodwill, (b)
intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, and (c) all reserves not already deducted
from assets, AND (ii) Total Liabilities.

"Total Liabilities" means as of any applicable date, any date as of
which the amount thereof shall be determined, all obligations that should, in
accordance with GAAP be classified as liabilities on the consolidated balance
sheet of Borrower, including in any event all Indebtedness, but specifically
excluding Subordinated Debt.

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<PAGE>

"Trademarks" means any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Assignor connected
with an symbolized by such trademarks.

1.2 ACCOUNTING AND OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
and determinations made hereunder shall be made in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. The terms "including"/"includes" shall always be read as
meaning "including (or includes) without limitation", when used herein or in any
other Loan Document.

2. LOAN AND TERMS OF PAYMENT

2.1 CREDIT EXTENSIONS. Borrower promises to pay to the order of Bank, in
lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Bank to Borrower hereunder. Borrower
shall also pay interest on unpaid principal amount of all Credit Extensions at
rates in accordance with the terms hereof.

2.1.1 Advances.

(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make Advances to Borrower in an aggregate
outstanding amount not to exceed (i) the Committed Revolving Line or the
Borrowing Base, whichever is less, minus (ii) the face amount of all
outstanding Letters of Credit (including drawn but reimbursed Letters of
Credit). Subject to the terms and conditions of this Agreement, amounts
borrowed pursuant to this Section 2.1 may be repaid and reborrowed at any
time during the term of this Agreement.

(b) Whenever Borrower desires an Advance, Borrower will
notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific time, on the Business Day that the Advance is to be made. Each
such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of EXHIBIT B hereto. Bank is authorized to make
Advances under this Agreement, based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be
entitled to rely on any telephonic notice given by a person who Bank
reasonably believes to be a Responsible Officer or a designee thereof, and
Borrower shall indemnify and hold Bank harmless for any damages or loss
suffered by Bank as a result of such reliance. Bank will credit the amount
of Advances made under this Section 2.1 to Borrower's deposit account.

(c) The Committed Revolving Line shall terminate on the
Revolving Maturity Date, at which time all Advances under this Section 2.1
and other amounts due under this Agreement (except as otherwise expressly
specified herein) shall be immediately due and payable.

2.1.2 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement,
Bank agrees to issue or cause to be issued Letters of Credit for the
account of Borrower in an aggregate outstanding face amount not to exceed
(i) the lesser of the Committed Revolving Line or the Borrowing Base,
whichever is less, minus (ii) the then outstanding principal balance of the
Advances; PROVIDED that the face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) shall not in any

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<PAGE>

case exceed $600,000. Each Letter of Credit shall have an expiry date no
later than the Revolving Maturity Date. All Letters of Credit shall be, in
form and substance, acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank's form of standard Application
and Letter of Credit Agreement.

(b) The obligation of Borrower to immediately reimburse
Bank for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement and such Letters of Credit,
under all circumstances whatsoever. Borrower shall indemnify, defend,
protect, and hold Bank harmless from any loss, cost, expense or liability,
including, without limitation, reasonable attorneys' fees, arising out of
or in connection with any Letters of Credit.

(c) Borrower may request that Bank issue a Letter of Credit
payable in a currency other than United States Dollars. If a demand for
payment is made under any such Letter of Credit, Bank shall treat such
demand as an Advance to Borrower of the equivalent of the amount thereof
(plus cable charges) in United States currency at the then prevailing rate
of exchange in San Francisco, California, for sales of that other currency
for cable transfer to the country of which it is the currency.

(d) Upon the issuance of any letter of credit payable in a
currency other than United States Dollars, Bank shall create a reserve
under the Committed Revolving Line for letters of credit against
fluctuations in currency exchange rates, in an amount equal to ten percent
(10%) of the face amount of such letter of credit. The amount of such
reserve may be amended by Bank from time to time to account for
fluctuations in the exchange rate. The availability of funds under the
Committed Revolving Line shall be reduced by the amount of such reserve for
so long as such letter of credit remains outstanding.

2.2 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to Bank pursuant to Section 2.1.1 and 2.1.2 of this
Agreement is greater than the lesser of (i) the Committed Revolving Line or (ii)
the Borrowing Base, Borrower shall immediately pay to Bank, in cash, the amount
of such excess.

2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS.

(a) INTEREST RATE. Except as set forth in Section 2.3(b), any
Advances shall bear interest, on the average daily balance thereof, at per annum
rate equal to 1.00% percentage points above the Prime Rate (the "Original Rate),
PROVIDED that at such time that the Borrower shall not have incurred a loss
(after taxes) in two consecutive fiscal quarters (such occurrence being the
"Rate Reduction Condition") the interest rate shall be reduced to a per annum
rate equal to .50% percentage points above the Prime Rate. Such a reduction in
the interest rate shall be effective at such time that the Borrower has provided
to the Bank financial statements evidencing compliance with the foregoing Rate
Reduction Condition and which the Bank determines to be acceptable for such
purposes, in its reasonable discretion. If, after any such rate reduction,
Borrower incurs a loss (after taxes) in any fiscal quarter the interest rate
shall be increased to the Original Rate until such time that the Borrower
subsequently satisfies the above Rate Reduction Condition, with any such
increase to the Original Rate to be effective as of the date of the financial
statements evidencing the loss.

(b) DEFAULT RATE. All Obligations shall bear interest, from and
after the occurrence of an Event of Default, at a rate equal to five (5)
percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.

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(c) PAYMENTS. Interest hereunder shall be due and payable on each
Payment Date. Borrower hereby authorizes Bank to debit any accounts with
Bank, including, without limitation, Account Number 3300047539 for payments
of principal and interest due on the Obligations and any other amounts owing
by Borrower to Bank. Bank will notify Borrower of all debits which Bank has
made against Borrower's accounts. Any such debits against Borrower's accounts
in no way shall be deemed a set-off. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.

(d) COMPUTATION. In the event the Prime Rate is changed from time
to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate
is changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.

2.4 CREDITING PAYMENTS. Prior to the occurrence of an Event of Default,
Bank shall credit a wire transfer of funds, check or other item of payment to
such deposit account or Obligation as Borrower specifies. After the
occurrence of an Event of Default, the receipt by Bank of any wire transfer
of funds, check, or other item of payment, whether directed to Borrower's
deposit account with Bank or to the Obligations or otherwise, shall be
immediately applied to conditionally reduce Obligations, but shall not be
considered a payment in respect of the Obligations unless such payment is of
immediately available federal funds or unless and until such check or other
item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment
received by Bank after 12:00 noon Pacific time shall be deemed to have been
received by Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to Bank under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable
for the period of such extension.

2.5 FEES. Borrower shall pay to Bank the following:

(a) FACILITY FEE. A Facility Fee equal to $15,000, which fee
shall be due on the Closing Date and shall be fully earned and non-refundable;

(b) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's customary
fees and out-of-pocket expenses for Bank's audits of Borrower's Accounts, and
for each appraisal of Collateral and financial analysis and examination of
Borrower performed from time to time by Bank or its agents;

(c) BANK EXPENSES. Upon demand from Bank, including, without
limitation, upon the date hereof, all Bank Expenses incurred through the date
hereof, including reasonable attorneys' fees and expenses, and, after the
date hereof, all Bank Expenses, including reasonable attorneys' fees and
expenses, as and when they become due.

2.6 ADDITIONAL COSTS. In case any law, regulation, treaty or official
directive or the interpretation or application thereof by any court or any
governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):

(a) subjects Bank to any tax with respect to payments of principal
or interest or any other amounts payable hereunder by Borrower or otherwise
with respect to the transactions contemplated hereby (except for taxes on the
overall net income of Bank imposed by the United States of America or any
political subdivision thereof);

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(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Bank; or

and the result of any of the foregoing is to increase the cost to Bank,
reduce the income receivable by Bank or impose any expense upon Bank with
respect to any loans, Bank shall notify Borrower thereof. Borrower agrees to
pay to Bank the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or
determined, upon presentation by Bank of a statement of the amount and
setting forth Bank's calculation thereof, all in reasonable detail, which
statement shall be deemed true and correct absent manifest error.

2.7 TERM. Except as otherwise set forth herein, this Agreement shall
become effective on the Closing Date and, subject to Section 12.7, shall
continue in full force and effect for a term ending on the Maturity Date.
Notwithstanding the foregoing, Bank shall have the right to terminate its
obligation to make Credit Extensions under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default. Notwithstanding termination of this Agreement, Bank's lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.

3. CONDITIONS OF LOANS

3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The obligation
of Bank to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory
to Bank, the following:

(a) this Agreement;

(b) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;

(c) if requested by the Bank, acknowledgements and consents by the
signatories to the existing subordination agreements to this Agreement, in
form and content satisfactory to Bank in its discretion;

(d) payment of the fees and Bank Expenses then due specified in
Section 2.5 hereof;

(e) Certificate of Foreign Qualification (if applicable); and

(f) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.

3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. The obligation of
Bank to make each Credit Extension, including the initial Credit Extension,
is further subject to the following conditions:

(a) timely receipt by Bank of the Payment/Advance Form as provided
in Section 2.1; and

(b) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of
such Payment/Advance Form and on the

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effective date of each Credit Extension as though made at and as of each such
date, and no Event of Default shall have occurred and be continuing, or would
result from such Credit Extension. The making of each Credit Extension shall
be deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2(b).

4. CREATION OF SECURITY INTEREST

4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to Bank a
continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt payment of any and all
Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date
hereof. Borrower acknowledges that Bank may place a "hold" on any Deposit
Account pledged as Collateral to secure the Obligations. Notwithstanding
termination of this Agreement, Bank's Lien on the Collateral shall remain in
effect for so long as any Obligations are outstanding.

4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall from
time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.

4.3 RIGHT TO INSPECT. Bank (through any of its officers, employees, or
agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower's usual business hours, to inspect Borrower's Books and to
make copies thereof and to check, test, and appraise the Collateral in order
to verify Borrower's financial condition or the amount, condition of, or any
other matter relating to, the Collateral.

5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary
is a corporation duly existing and in good standing under the laws of its
state of incorporation and qualified and licensed to do business in, and is
in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified.

5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles/Certificate of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which Borrower is a party or by which Borrower is bound.
Borrower is not in default under any agreement to which it is a party or by
which it is bound, which default could have a Material Adverse Effect.

5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title to
the Collateral, free and clear of Liens, except for Permitted Liens.

5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing obligations. The service or property giving rise to such Eligible
Accounts has been performed or delivered to the account debtor or to the
account debtor's agent for immediate shipment to and

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unconditional acceptance by the account debtor. Borrower has not received
notice of actual or imminent Insolvency Proceeding of any account debtor whose
accounts are included in any Borrowing Base Certificate as an Eligible Account.

5.5 MERCHANTABLE INVENTORY. All Inventory is in all material respects of
good and marketable quality, free from all material defects.

5.6 INTELLECTUAL PROPERTY. Borrower is the sole owner of the
Intellectual Property Collateral, except for non-exclusive licenses granted by
Borrower to its customers in the ordinary course of business. Each of the
Patents is valid and enforceable, and no part of the Intellectual Property
Collateral has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property Collateral
violates the rights of any third party. Except for and upon the filing with the
United States Patent and Trademark Office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights and
Mask Works necessary to perfect the security interests created hereunder, and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any United States governmental
authority or United States regulatory body is required either (i) for the grant
by Borrower of the security interest granted hereby or for the execution,
delivery or performance of Loan Documents by Borrower in the United States or
(ii) for the perfection in the United States or the exercise by Bank of its
rights and remedies hereunder.

5.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in the
Schedule, Borrower has not done business and will not without at least thirty
(30) days prior written notice to Bank do business under any name other than
that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in Section 10 hereof.

5.8 LITIGATION. Except as set forth in the Schedule, there are no actions
or proceedings pending, or, to Borrower's knowledge, threatened by or against
Borrower or any Subsidiary before any court or administrative agency in which an
adverse decision could have a Material Adverse Effect or a material adverse
effect on Borrower's interest or Bank's security interest in the Collateral.

5.9 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All consolidated
financial statements related to Borrower and any Subsidiary that have been
delivered by Borrower to Bank fairly present in all material respects Borrower's
consolidated financial condition as of the date thereof and Borrower's
consolidated results of operations for the period then ended. There has not
been a material adverse change in the consolidated financial condition of
Borrower since the date of the most recent of such financial statements
submitted to Bank on or about the Closing Date.

5.10 SOLVENCY. The fair saleable value of Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities; the
Borrower is not left with unreasonably small capital after the transactions
contemplated by this Agreement; and Borrower is able to pay its debts (including
trade debts) as they mature.

5.11 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of

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the Federal Fair Labor Standards Act. Borrower has not violated any statutes,
laws, ordinances or rules applicable to it, violation of which could have a
Material Adverse Effect.

5.12 ENVIRONMENTAL CONDITION. None of Borrower's or any Subsidiary's
properties or assets has ever been used by Borrower or any Subsidiary or, to
the best of Borrower's knowledge, by previous owners or operators, in the
disposal of, or to produce, store, handle, treat, release, or transport, any
hazardous waste or hazardous substance other than in accordance with
applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the release, or other disposition of hazardous waste
or hazardous substances into the environment.

5.13 TAXES. Borrower and each Subsidiary has filed or caused to be filed
all tax returns required to be filed on a timely basis, and has paid, or has
made adequate provision for the payment of, all taxes reflected therein.

5.14 SUBSIDIARIES. Borrower does not own any stock, partnership interest
or other equity securities of any Person, except for Permitted Investments.

5.15 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted.

5.16 FULL DISCLOSURE. No representation, warranty or other statement made
by Borrower in any certificate or written statement furnished to Bank contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained in such certificates or
statements not misleading.

6. AFFIRMATIVE COVENANTS

Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
a Credit Extension hereunder, Borrower shall do all of the following:

6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.

6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.

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6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to Bank: (a) as soon as available, but in any event within thirty
(30) days after the end of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated
operations during such period, in a form and certified by an officer of
Borrower reasonably acceptable to Bank; (b) as soon as available, but in any
event within ninety (90) days after the end of Borrower's fiscal year,
audited consolidated financial statements of Borrower prepared in accordance
with GAAP, consistently applied, together with an unqualified opinion on such
financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) [reserved]; (d) promptly upon receipt of
notice thereof, a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to Borrower
or any Subsidiary of One Hundred Thousand Dollars ($100,000) or more; (e)
prompt notice of any material change in the composition of the Intellectual
Property Collateral, including, but not limited to, any subsequent ownership
right of the Borrower in or to any Copyright, Patent or Trademark not
specified in any intellectual property security agreement between Borrower
and Bank or knowledge of an event that materially adversely effects the value
of the Intellectual Property Collateral; and (f) such budgets, sales
projections, operating plans or other financial information as Bank may
reasonably request from time to time.

Within THIRTY (30) days after the last day of each MONTH, Borrower shall
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of EXHIBIT C hereto, together with aged listings of
accounts receivable and accounts payable.

Within THIRTY (30) days after the last day of each MONTH, Borrower shall
deliver to Bank with the MONTHLY financial statements a Compliance Certificate
signed by a Responsible Officer in substantially the form of EXHIBIT D hereto.

Bank shall have a right from time to time hereafter to audit Borrower's
Accounts at Borrower's expense, provided that such audits will be conducted no
more often than every six (6) months unless an Event of Default has occurred and
is continuing.

6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory in good and
marketable condition, free from all material defects. Returns and allowances,
if any, as between Borrower and its account debtors shall be on the same basis
and in accordance with the usual customary practices of Borrower, as they exist
at the time of the execution and delivery of this Agreement. Borrower shall
promptly notify Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves more than Fifty
Thousand Dollars ($50,000).

6.5 TAXES. Borrower shall make, and shall cause each Subsidiary to make,
due and timely payment or deposit of all material federal, state, and local
taxes, assessments, or contributions required of it by law, and will execute and
deliver to Bank, on demand, appropriate certificates attesting to the payment or
deposit thereof; and Borrower will make, and will cause each Subsidiary to make,
timely payment or deposit of all material tax payments and withholding taxes
required of it by applicable laws, including, but not limited to, those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Bank with proof satisfactory to
Bank indicating that Borrower or a Subsidiary has made such payments or
deposits; provided that Borrower or a Subsidiary need not make any payment if
the amount or validity of such payment is (I) contested in good faith by
appropriate proceedings, (ii) is reserved against (to the extent required by
GAAP) by Borrower and (iii) no lien other than a Permitted Lien results.

6.6 INSURANCE.

(a) Borrower, at its expense, shall keep the Collateral insured against
loss or damage by fire, theft, explosion, sprinklers, and all other hazards and
risks, and in such amounts,

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as ordinarily insured against by other owners in similar businesses conducted
in the locations where Borrower's business is conducted on the date hereof.
Borrower shall also maintain insurance relating to Borrower's ownership and
use of the Collateral in amounts and of a type that are customary to
businesses similar to Borrower's.

(b) All such policies of insurance shall be in such form, with such
companies, and in such amounts as are reasonably satisfactory to Bank. All such
policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. At Bank's
request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. All proceeds
payable under any such policy shall, at the option of Bank, be payable to Bank
to be applied on account of the Obligations.

6.7 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal
depository and operating accounts with Bank.

6.8 QUICK RATIO. Borrower shall maintain, as of the last day of each
calendar month, a ratio of Quick Assets to Current Liabilities of at least 1.75
to 1.0.

6.9 DEBT-NET WORTH RATIO. Borrower shall maintain, as of the last day of
each calendar month, a ratio of Total Liabilities less Subordinated Debt to
Tangible Net Worth plus Subordinated Debt of not more than 1.00 to 1.0.

6.10 TANGIBLE NET WORTH. Borrower shall maintain, as of the last day of
each calendar month, a Tangible Net Worth of not less than $6,000,000.

6.11 PROFITABILITY. Borrower shall not incur a loss (after taxes) for the
fiscal quarter ending March 31, 1998; Borrower shall not incur a loss (after
taxes) in excess of $250,000 for the fiscal quarter ending June 30, 1998;
Borrower shall not incur a loss (after taxes) in excess of $125,000 for the
fiscal quarter ending September 30, 1998; and Borrower shall attain profits
(after taxes) of at least $100,000 for the fiscal quarter ending December 31,
1998. The parties hereto understand and agree that expenses of the Borrower
relating to its software system upgrade, UP TO $3,000,000 ONLY, shall be
excluded from the calculation of this Profitability covenant; and such expenses
that exceed $3,000,000 in the aggregate SHALL BE INCLUDED in the foregoing
calculation.

6.12 REVENUES: SUBSCRIBER BASE. The revenues of the Borrower shall not
decline for two or more months sequentially. Further, the subscriber base
revenues of the Borrower for each month shall not decline more than 10% from the
amount of such revenues of the prior month.

6.13 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.

(a) Borrower shall register or cause to be registered (to the
extent not already registered) with the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, those
intellectual property rights listed on Exhibits A, B, and C to the
Intellectual Property Security Agreement delivered to Bank by Borrower in
connection with this Agreement within thirty (30) days of the date of this
Agreement. Borrower shall register or cause to be registered with the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, those additional intellectual property rights developed or
acquired by Borrower from time to time in connection with any product prior
to the sale or licensing of such product to any third party, including
without limitation revisions or additions to the intellectual property rights
listed on such Exhibits A, B, and C.

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(b) Borrower shall execute and deliver such additional instruments
and documents from time to time as Bank shall reasonably request to perfect
Banks's security interest in the Intellectual Property Collateral.

(c) Borrower shall (i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents, Copyrights, and Mask Works, (ii) use
its best efforts to detect infringements of the Trademarks, Patents, Copyrights
and Mask Works and promptly advise Bank in writing of material infringements
detected and (iii) not allow any Trademarks, Patents, Copyrights, or Mask Works
to be abandoned, forfeited or dedicated to the public without the written
consent of Bank, which shall not be unreasonably withheld, unless Bank
determines that reasonable business practices suggest that abandonment is
appropriate.

(d) Bank shall have the right, but not the obligation, to take, at
Borrower's sole expense, any actions that Borrower is required under this
Section 6.14 to take but which Borrower fails to take, after fifteen (15) days'
notice to Borrower. Borrower shall reimburse and indemnify Bank for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.14.

6.14 FURTHER ASSURANCES. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.

7. NEGATIVE COVENANTS

Borrower covenants and agrees that, so long as any Credit Extension
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
Borrower will not do any of the following:

7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose
of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than Transfers:
(i) of inventory in the ordinary course of business, (ii) of nonexclusive
licenses and similar arrangements for the use of the property of Borrower or
its Subsidiaries in the ordinary course of business; (iii) that constitute
payment of normal and usual operating expenses in the ordinary course of
business; or (iii) of worn-out or obsolete Equipment.

7.2 CHANGES IN BUSINESS, OWNERSHIP, OR MANAGEMENT, BUSINESS LOCATIONS.
Engage in any business, or permit any of its Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrower and any
business substantially similar or related thereto (or incidental thereto), or
suffer a change in Borrower's ownership of greater than 40% or management,
provided that the foregoing shall not restrict changes in such ownership solely
arising from or relating to transfers between and among affiliates or between
and among immediate family members. Borrower will not, without at least thirty
(30) days prior written notification to Bank, relocate its chief executive
office or add any new offices or business locations.

7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.

7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.

7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien with
respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.

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7.6 DISTRIBUTIONS. Pay any dividends or make any other distribution or
payment on account of or in redemption, retirement or purchase of any capital
stock.

7.7 INVESTMENTS; LOANS; GUARANTEES. Directly or indirectly acquire or
own, or make any Investment in or to any Person, or permit any of its
Subsidiaries so to do, other than Permitted Investments, or make any loans of
any money or any other assets to any Person, or guarantee or otherwise become
liable with respect to the obligations of any other Person.

7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a nonaffiliated Person.

7.9 INTELLECTUAL PROPERTY AGREEMENTS. Borrower shall not permit the
inclusion in any material contract to which it becomes a party of any provisions
that could or might in any way prevent the creation of a security interest in
Borrower's rights and interests in any property included within the definition
of the Intellectual Property Collateral acquired under such contracts, except to
the extent that such provisions are necessary in Borrower's exercise of its
reasonable business judgment, in which case written notice thereof shall be
given to Bank.

7.10 SUBORDINATED DEBT. Make any payment in respect of any Subordinated
Debt, or permit any of its Subsidiaries to make any such payment, except in
compliance with the terms of such Subordinated Debt, or amend any provision
contained in any documentation relating to the Subordinated Debt without Bank's
prior written consent.

7.11 INVENTORY. Store the Inventory with a bailee, warehouseman, or
similar party unless Bank has received a pledge of any warehouse receipt
covering such Inventory. Except for Inventory sold in the ordinary course of
business and except for such other locations as Bank may approve in writing.
Borrower shall keep the Inventory only at the location set forth in Section 10
hereof and such other locations of which Borrower gives Bank prior written
notice and as to which Borrower signs and files a financing statement where
needed to perfect Bank's security interest.

7.12 COMPLIANCE. Become an "investment company" or a company controlled by
an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose; fail
to meet the minimum funding requirements of ERISA; permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral; or permit any
of its Subsidiaries to do any of the foregoing.

8. EVENTS OF DEFAULT

Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:

8.1 PAYMENT DEFAULT. If Borrower fails to pay, when due, any of the
Obligations.

8.2 Covenant Default.

(a) If Borrower fails to perform any obligation under Sections 6.3,
6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, 6.13, or 6.14 or violates any of the
covenants contained in Article 7 of this Agreement, or

-18-
<PAGE>

(b) If Borrower fails or neglects to perform, keep, or observe any
other material term, provision, condition, covenant, or agreement contained
in the Agreement, in any of the Loan Documents, or in any other present or
future agreement between Borrower and Bank and as to any default under such
other term, provision, condition, covenant or agreement that can be cured, has
failed to cure such default within ten (10) days after the occurrence
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by Borrower
be cured within such ten (10) days period, and such default is likely to be
cured within a reasonable time, then Borrower shall have an additional
reasonable period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the
failure to have cured such default shall not be deemed an Event of Default
(provided that no Advances will be required to be made during such cure
period);

8.3 MATERIAL ADVERSE CHANGE. If there (i) occurs a material adverse
change in the business, operations, or condition (financial or otherwise) of
the Borrower, or (ii) is a material impairment of the prospect of repayment
of any portion of the Obligations or (iii) is a material impairment of the
value or priority of Bank's security interests in the Collateral;

8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or
levy has not been removed, discharged or rescinded within ten (10) days, or
if Borrower is enjoined, restrained, or in any way prevented by court order
from continuing to conduct all or any material part of its business affairs,
or if a judgment or other claim becomes a lien or encumbrance upon any
material portion of Borrower's assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any of Borrower's assets by the
United States Government, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or governmental agency, and the
same is not paid within ten (10) days after Borrower receives notice thereof,
provided that none of the foregoing shall constitute an Event of Default where
such action or event is stayed or an adequate bond has been posted pending a
good faith contest by Borrower (provided that no Credit Extensions will be
required to be made during such cure period);

8.5 INSOLVENCY. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is
commenced against Borrower and is not dismissed or stayed within 30 days
(provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);

8.6 OTHER AGREEMENTS. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could have a Material Adverse Effect;

8.7 SUBORDINATED DEBT. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;

8.8 JUDGMENTS. If a judgment or judgments for the payment of money in
an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such
judgment); or

8.9 MISREPRESENTATIONS. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate or

-19-

<PAGE>

writing delivered to Bank by Borrower or any Person acting on Borrower's
behalf pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.

8.10 GUARANTY. Any guaranty of all or a portion of the Obligations
ceases for any reason to be in full force and effect, or any Guarantor fails
to perform any obligation under any guaranty of all or a portion of the
Obligations, or any material misrepresentation or material misstatement
exists now or hereafter in any warranty or representation set forth in any
guaranty of all or a portion of the Obligations or in any certificate
delivered to Bank in connection with such guaranty, or any of the
circumstances described in Sections 8.4, 8.5 or 8.8 occur with respect to any
Guarantor.

9. BANK'S RIGHTS AND REMEDIES

9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the continuance
of an Event of Default, Bank may, at its election, without notice of its
election and without demand, do any one or more of the following, all of
which are authorized by Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable
(provided that upon the occurrence of an Event of Default described in
Section 8.5 all Obligations shall become immediately due and payable without
any action by Bank);

(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;

(c) Demand of Borrower (i) deposit cash with Bank in an amount
equal to the amount of any Letters of Credit remaining undrawn, as collateral
security for the repayment of any future drawing under such Letters of Credit,
and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in
advance all Letters of Credit fees scheduled to be paid or payable over the
remaining term of the Letters of Credit;

(d) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;

(e) Without notice to or demand upon Borrower, make such payments
and do such acts as Bank considers necessary or reasonable to protect its
security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank
as Bank may designate. Borrower authorizes Bank to enter the premises where
the Collateral is located, to take and maintain possession of the Collateral,
or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank's determination appears to be
prior or superior to its security interest and to pay all expenses incurred
in connection therewith. With respect to any of Borrower's premises,
Borrower hereby grants Bank a license to enter such premises and to occupy
the same, without charge in order to exercise any of Bank's rights or
remedies provided herein, at law, in equity, or otherwise;

(f) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank,
or (ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;

(g) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a non-exclusive, royalty-free
license or other right, solely pursuant to the provisions of this Section
9.1. to, use, without charge, Borrower's labels, patents, copyrights, mask
works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter,

-20-

<PAGE>

or any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral
and, in connection with Bank's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure
to Bank's benefit;

(h) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply the proceeds thereof to the
Obligations in whatever manner or order it deems appropriate;

(i) Bank may credit bid and purchase at any public sale, or at any
private sale as permitted by law;

(j) Any deficiency that exists after disposition of the Collateral
as provided above will be paid immediately by Borrower; and

(k) Bank shall have a non-exclusive, royalty-free license to use
the Intellectual Property Collateral to the extent reasonably necessary to
permit Bank to exercise its rights and remedies upon the occurrence of an
Event of Default.

9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Bank (and any of Bank's designated officers, or employees) as Borrower's true
and lawful attorney to: (a) send requests for verification of Accounts or
notify account debtors of Bank's security interest in the Accounts; (b)
endorse Borrower's name on any checks or other forms of payment or security
that may come into Bank's possession; (c) sign Borrower's name on any invoice
or bill of lading relating to any Account, drafts against account debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices
to account debtors; (d) make, settle, and adjust all claims under and decisions
with respect to Borrower's policies of insurance; and (e) settle and adjust
disputes and claims respecting the accounts directly with account debtors,
for amounts and upon terms which Bank determines to be reasonable; (f) to
modify, in its sole discretion, any intellectual property security agreement
entered into between Borrower and Bank without first obtaining Borrower's
approval of or signature to such modification by amending Exhibit A,
Exhibit B, Exhibit C, and Exhibit D, thereof, as appropriate, to include
reference to any right, title or interest in any Copyrights, Patents,
Trademarks, Mask Works acquired by Borrower after the execution hereof or to
delete any reference to any right, title or interest in any Copyrights,
Patents, Trademarks, or Mask Works in which Borrower no longer has or claims
any right, title or interest; (g) to file, in its sole discretion, one or
more financing or continuation statements and amendments thereto, relative
to any of the Collateral without the signature of Borrower where permitted by
law; and (h) to transfer the Intellectual Property Collateral into the name
of Bank or a third party to the extent permitted under the California Uniform
Commercial Code provided Bank may exercise such power of attorney to sign the
name of Borrower on any of the documents described in Section 4.2 regardless
of whether an Event of Default has occurred. The appointment of Bank as
Borrower's attorney in fact, and each and every one of Bank's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Bank's obligation to
provide advances hereunder is terminated.

9.3 ACCOUNTS COLLECTION. Upon the occurrence and during the continuance
of an Event of Default, Bank may notify any Person owing funds to Borrower of
Bank's security interest in such funds and verify the amount of such Account.
Borrower shall collect all amounts owing to Borrower for Bank, receive in
trust all payments as Bank's trustee, and if requested or required by Bank,
immediately deliver such payments to Bank in their original form as received
from the account debtor, with proper endorsements for deposit.

-21-

<PAGE>

9.4 BANK EXPENSES. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of
the following: (a) make payment of the same or any part thereof; (b) set up
such reserves under the Committed Revolving Line as Bank deems necessary to
protect Bank from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.6 of this
Agreement, and take any action with respect to such policies as Bank deems
prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at
the then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by
Bank to make similar payments in the future or a waiver by Bank of any Event
of Default under this Agreement.

9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies
with reasonable banking practices, Bank shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any
loss or damage thereto occurring or arising in any manner or fashion from any
cause; (c) any diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other person
whomsoever. All risk of loss, damage or destruction of the Collateral shall
be borne by Borrower.

9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not expressly set forth herein
as provided under the Code, by law, or in equity. No exercise by Bank of one
right or remedy shall be deemed an election, and no waiver by Bank of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Bank shall constitute a waiver, election, or acquiescence by it. No
waiver by Bank shall be effective unless made in a written document signed on
behalf of Bank and then shall be effective only in the specific instance and
for the specific purpose for which it was given.

9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments,
chattel paper, and guarantees at any time held by Bank on which Borrower may
in any way be liable.

10. NOTICES.

Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement
entered into in connection herewith shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, by certified mail, postage prepaid,
return receipt requested, or by telefacsimile to Borrower or to Bank, as the
case may be, at its addresses set forth below:

If to Borrower Newgen Results Corporation
12680 High Bluff Drive, Suite 300
San Diego, California 92130
Attn: Mr. Sam Simkin
FAX: 619-481-1299

If to Bank Silicon Valley Bank
5414 Oberlin Drive, Suite 230
San Diego, CA 92121
Attn: Manager
FAX: 619-535-1611

-22-
<PAGE>

The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.

11. CHOICE OF LAW AND VENUE; JURY WAIVER

The Loan Documents shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to principles of conflicts or law. Each of Borrower and Bank hereby submits
to the exclusive jurisdiction of the state and Federal courts located in the
County of San Diego, State of California. BORROWER AND BANK EACH HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES
AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT
TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.

12. GENERAL PROVISIONS

12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of the respective successors and permitted assigns of each of
the parties; PROVIDED, HOWEVER, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Bank's prior written consent,
which may be granted or withheld in Bank's sole discretion. Bank shall have
the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.

12.2 INDEMNIFICATION. Borrower shall, indemnify, defend, protect
and hold harmless Bank and its officers, employees, and agents against: (a)
all obligations, demands, claims, and liabilities claimed or asserted by any
other party in connection with the transactions contemplated by the Loan
Documents; and (b) all losses or Bank Expenses in any way suffered, incurred,
or paid by Bank as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under the
Loan Documents, or otherwise (including without limitation reasonable
attorneys fees and expenses), except for losses caused by Bank's gross
negligence or willful misconduct.

12.3 TIME OF ESSENCE. Time is of the essence for the performance
of all obligations set forth in this Agreement.

12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the
purpose of determining the legal enforceability of any specific provision.

12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
amended or terminated except by a writing signed by Borrower and Bank. All
prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement, if any, are merged into this Agreement and the Loan Documents.

-23-

<PAGE>

12.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.

12.7 SURVIVAL. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities
described in Section 12.2 shall survive until all applicable statute of
limitations periods with respect to actions that may be brought against Bank
have run.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

NEWGEN RESULTS CORPORATION

By: [ILLEGIBLE]
-------------------------------------
Title: V.P., C.F.O.
-----------------------------------

By:
-------------------------------------
Title:
-----------------------------------

SILICON VALLEY BANK

By: [ILLEGIBLE]
-------------------------------------
Title: Senior Vice President
-----------------------------------

-24-

<PAGE>

EXHIBIT A

The Collateral shall consist of all right, title and interest of Borrower in
and to the following:

(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor
vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing, wherever located;

(b) All inventory, now owned and operated or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products
including such inventory as is temporarily out of Borrower's custody or
possession, or in transit and including any returns upon any accounts or
other proceeds, including insurance proceeds, resulting from the sale of
disposition of any of the foregoing and any documents of title
representing any of the above;

(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications,
leases, license agreements, franchise agreements, blueprints, drawings,
purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and
rights to payment of any kind;

(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by Borrower, whether or not
earned by performance, and any and all credit insurance, guaranties, and
other security therefor, as well as all merchandise returned to or
reclaimed by Borrower;

(e) All documents, cash, deposit accounts, securities, investment property,
letters of credit, certificates of deposit, instruments and chattel
paper now owned or hereafter acquired and Borrower's Books relating to
the foregoing.

(f) All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work
thereof, whether published or unpublished, now owned or hereafter
acquired; all trade secret rights, including all rights to unpatented
inventions, know-how, operating manuals, license rights and agreements
and confidential information, now owned or hereafter acquired; all mask
work or similar rights available for the protection of semiconductor
chips, now owned or hereafter acquired; all claims for damages by way of
any past, present and future infringement or any of the foregoing; and

(g) All Borrower's Books relating to the foregoing and any and all
claims, rights and interests in any of the above and all substitutions
for, additions and accessions to and proceeds thereof.

<PAGE>

EXHIBIT B

LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

TO: CENTRAL CLIENT SERVICE DIVISION DATE: _______________

FAX#: (408) __________________ TIME: _______________

FROM: ________________________________________________________________________
BORROWER'S NAME

FROM: ________________________________________________________________________
AUTHORIZED SIGNER'S NAME

______________________________________________________________________________
AUTHORIZED SIGNATURE

PHONE: _______________________________________________________________________

FROM ACCOUNT # ___________________________ TO ACCOUNT#_______________________

______________________________________________________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $_____________________
PRINCIPAL PAYMENT (ONLY) $_____________________
INTEREST PAYMENT (ONLY) $_____________________
PRINCIPAL AND INTEREST (PAYMENT) $_____________________
OTHER INSTRUCTIONS: _________________________________________________
______________________________________________________________________________

All representations and warranties of Borrower stated in the Loan and
Security Agreement are true, correct and complete in all material respects as
of the date of the telephone request for and Advance confirmed by this
Advance Request; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in
all material respects as of such date.

______________________________________________________________________________
BANK USE ONLY:
TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.

___________________________________________________________________________
Authorized Requester

____________________________
Authorized Signature (Bank)
Phone# _____________________

______________________________________________________________________________

<PAGE>

EXHIBIT C

BORROWING BASE CERTIFICATE

Borrower Bank: Silicon Valley Bank
Commitment Amount $
<TABLE>
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _____. $_________________
2. Additions (please explain on reverse) $_________________
3. TOTAL ACCOUNTS RECEIVABLE $_________________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $__________________
5. Balance of 50% over 90 day accounts $__________________
6. Concentration Limits $__________________
7. Foreign Accounts $__________________
8. Governmental Accounts $_______________
9. Contra Accounts $_______________
10. Promotion or Demo Accounts $__________________
11. Intercompany/Employee Accounts $__________________
12. Other (please explain on reverse) $_______________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $________________
14. Eligible Accounts (#3 minus #13) $__________________
15. LOAN VALUE OF ACCOUNTS (80% OF #14) $________________

16. [Reserved]
17. [Reserved]
BALANCES
18. Maximum Loan Amount $__________________
19. Total Funds Available [Lesser of #18 or #15] $_________________
20. Present balance owing on Line of Credit $_________________
21. Outstanding under Sublimits () $__________________
22. RESERVE POSITION (#19 minus #20 and #21) $_________________
</TABLE>

THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE
AND CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE
CERTIFICATE COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THE LOAN AND SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND SILICON VALLEY
BANK.
COMMENTS:

_________________________________
_________________________________
BANK USE ONLY
RECEIVED BY: ___________________
DATE: __________________________
REVIEWED BY:____________________
COMPLIANCE STATUS: YES / NO
_________________________________
_________________________________

_____________________________________

By: _________________________________
Authorized Signer

<PAGE>

EXHIBIT D

COMPLIANCE CERTIFICATE

TO: SILICON VALLEY BANK

FROM:

The undersigned authorized officer of NEWGEN RESULTS CORPORATION hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending __________ with all required
covenants except as noted below and (ii) all representations and warranties
of Borrower stated in the Agreement are true and correct in all material
respects as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these
are prepared in accordance with Generally Accepted Accounting Principles
(GAAP) and are consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer expressly
acknowledges that h no borrowings may be requested by the Borrower at any time
or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that such compliance is determined not just at
the date this certificate is delivered.

PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.

<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
<S> <C> <C>
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
A/R & A/P Agings Monthly within 30 days Yes No

<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
<S> <C> <C> <C>
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.75:1.0 _____:1.0 Yes No
Minimum Tangible Net Worth $6,000,000 $_________ Yes No
Maximum Debt/Tangible Net Worth 1.00:1.0 _____:1.0 Yes No
Profitability: 3/98 Quarterly No loss $_________ Yes No
6/98 Quarterly No gtr than ($250K) $_________ Yes No
9/98 Quarterly No gtr than ($125K) $_________ Yes No
12/98 Quarterly No less than $100K $_________ Yes No
Revenues No 2 consec mo decline _________ Yes No
Subscriber Base Revenues No fall gtr than 10% of
prior month _________ Yes No
</TABLE>

COMMENTS REGARDING EXCEPTIONS:
Sincerely,

___________________________ Date:____________
SIGNATURE

___________________________
TITLE

<PAGE>

SILICON VALLEY BANK

AMENDMENT AGREEMENT

BORROWER: NEWGEN RESULTS CORPORATION

ADDRESS: 12680 HIGH BLUFF DRIVE, SUITE 300
SAN DIEGO, CALIFORNIA 92130

DATE: MAY 21, 1998

THIS AMENDMENT AGREEMENT is entered into between SILICON VALLEY BANK
("Silicon") and the borrower named above ("Borrower").

Reference is made to the Amended and Restated Loan and Security
Agreement dated as of March 10, 1998, by and between Silicon Borrower (the
"Loan Agreement"). The parties agree to amend to Loan Agreement as follows,
effective as of the date hereof. (Capitalized terms used but not defined in
this Amendment, shall have the meanings set forth in the Loan Agreement.)

1. MODIFICATION OF CREDIT LIMIT. In Section 1 of the Loan Agreement,
the definition of "Committed Revolving Line" is hereby amended to read as
follows:

"Committed Revolving Line' means a credit extension of up to $4,500,000."

2. MODIFICATION OF LETTER OF CREDIT SUBLIMIT. In Section 2.1.2 of the
Loan Agreement, the amount "$600,000" is hereby replaced by the amount
"$1,000,000".

3. ELIMINATION OF DEBT - NET WORTH RATIO COVENANT. Section 6.9 of the
Agreement, entitled DEBT NET WORTH RATIO, is hereby deleted in its entirety.

4. ELIMINATION OF TANGIBLE NET WORTH COVENANT. Section 6.10 of the
Agreement, entitled TANGIBLE NET WORTH, is hereby deleted in its entirety.

5. FEE. Borrower shall pay to Silicon a fee of $7,500 in connection
with this Agreement, which is in addition to all other amounts due under the
Loan Agreement.

6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and Borrower, and
any other written documents and agreements between Silicon and Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with
respect to the subject hereof. Except as herein expressly modified, all of
the terms and provisions of the Loan Agreement, and all other documents and
agreements between Silicon

-1-
<PAGE>

and Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.

BORROWER: SILICON:
NEWGEN RESULTS CORPORATION SILICON VALLEY BANK

By /s/ [ILLEGIBLE] By /s/ Raquel B Sidlo
------------------------------- ---------------------------
Vice President Title VP
---------------------------

By /s/ [ILLEGIBLE]
-------------------------------
Secretary or Ass't Secretary

-2-

<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 230.406 * INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF
CONFIDENTIAL TREATMENT REQUEST
THAT IS FILED SEPARATELY WITH THE
COMMISSION

DATA DISTRIBUTION AGREEMENT

THIS AGREEMENT IS SUBJECT TO ARBITRATION.

This Agreement is made and entered into this 15th day of May, 1996, by
and between Newgen Results Corporation ("Newgen") with offices located at
12526 High Bluff Drive, Suite 150, San Diego, California 92130, and Universal
Computer Services, Inc. ("UCS"), Universal Computer Consulting, Ltd. ("UCC"),
and Ford Dealer Computer Services, Inc. ("FDCS"), (UCS, UCC, and FDCS
collectively referred to as "Supplier"), with offices located at 6700
Hollister, Houston, Texas 77040.

WHEREAS, UCC, UCS and FDCS provide computer services and support to
automobile dealerships in the United States, for, respectively, the UCS In-House
Computer System and the FDCS In-Dealership Computer System;

WHEREAS, Newgen desires Supplier's assistance with its Service Results
program and other related services or products which are for the
merchandising and sale of service and parts business to vehicle owners;

WHEREAS, Newgen desires to obtain historical customer pay repair order
information, recurring customer pay repair order information, historical
warranty repair order information, recurring warranty repair order
information, historical vehicle service file information, historical vehicle
sales file information, newly sold vehicle information, and newly serviced
vehicle information, in tape format from the UCS In-House Computer System or
the FDCS In-Dealership Computer System of participating automobile dealers;

WHEREAS, Newgen and Supplier desire, by this Agreement to provide for the
terms and conditions under which Supplier will provide this information to
Newgen.

NOW, THEREFORE, In consideration of the mutual promises and obligations
contained in this Agreement, Newgen and Supplier agree to enter into this
Data Distribution Agreement on the following terms and conditions:

SECTION 1
DEFINITIONS

For the purpose of this Agreement, the following words will have the
meanings ascribed to them as follows:

1.1 ANALYSIS REPORT - Report generated by Supplier which shows the number of
different vehicles which visited a potential Dealer's service department or
were sold by Dealer during the three (3), six (6), nine (9), twelve (12),
eighteen (18), and twenty-four (24) months prior to Newgen's request for
the report.

1.2 COMPUTER SYSTEM - Either the UCS In-House Computer System or the FDCS 7000
MP In-Dealership Computer System.

1.3 DEALER - Automobile dealer as designated by Newgen in accordance with
Section 4.6 as a participating dealer under this Agreement, who uses either
the UCS In-House Computer System or the FDCS In-Dealership Computer System.

1.4 DEALER AGREEMENT - Agreement between Dealer and either UCS, UCC, or FDCS
for support of Dealer's Computer System.

1.5 [***] - The [***], the [***], the [***], the [***], the [***], the [***],
the

* Confidential Treatment Requested
1

<PAGE>

[***], and the [***] contained on Dealer's Computer System which Dealer
has licensed to Supplier for the purposes described in this Agreement.

1.6 FDCS IN-DEALERSHIP COMPUTER SYSTEM - The 7000 MP integrated computer system
for automobile dealerships supported by FDCS. This does not include any
DX-10, UNIX, or Rainbow computer systems which may be supported by FDCS.

1.7 NEWGEN'S REVENUE - The monthly gross revenue Newgen generates from all
services and products Newgen provides to Dealers and other entities each
month, including any special charges or surcharges, which were derived
from or used the Dealer Data provided to Newgen by Supplier.

1.8 UCS IN-HOUSE COMPUTER SYSTEM - The integrated computer system for
automobile dealerships supported by UCS.

SECTION 2
TITLE AND LICENSE OF DATA

2.1 TITLE. Except as a licensee of Dealer Data pursuant to the Dealer Agreements
and this Agreement, Supplier and Newgen each acknowledge that all rights, title
and interest in Dealer Data will remain vested in each individual Dealer.

2.2 LICENSE. Supplier hereby grants Newgen a personal, non-exclusive,
non-transferable sublicense to use that Dealer Data which has been provided
by Supplier to Newgen for the sole purpose of assisting Newgen in providing
to Dealers Newgen's Service Results program and other related services or
products which are for the merchandising and sale of service and parts
business to vehicle owners, pursuant to this Agreement.

SECTION 3
RESPONSIBILITIES OF SUPPLIER

3.1 DEALER DATA COPIES. Supplier will provide Newgen with a tape(s) of the
Dealer Data collected from each Dealer's Computer System once per week for all
Dealers. Supplier will provide the Dealer Data in the format specified in
Exhibit B.

3.2 ANALYSIS REPORTS. Upon request by Newgen, Supplier will provide to Newgen an
Analysis Report.

3.3 OPERATION CODES. Supplier will provide to Newgen, at no charge, on a one
time basis, the Dealer's operation codes. The specifications for the Dealer
operation codes are set forth in Exhibit B.

SECTION 4
RESPONSIBILITIES OF NEWGEN

4.1 AMENDMENT TO DEALER AGREEMENT. Newgen acknowledges that every Dealer will be
required to execute an amendment to Dealer's Agreement whereby Dealer grants to
Supplier a royalty-free license to use and distribute Dealer Data to Newgen for
the purpose of facilitating Newgen's internal use of the Dealer Data. Supplier
will provide to Newgen blank forms of said amendment which will incorporate the
provisions of Exhibit A. Supplier authorizes Newgen to present to Dealers said
form amendment for execution by Dealer. Newgen agrees to have every Dealer
execute said amendment. Upon receipt by Newgen of an executed amendment from a
Dealer, Newgen shall immediately forward the original of said executed amendment
to Supplier. Newgen agrees that said amendment may not be altered in any
manner, and that said amendment is not deemed effective and binding unless and
until it is executed by an officer of Supplier. Newgen acknowledges that they
are not granted any other authority by Supplier other than to present said
amendments for execution and the collection of said executed amendments.

* Confidential Treatment Requested

<PAGE>

4.2 PAYMENT FOR DATA AND REPORTS. Newgen agrees to pay Supplier for the Dealer
Data and Analysis Reports as described in Section 5 of this Agreement.

4.3 EXPENSES. Newgen agrees to pay $[****] to Supplier within thirty (30)
days of the execution date of this Agreement, for the creation of the
software program(s) necessary to produce the Dealer Data tape. In addition,
if Newgen requires modifications to any such software program(s), Newgen
agrees to pay to Supplier any and all costs and expenses associated with such
modification. Newgen agrees to pay $[****] to Supplier within thirty (30)
days of the execution date of this Agreement for the creation of the software
program(s) necessary to produce the Analysis Report.

It is anticipated that the development time to create the software program(s)
necessary to produce the Dealer Data tape will be thirty (30) to sixty (60)
days. However, should Supplier be unable to create the software program(s)
necessary to produce the Dealer Data tape within one hundred twenty (120)
days, Supplier will refund to Newgen the $[****] amount Newgen paid to
Supplier pursuant to Section 4.2 above, and this Agreement will be terminated.

It is anticipated that the development time to create the software program(s)
necessary to produce the Analysis Report will be thirty (30) to sixty (60)
days. However, should Supplier be unable to create the software program(s)
necessary to produce the Analysis Report within one hundred twenty (120)
days, Supplier will refund to Newgen the $[****] Newgen paid to Supplier
pursuant to Section 4.2 above, and Supplier will have no further obligation
to produce any Analysis Reports. Newgen acknowledges that such a failure by
Supplier to create the software program(s) necessary to produce the Analysis
Report shall not constitute a default under this Agreement.

4.4 DEALER DATA TAPE FORMAT. The specifications for the Dealer Data are listed
in Exhibit B.

4.5 AUTHORIZATION FOR REPRESENTATIONS, WARRANTIES OR GUARANTEES. Newgen
shall refrain from making any representations, warranties or guarantees to
any third parties regarding the Dealer Data supplied by Supplier to Newgen,
except as specified herein or as expressly authorized in writing by Supplier,
such authorization not to be unreasonably withheld.

4.6 DEALER DESIGNATION. Newgen shall provide to Supplier, within thirty (30)
days of the execution of this Agreement, a written list of the Dealers which
Newgen wants to participate under this Agreement. Newgen shall give Supplier
written notice of any new Dealers whom Newgen wants to participate under this
Agreement. Newgen acknowledges that Supplier makes no guarantees on the length
of time it will take to set up a Dealer in the program.

Newgen shall provide to Supplier written notice of a Dealer's termination from
the program within ten (10) days after the Dealer's termination date from the
program.

4.7 INVOICING INFORMATION. In order that Supplier may generate an invoice to
Newgen, Newgen shall, at no charge, provide to Supplier no later than the 5th
calendar day of the month following the month to be invoiced, or within three
(3) calendar days of the date Newgen provides the billing tape or hard copy
of the billing information to Ford Motor Company, whichever comes first, a
copy of the billing tape or hard copy of the billing information which Newgen
supplies to Ford Motor Company to enable Ford Motor Company to bill Dealers
for the services and products Newgen provides Dealers. Newgen shall, at no
charge to Supplier, provide Supplier with data specifications and cooperate
with Supplier to assist Supplier in reading the billing tape. If Supplier is
unable to read the billing tape or if there is no billing tape, Newgen shall
provide Supplier the billing information in hard copy format.

For all non-Ford and non-Lincoln-Mercury Dealers, Newgen shall, at no charge,
provide to Supplier, no later than the 5th calendar day of the month
following the month to be invoiced, a billing tape or hard copy of the billing
information of what Newgen invoiced Dealers for the services and products
Newgen provided the Dealers.

3
* Confidential Treatment Requested

<PAGE>

Section 5

PRICES AND COMPENSATION

5.1 [***] FOR [***]. Newgen agrees to pay Supplier a charge [***], [***],
[***], and [***], included on each [***] provided to Newgen. This charge will
be $[****] per [***], $[****] per [***], $[****] per [***], and $[****] per
[***] provided to Newgen. [***], as described in this Section 5.1, for any [***]
will not exceed $[****]. This $[****] [***] will apply to [***] by a [***],
not to a [***] by a [***]. Where a [***] more than [***], the [***] for [***]
will be as follows:

<TABLE>

NUMBER OF [***] [***]
[***] [***] FOR THE [***]
---------------------- ----------------------------------
<S> <C>
[***] $ [****]
[***] $ [****]
[***] $ [****]
[***] $ [****]
[***] $ [****]
[***] $ [****]
[***] $ [****]
[***] $ [****] [***]
[***]
[***]
</TABLE>

Supplier may increase this charge at any time after twelve (12) months from
the date of execution of this Agreement by an amount based on the percentage
rate of price increases for all goods and services as determined by the
Bureau of Labor Statistics of the U.S. Department of Labor (Consumer Price
Index).

5.2 PAYMENT OF [***]. The [***] described in Section 5.1, for each [***],
may be paid by Newgen in [***]. Each payment shall be in an amount equal
to [***] of the total [***] for the [***]. Newgen will not be [***] on the
[***] of the [***] should Newgen elect to [***] as described herein. However,
should Newgen fail to pay the [***] in a timely manner, Newgen will be charged
interest as described in Section [***]. Supplier will not invoice Newgen for
the [***] prior to the date that the [***] is shipped to Newgen.

5.3 [***]. Newgen agrees to pay Supplier a charge for [***], [***], [***],
and [***]. The charge shall be based on the [***] and [***], as defined
in [***], during that month. The charge shall be as follows:

<TABLE>

[***] CHARGE
------------ ------
<S> <C>
[***] [****]% of [***]
[***] [****]% of [***]
[***] [****]% [***]
[***] [****]% [***]

</TABLE>

(for example, if there are [***], the [***] Charge would be
[****]% of [***] for each [***].)

For [***] who start after the first of the month, Newgen will be
charged in accordance with this Section 5.3, based on [***]
received by Newgen from that [***]for the partial month.

* Confidential Treatment Requested
4

<PAGE>

5.4 ANALYSIS REPORT CHARGE. Newgen agrees to pay Supplier a charge per
Analysis Report. This charge will be $[****] per Analysis Report produced.
Supplier may increase this charge at any time after twelve (12) months from
the date of execution of this Agreement by an amount based on the percentage
rate of price increases for all goods and services as determined by the
Bureau of Labor Statistics of the U.S. Department of Labor (Consumer Price
Index).

5.5 FREIGHT AND TAPE CHARGES. Newgen agrees to pay to Supplier a charge for
each physical data tape sent to Newgen at Supplier's then current rate.
Newgen shall be responsible for freight and insurance charges for all
shipments to or from Newgen, including but not limited to all shipments of
Dealer Data tapes.

5.6 INVOICING. Supplier will invoice Newgen each month for all amounts due
to Supplier under this Agreement. Newgen agrees to make payment to Supplier
within thirty (30) days of the date of the invoice. In the event that payment
is not received by the 30th day of the month following the month for which
the invoice is dated, Newgen will be in default of this Agreement and
Supplier may invoke any and all remedies available, in law or in equity.
Interest calculated at the lesser of 1 1/2% per month or the maximum
non-usurious rate currently permitted by law, will be charged to Newgen on
all invoices unpaid after thirty (30) days from the date of the invoice.

Section 6
DELIVERY

6.1 MANNER OF DELIVERY. Supplier will deliver all Dealer Data tapes to
Newgen utilizing the shipping service selected by Newgen. Newgen accepts the
risk of loss for the Dealer Data tapes upon shipment from Supplier's
location. Newgen shall be responsible for and pay all shipping and handling
costs for delivery of the Dealer Data tapes and reports from Supplier to
Newgen.

Section 7
WARRANTIES AND LIMITATION OF LIABILITY

7.1 WARRANTIES. EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE BY
SUPPLIER WITH RESPECT TO THE DEALER DATA OR OTHER TRANSACTIONS OR SERVICES
CONTEMPLATED HEREIN. This Agreement states the entire obligation of Supplier
in connection with the license and provision of Dealer Data to Newgen.

7.2 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, SUPPLIER SHALL NOT UNDER ANY CIRCUMSTANCES, BE LIABLE TO
NEWGEN OR ITS DEALERS FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, EVEN IF
SUPPLIER HAS BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
FURTHERMORE, SUPPLIER SHALL NOT BE LIABLE TO NEWGEN OR ITS DEALERS FOR DAMAGE
OR LOSS OF ANY NATURE. WHATSOEVER, AND NEWGEN'S OR ITS DEALERS' SOLE AND
EXCLUSIVE REMEDY HEREUNDER SHALL BE THE RIGHT TO HAVE SUPPLIER REPLACE ANY
DEFECTIVE TAPE MEDIA CONTAINING THE DEALER DATA WHICH WAS PROVIDED TO NEWGEN.
IN ANY EVENT, SUPPLIER SHALL NOT BE LIABLE TO NEWGEN FOR ANY AMOUNT GREATER
THAN THE AMOUNT OF THE MONTHLY CHARGES PAID BY NEWGEN TO SUPPLIER FOR THE
MONTH IN WHICH THE LIABILITY AROSE.

Section 8
TAXES

8.1 Newgen agrees to pay all taxes, other than those taxes based on
Supplier's income, or provide appropriate exemptions, including personal
property, sales, use or excise taxes, which may be imposed by any taxing
authority as a result of Supplier's sublicense and distribution of the Dealer
Data to Newgen.

* Confidential Treatment Requested
5

<PAGE>

Section 9
ARBITRATION

9.1 ARBITRATION. All disputes, claims, controversies and other matters in
question between the parties to this Agreement, arising out of, or relating
to this Agreement, or to the breach thereof, including any claim in which
either party is demanding monetary damages of any nature including
negligence, strict liability or intentional acts or omissions by either
party, and which cannot be resolved by the parties, shall be settled by
arbitration. Except as provided otherwise in this Section 9, the arbitration
shall be administered in accordance with the commercial arbitration rules of
the American Arbitration Association. Arbitrators shall be chosen from a
panel of persons with knowledge of electronic data processing industry
practices, contracts, and data processing systems. If the parties cannot
agree on arbitrators within fifteen (15) days of receipt of the arbitration
demand, then the arbitrators shall be chosen in accordance with the
commercial arbitration rules of the American Arbitration Association. The
arbitration proceeding will be held in Houston, Texas. In no event shall the
demand for arbitration be made more than one (1) year after the claim or cause
of action arises. The award of the arbitrator or arbitration panel shall be
final and binding, and there shall be no appeal therefrom. Judgment upon the
award rendered by the arbitrator or arbitration panel may be entered in any
court having jurisdiction. The Federal Arbitration Act (9 U.S.C. sections 1
et seq.) shall govern the interpretation and application of this Section 9.

Section 10
TERM AND TERMINATION

10.1. INITIAL TERM. The initial term of this Agreement is two (2) years
("Initial Term"), commencing on the date Supplier ships to Newgen the first
Dealer Data tape, such date to be conclusively determined by Supplier.

10.2 RENEWAL TERM(S). This Agreement shall be automatically renewed after
the Initial Term for consecutive periods of twelve (12) months each ("Renewal
Terms"), unless and until terminated by Supplier or Newgen delivering to the
other written notice of their intent to terminate the Agreement at least one
hundred twenty (120) days prior to the end of the Initial Term or any
subsequent Renewal Term.

10.3 TERMINATION OF AGREEMENT. If Newgen materially breaches any obligation
of Newgen under this Agreement, except any obligation to make payment to
Supplier, Newgen shall have thirty (30) days after receipt of written notice
of such default within which to cure such default, and if such default is not
cured within such period of time, then Supplier shall have the right without
further notice to terminate this Agreement. If Newgen fails to make any
payment to Supplier when due, Newgen shall have ten (10) days after receipt
of written notice of such payment default within which to cure such payment
default, and if such payment default is not cured within such period of time,
then Supplier shall have the right without further notice, at Supplier's
option, to suspend the delivery of Dealer Data until such payment default is
cured, or terminate this Agreement. If Supplier materially breaches any
obligation of Supplier under this Agreement, Supplier shall have thirty (30)
days after receipt of written notice of such default within which to cure
such default, and if such default is not cured within such period of time,
then Newgen shall have the right without further notice to terminate this
Agreement.

10.4 BANKRUPTCY. If either party becomes the subject of any voluntary
proceeding, or any involuntary proceeding which remains undismissed for sixty
(60) days, relating to bankruptcy, insolvency, liquidation, receivership,
composition of or assignment for the benefit of creditors ("Bankrupt Party"),
the other party may, at its option, terminate this Agreement upon giving
Bankrupt Party thirty (30) days written notice of its intention to terminate.

10.5 SURVIVAL OF OBLIGATIONS. The termination of this Agreement shall not
terminate, affect or impair any rights, obligations or liabilities of either
party hereto which may accrue prior to such termination. Supplier and Newgen
specifically agree that the obligations provided in the following sections:

Sections 2.1, 2.2, 4.4, 7.1, 7.2, 8.1, 9.1, 12.1, 13

shall remain in effect and survive termination.

6
<PAGE>

SECTION 11
EXCUSE FOR NONPERFORMANCE

11.1 Supplier shall not be held responsible for any delay or failure to
perform hereunder where such delay or failure is due to any cause beyond
Supplier's direct control including, but not limited to, Acts of God, fire,
explosion, flood, strikes or other labor dispute, riot, communications or
power supply failure, delay in delivery, failure or malfunction of equipment,
lack of or inability to obtain Dealer Data from Dealers, or any other causes,
contingencies or circumstances which prevent or hinder performance hereunder
or make such performance hereunder impracticable.

SECTION 12
INDEMNIFICATION

12.1 Newgen agrees to indemnify, defend and hold Supplier, its officers,
directors, employees, and agents harmless from and against any and all
obligations, liabilities, costs, damages and expenses (including reasonable
attorney's fees) incurred or arising out of or relating to the provision of
Dealer Data by Supplier to Newgen and the use of such Dealer Data by Newgen.

12.2 Supplier agrees to indemnify, defend and hold Newgen, its officers,
directors, employees, and agents harmless from and against any and all
obligations, liabilities, costs, damages and expenses (including reasonable
attorney's fees) incurred or arising out of or relating to the use or
distribution of Dealer Data by Supplier.

12.3 A party seeking indemnification will give prompt written notice to the
party from whom such indemnification is sought (the "Indemnifying Party") of
each claim for indemnification hereunder, specifying the amount and nature of
the claim, and of any matter which in the opinion of the Indemnified Party is
likely to give rise to an indemnification claim under this Agreement.
Indemnified Party will have the right to participate at its own expense in
the defense of any such matter or in this settlement. The Indemnifying Party
shall use its best efforts consistent with sound business practice to defend
any claim or cause of action, and to mitigate the damages, liabilities,
losses and expenses giving this to any claim for indemnity pursuant to this
Section 12.

SECTION 13
MISCELLANEOUS

13.1 NONCOMPETITION. Once Newgen notifies Supplier, as set forth in Section
4.6, that a Dealer is participating under this Agreement. Supplier agrees it
will not solicit for a period of one hundred twenty (120) days, that Dealer
on any of Supplier's products or services which are for the merchandising and
sale of service and parts business to vehicle owners. However, should a
Dealer who is participating under this Agreement contact Supplier regarding
Supplier's products or services for the merchandising and sale of service and
parts business to vehicle owners, this section 13.1 shall not restrict
Supplier in any way from selling those products or services to that Dealer.

Newgen acknowledges that any Dealer which currently uses any of Supplier's
products or services for the merchandising and sale of service and parts
business to vehicle owners must fulfill its contractual commitments to
Supplier. Further, Newgen agrees that Newgen shall not allow a Dealer to
begin on the Newgen Results program prior to the termination of Dealer's
contract with Supplier.

13.2 BILLING AUDIT. Newgen shall allow Supplier, at Supplier's own expense,
to audit Newgen's billing and accounting records up to four (4) times per
year, provided that said audits will be during Newgen's normal business hours
and will not cause significant disruption to Newgen's business. Newgen shall
cooperate fully with Supplier throughout the audit, and provided to Supplier,
in a timely manner, any and all documents necessary to conduct such an audit.

13.3 PUBLICITY; USE OF TRADEMARKS. A party may not use the registered
trademarks, service marks, logo, name or any other proprietary designations of
the other party without that party's prior written consent, and shall submit
to the other party for prior approval any advertising or promotional
materials in which such trademarks, service marks or logos are to used, which
approval shall not unreasonably be withheld or delayed. Neither party will
issue or

<PAGE>

permit to be issued any publicity, advertisement or other public statement
concerning the subject matter of this Agreement without the prior written
consent of the other party.

13.4 ASSIGNMENT. Neither party may assign any rights or delegate any duties
under this Agreement to any person or entity, except an affiliate of such
party, unless the other party has given its prior written consent such
consent not to be unreasonably withheld, and any attempt to do so without
that consent will be void. However, if either party sells all or
substantially all of its assets or a majority interest in its capital stock
to a non-affiliated company ("Purchasing Company"), then the other party will
allow the assignment of this Agreement to the Purchasing Company. This
Agreement will bind and inure to the benefit of the parties and their
respective successors and assigns as permitted in this Agreement.

13.5 RELATIONSHIP OF THE PARTIES. Supplier and Newgen agree that each party
shall undertake performing their responsibilities pursuant to this Agreement
as an independent contractor. Nothing contained herein or done pursuant
hereto shall make either party or its agents or employees legal
representative, agent or employee of the other for any purpose whatsoever.
Neither Supplier nor Newgen (nor any of their agents or employees) shall have
any right, power or authority to assume, create or incur, in writing or
otherwise, any expense, liability or obligation in the name, or in the
behalf, of the other party. Neither Supplier nor Newgen will state or imply
the contrary to any third party.

13.6 NOTICES. All notices, requests and approvals required by this
Agreements (i) shall be in writing, (ii) shall be addressed to the parties as
indicated below unless notified in writing of a change in address, and (iii)
shall be deemed to have been delivered either when personally delivered or,
if sent by mail, in which event it shall be sent postage prepaid, thereof
three (3) business days after mailing, or, if sent by telex, upon delivery
thereof. The addresses of the parties are as follows:

To Newgen: Newgen Results Corporation
12526 High Bluff Drive, Suite 150
San Diego, CA 92130
Attention: Sam Simkin

Copy to: Newgen Results Corporation
330 St. Mary Avenue, Suite 620
Winnipeg, Canada R3C3Z5
Attention: Alan Cantor, Q.C.

To Supplier: Universal Computer Services, Inc.
6700 Hollister
Houston, TX 77040
Attention: Dan Agan

Copy to: Universal Computer Services, Inc.
6700 Hollister
Houston, TX 77040
Attention: Legal Department

13.7 HEADINGS. The Headings contained herein are for convenience of
reference only and are not intended to define, limit, expand, or describe the
scope or intent of any provision of this Agreement.

13.8 ENFORCEABILITY. This Agreement shall be governed by the laws of the
state of Texas. If a part of this Agreement is found invalid or unenforceable,
it will be enforced to the maximum extent permitted by law, and other parts
of this Agreement will remain in force.

13.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original instrument and all
of which together shall constitute the same instrument.

<PAGE>

13.10 ENTIRE AGREEMENT, MODIFICATIONS AND CHANGES. This Agreement, together
with any exhibits attached hereto, constitutes the entire Agreement between
the parties relating to the subject matter herein. This Agreement may only be
amended by a written document signed by all parties.

13.11 ACTIONS. No action (including arbitration), regardless of form,
arising out of transactions under this Agreement, shall be brought by either
party more than one year after the cause of action occurred.

13.12 EXECUTION OF AGREEMENT. This Agreement will be effective and binding
only when accepted in Houston, Texas by Supplier, and obligations and
undertakings of each of the parties to this Agreement shall be performable in
Harris County, Texas.

13.13 NO WAIVER. No waiver will be implied from conduct or failure to
enforce rights. No waiver will be effective unless in a writing signed on
behalf of the party claimed to have waived.

13.14 INJUNCTIVE RELIEF. Either party may have injunctive, preliminary or
other equitable relief to remedy any actual or threatened unauthorized
disclosure of trade secrets or unauthorized use, copying, marketing,
distribution or sublicensing of trade secrets or other proprietary rights.

13.15 ATTORNEYS' FEES; COSTS. In any suit to enforce this Agreement, the
prevailing party will have the right to request the award of costs and
reasonable attorneys' fees and expenses, including costs, fees, and expenses
on appeal from the arbitrator(s).

13.16 TERMS OF THIS AGREEMENT. Neither party shall, without prior written
consent of the other party, such consent not to be unreasonably withheld,
disclose to any third party, the terms of this Agreement except as may be
necessary to establish or assert rights hereunder or as required by law.
Newgen, however, is permitted to disclose to Ford Motor Company, the pricing
terms of this Agreement. Further, Newgen agrees that it will not refer to or
cite, to any Dealer or other third party, Supplier as the cause of any
pricing increases, including any surcharges, Newgen institutes in its pricing
of products and services to Dealers.

13.17 RIGHTS OUTSIDE OF AGREEMENT. Nothing contained in this Agreement
shall be construed as limiting rights that any party may enjoy outside the
obligations set forth or created herein, or in any way preclude any party
from independent development or marketing of any product.

13.18 PARTIES. Wherever the reference is made in this Agreement to
"parties", this shall be understood to refer to Supplier as one party and
Newgen as the other party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of this 15th day of May 1996.

NEWGEN RESULTS CORPORATION UNIVERSAL COMPUTER SERVICES, INC.
12526 HIGH BLUFF DRIVE, SUITE 150 6700 HOLLISTER
SAN DIEGO, CA 92130 HOUSTON, TX 77040

By: /s/ Sam Simkin By:
---------------------------------- ------------------------------
Name: Sam Simkin Name:
--------------------------------- -----------------------------
Title: Vice President/CFO Title:
------------------------------- ----------------------------

UNIVERSAL COMPUTER CONSULTING, LTD. FORD DEALER COMPUTER SERVICES, INC.
BY U.C. CONSULTING, INC., GENERAL PARTNER 6700 HOLLISTER
6700 HOLLISTER HOUSTON, TX 77040
HOUSTON, TX 77040

By: By:
-------------------------------------- -------------------------------
Name: Name:
----------------------------------- -----------------------------
Title: Title:
---------------------------------- ----------------------------

<PAGE>

EXHIBIT A

TERMS TO BE PRESENT IN AMENDMENT TO
DEALER AGREEMENT FOR LICENSE OF DEALER DATA

Dealer acknowledges that Dealer is participating in Newgen's service
reminder programs. This program is for the merchandising and sale of service
and parts business to vehicle owners.

Dealer grants to UCC [UCS] [FDCS] a royalty-free license to use and
distribute to Newgen historical customer pay repair order information, recurring
customer pay repair order information, historical warranty repair order
information, recurring warranty repair order information, historical vehicle
service file information, historical vehicle sales file information, newly sold
vehicle information, and newly serviced vehicle information ("Dealer Data")
contained on Dealer's Computer System.

Dealer acknowledges and agrees that UCC [UCS] [FDCS] shall not be liable to
Dealer in any way, including but not limited to actual, consequential or
incidental damages, for any use of the Dealer Data by Newgen, or any failure by
Newgen to use the Dealer Data or provide services to Dealer of which the Dealer
Data is a part.

Dealer hereby waives and releases all claims of any nature whatsoever
against UCC [UCS] [FDCS] and relieves UCC [UCS] [FDCS] of all liabilities due to
errors, omissions, and delays in the provision of the Dealer Data to Newgen.

This amendment contains the entire understanding between the parties and
will be effective and binding only when executed by an officer of UCC [UCS]
[FDCS] denoting its acceptance.

10
<PAGE>

Exhibit B

DATA FROM UCS/FDCS SYSTEMS 5/9/96

SPECIFICATIONS

1. Line sequential ASCII file.

2. Files and fields to be fixed length, not variable.

3. Repair orders to be included are customer pay and warranty, no internal
repair orders.

4. Tape format is 8mm.

5. Newly added vehicle records and RO history data are to be sent weekly to
Newgen.

6. All alpha fields should be left justified, upper case and filled with
spaces to the right.

7. All numeric fields will be right justified and filled with zeros.

8. The only FDCS clients which data can be provided for are 7000 MPs.

9. On the initial data file, the last 2 years of vehicles sold and the last 2
years of vehicles serviced will be sent. This file is called the SOLD
VEHICLE AND SERVICE VEHICLE INFORMATION FILE. Thereafter, the only data
which will be sent in the SOLD VEHICLE AND SERVICE VEHICLE INFORMATION FILE
are;

A. Those vehicles (new and used) which have been sold in the last week or
newly serviced in the past week, and

B. Any previously sold or serviced vehicle which had a change to one
of the address fields.

These records, for both the initial SOLD VEHICLE AND SERVICE VEHICLE
INFORMATION FILE and the weekly SOLD VEHICLE AND SERVICE VEHICLE
INFORMATION FILE will be on a separate tape from the REPAIR ORDER HISTORY
FILE and the OPERATION CODE FILE.

10. The past 12 months REPAIR ORDER HISTORY FILE will be on a separate tape
from the current week's REPAIR ORDER HISTORY FILE. In some cases,
dealerships may not have 12 months of RO history, and in those situations,
UCS will provide whatever amount of history a dealership has.

11. All RO's closed in the past week will be sent. This file is called the
REPAIR ORDER HISTORY FILE. The weekly REPAIR ORDER HISTORY FILE records
will be on a separate tape from that of the weekly SOLD VEHICLE AND SERVICE
VEHICLE INFORMATION FILE.

<PAGE>

12. The Operation Codes and Descriptions table will only be sent one time and
will be on a separate tape. This file is called the OPERATION CODE FILE.
The Operation Codes can be duplicated within the UCS/FDCS System, and
duplicate Operation Codes are only distinguishable by VIN prefixes.
Therefore, a table will be needed by Operation Code and VIN prefix, to
distinguish duplicate Operation Codes. (ie. Operation Code 200, may be an
alignment for a Taurus and an oil change for a Pickup.)

13. On the initial processing for each dealership, three tapes will be sent for
each dealership. They are;

SOLD VEHICLE AND SERVICE VEHICLE INFORMATION FILE (2 years)
REPAIR ORDER HISTORY FILE (last 12 months if available)
OPERATION CODE FILE

If 5 new dealerships begin in one week 15 tapes will be sent.

14. On every processing thereafter, only two tapes will be sent. They are;

SOLD VEHICLE AND SERVICE VEHICLE INFORMATION FILE (current week's)
REPAIR ORDER HISTORY FILE (current week's)

All dealerships' data (for the same type of data) will be on the same tape.
Meaning if 10 dealerships' data is being sent, 2 tapes will be sent, not
20, (assuming they all fit on two tapes).

15. Customer Pay RO's and Warranty RO's will each be on a separate record on
the initial REPAIR ORDER HISTORY FILE tape containing the 12 months of
history. Customer Pay RO's and Warranty RO's will each be contained in the
same record on the weekly REPAIR ORDER HISTORY FILE tape.

16. Because of the large amount of data stored and the difficulty involved in
any retroactive processing or collection of data, Newgen must inform UCS
within 3 days of the receipt of any Data tape, if an error or omission was
found.

<PAGE>

SOLD VEHICLE AND SERVICE VEHICLE INFORMATION 5/9/96

<TABLE>
<CAPTION>
Alpha-A
Numeric-N
Data in Field Both-A/N Length Occurs Comments
---------------------- ---------- ------- ------- ------------------------------
<S> <C> <C> <C> <S>
1. Dealer Number A/N 6 1 This is the six digit internal
UCS account number for the
dealership. UCS will provide
the dealerships' names and
corresponding account numbers.

2. Name (Customer) A/N 35 1 UCS to provide name exactly as
it appears in the field on the
dealerships' computer, usually
"Last, First". UCS is to do no
field editing.

3. Address 1 A/N 30 1

4. Address 2 A/N 30 1

5. City A/N 20 1

6. State A 2 1

7. Zip A/N 9 1 Left justify, fill with spaces.

8. Customer Home N 10 1 Include area code. If no area
Phone code, first three
characters will be spaces.

9. Customer Work N 10 1 Include area code. If no area
Phone code, first three
characters will be spaces.

10. VIN Number A/N 17 1

11. [****] A/N 8 1

12. [****] A/N 8 1

13. [****] A 1 1 [****]

14. Car Year N 2 1 Year can come from the VIN

15. Car Make A/N 10 1 Make can come from the VIN

16. Car Model A/N 10 1 Make can come from the VIN

* Confidential Treatment Requested
<PAGE>

SOLD VEHICLE AND SERVICE VEHICLE INFORMATION (cont) 5/9/96

Alpha-A
Numeric-N
Data in Field Both-A/N Length Occurs Comments
---------------------- ---------- ------- ------- ------------------------------
<S> <C> <C> <C> <C>
17. [****] A/N 10 1

18. [****] N 6 1 [****]

19. Sold Date N 6 1 Format is YYMMDD (year, month, day)

20. [****] N 3 1 [****]

21. Original Miles N 7 1 Original mileage when sold.

22. [****] A/N 10 1 [****]

23. [****] A/N 9 1 [****]

24. [****] A/N 6 1 [****]

25. Service Advisor A/N 8 1 Left justify, fill with spaces.
Number The permanent assigned advisor.

26. [****] N 6 1 [****]

27. Last Service N 7 1 As of the date the car was
Miles serviced. Right justify and
fill with zeros.

28. [****] N 6 1 [****]

29. Sales Type A/N 1 1 UPS field SALETYPE

30. [****] A/N 35 1

31. [****] A/N 4 1

32. [****] N 6 1 [****]

33. [****] N 6 1 [****]

* Confidential Treatment Requested

<PAGE>

SOLD VEHICLE AND SERVICE VEHICLE INFORMATION (cont) 5/9/96

Alpha-A
Numeric-N
Data in Field Both-A/N Length Occurs Comments
---------------------- ---------- ------- ------- ------------------------------
<S> <C> <C> <C> <C>
34. [****] A/N 15 1

35. [****] A/N 1 1

36. [****] A/N 1 1

37. [****] A/N 1 1

38. [****] A/N 3 1 [****]

39. [****] A/N 15 1 [****]

40. Record A/N 2 1 Can be a linefeed or carriage
Terminator return linefeed.
</TABLE>

* Confidential Treatment Requested
<PAGE>

Repair Order History File 5/9/96
- -------------------------
<TABLE>
<CAPTION>
Alpha-A
Numeric-N
Data in Field Both-A/N Length Occurs Comments
------------------ --------- ------ ------ -------------------------------
<S> <C> <C> <C> <C>
1. Dealer Number A/N 6 1 This is the six digit internal
UCS account number for the
dealership. UCS will provide
the dealerships' names and
corresponding account numbers.

2. VIN Number A/N 17 1

3. Repair Order A/N 8 1 Left justify, fill with spaces.
Number

4. Date RO was N 6 1 Format is
Closed YYMMDD(year,month,day)

5. Service Writer A/N 8 1 Left justify, fill with spaces.
Number

6. Car Miles N 6 1 As of the date the car was
serviced. Right justify and
fill with zeros.

7. Invoice Charges N 7 1 Format is DDDDDCC(dollar,cents)
for Customer Pay No decimal point. Right
justify and fill with zeros.

8. Invoice Charges N 7 1 Format is DDDDDCC(dollar,cents)
for Warranty No decimal point. Right
justify and fill with zeros.

9. Invoice Charges N 7 1 Format is DDDDDCC(dollar,cents)
(Total of Customer No decimal point. Right
Pay and Warranty) justify and fill with zeros.

10. Operation Codes A/N 16 40 The first 40 operation codes
Table used will be identified, along
with the following information.

10A. Operation Code A/N 15 1 Operation Code, left justify

10B. Customer Pay, A 1 1 C = Customer Pay, W = Warranty,
Warranty or

11. Record A/N 2 1 Can be a linefeed or carriage
Terminator return linefeed.
</TABLE>

<PAGE>

Operation Code File 5/9/96
-------------------

SPECIFICATIONS
- --------------
1. Operation Codes will be on a separate tape from the repair order data.
2. The operation code file will only be submitted a single time.
3. The following format will be repeated for the number of operation codes
the dealership has.

Operation Code Format
- ----------------------

<TABLE>
<CAPTION>
Alpha-A
Numeric-N
Data in Field Both-A/N Length Occurs Comments
----------------- --------- ------ ------ -------------------------------
<S> <C> <C> <C> <C>
1. Dealer Number A/N 6 1 This is the six digit UCS
account number for the
dealership.

2. Operation Codes A/N 15 1 The dealership's operation
code.

3. VIN Prefix Mask A/N 8 1 VIN prefixes which relate to
this operation code. Any dash
is a wild card.

4. Description A/N 40 1 The dealership's operation
code description.

5. Record A/N 2 1 Carriage return linefeed.
Terminator
</TABLE>

<PAGE>

OFFICE LEASE

by and between

WCB II MORE LIMITED PARTNERSHIP,

as Landlord,

and

NEWGEN RESULTS CORPORATION,

as Tenant

APPROVED AS TO
FORM: /s/ [ILLEGIBLE]
---------------

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
No.
----

<S> <C>
SECTION I. TERMS AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SECTION II. PROPERTY LEASED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
C. Minor Variations In Area . . . . . . . . . . . . . . . . . . . . . . . . . 2
D. [INTENTIONALLY DELETED]. . . . . . . . . . . . . . . . . . . . . . . . . . 2

SECTION III. COMMENCEMENT OF TERM AND POSSESSION OF
PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Lease Commencement Date SEE ADDENDUM SECTION XXXV.A. . . . . . . . 2
B. Completion of Tenant Improvements and Possession of Premises . . . . . . . 3
C. Extension of Lease Commencement Date . . . . . . . . . . . . . . . . . . . 3
D. Acceptance and Suitability . . . . . . . . . . . . . . . . . . . . . . . . 3

SECTION IV. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Monthly Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B. Consumer Price Index Increases . . . . . . . . . . . . . . . . . . . . . . 4
C. Rent and Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . 5

SECTION V. REIMBURSEMENT OF COMMON EXPENSES. . . . . . . . . . . . . . . . . . . . . . 5
A. Definitions SEE ADDENDUM SECTION XXXV.B. . . . . . . . . . . 5
B. Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. Rebate or Additional Charges . . . . . . . . . . . . . . . . . . . . . . . 7
D. Control of Common Areas. . . . . . . . . . . . . . . . . . . . . . . . . . 7

SECTION VI. SECURITY DEPOSIT SEE ADDENDUM SECTION XXXV.C.. . . . . . 7

SECTION VII. TENANT'S TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

SECTION VIII. USE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. Permitted Uses SEE ADDENDUM SECTION XXXV.D.(1) . . . . . . 8
B. Compliance with Laws SEE ADDENDUM SECTION XXXV.D.(2) . . . . . . 9
C. Hazardous Materials SEE ADDENDUM SECTION XXXV.D.(3) . . . . . . 9
D. Landlord's Rules and Regulations . . . . . . . . . . . . . . . . . . . . . 12
E. Traffic and Energy Management. . . . . . . . . . . . . . . . . . . . . . . 12

SECTION IX. SERVICE AND UTILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
A. Standard Building Services and Reimbursement by Tenant
SEE ADDENDUM SECTION XXXV.E. . . . . . . . . . . . . . . . . . . . . . . . 12
B. Limitation on Landlord's Obligations . . . . . . . . . . . . . . . . . . . 13
C. Excess Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
D. Security Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SECTION X. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. Landlord's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
B. Tenant's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
C. Landlord's Right to Make Repairs . . . . . . . . . . . . . . . . . . . . . 14
D. Condition of Premises Upon Surrender . . . . . . . . . . . . . . . . . . . 15

SECTION XI. ENTRY BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

SECTION XII. ALTERATIONS, ADDITIONS AND TRADE FIXTURES . . . . . . . . . . . . . . . . 15

<PAGE>

Page
No.
----

SECTION XIII. MECHANIC'S LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

SECTION XIV. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B. Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
C. Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . 18

SECTION XV. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
A. Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
B. Limitation on Landlord's Liability; Release of Directors, Officers
and Partners of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . 19

SECTION XVI. ASSIGNMENT AND SUBLETTING BY TENANT . . . . . . . . . . . . . . . . . . . 19

SECTION XVII. TRANSFER OF LANDLORD'S INTEREST. . . . . . . . . . . . . . . . . . . . . 22

SECTION XVIII. DAMAGE AND DESTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 23
A. Minor Insured Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
B. Major or Uninsured Damage. . . . . . . . . . . . . . . . . . . . . . . . . . 23
C. Abatement of Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
D. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

SECTION XIX. CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
A. Total or Partial Taking. . . . . . . . . . . . . . . . . . . . . . . . . . 24
B. Award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
C. Abatement in Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
D. Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
E. Transfer of Landlord's Interest to Condemnor . . . . . . . . . . . . . . . 25

SECTION XX. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
A. Tenant's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
B. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

SECTION XXI. LATE PAYMENTS/INTEREST AND LATE CHARGES . . . . . . . . . . . . . . . . . 28
A. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
B. Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
C. Consecutive Late Payment of Rent . . . . . . . . . . . . . . . . . . . . . 29
D. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION XXII. [INTENTIONALLY DELETED]. . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION XXIII. HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION XXIV. ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

SECTION XXV. MORTGAGE PROTECTION/SUBORDINATION . . . . . . . . . . . . . . . . . . . . 30
A. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
B. Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

SECTION XXVI. ESTOPPEL CERTIFICATE/FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 31
A. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
B. Furnishing of Financial Statements . . . . . . . . . . . . . . . . . . . . 31

SECTION XXVII. PARKING SEE ADDENDUM SECTION XXXV.F. . 32

<PAGE>

Page
No.
----

SECTION XXVIII. SIGNS; NAME OF BUILDING SEE ADDENDUM SECTION XXXV.G. . . . . . . 33

SECTION XXIX. QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION XXX. BROKER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION XXXI. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION XXXII. NOTICE AND CURE TO LANDLORD AND MORTGAGEE . . . . . . . . . . . . . . . 34

SECTION XXXIII. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
A. Paragraph Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
B. Incorporation of Prior Agreements; Amendments. . . . . . . . . . . . . . . 34
C. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
D. Short Form or Memorandum of Lease. . . . . . . . . . . . . . . . . . . . . 35
E. Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
F. Examination of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
G. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
H. Surrender of Lease Not Merger. . . . . . . . . . . . . . . . . . . . . . . 35
I. Corporate Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
J. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
K. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
L. Use of Language. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
M. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
N. No Reduction of Rental . . . . . . . . . . . . . . . . . . . . . . . . . . 36
O. No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
P. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Q. Indemnities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
R. Nondisclosure of Lease Terms . . . . . . . . . . . . . . . . . . . . . . . 37

SECTION XXXIV. EXECUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

SECTION XXXIV. ADDENDUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

EXHIBIT A SITE PLAN FOR THE PROJECT

EXHIBIT B FLOOR PLAN OF THE PREMISES

EXHIBIT C CONSTRUCTION WORK LETTER

EXHIBIT D RENT SCHEDULE

EXHIBIT E RULES AND REGULATIONS

EXHIBIT F CONFIRMATION OF LEASE COMMENCEMENT DATE

EXHIBIT G JANITORIAL SERVICES

EXHIBIT H FORM OF LETTER OF CREDIT

EXHIBIT I FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

</TABLE>

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OFFICE LEASE

THIS LEASE is entered into by and between Landlord and Tenant effective as of
this 31st day of July, 1996.

SECTION I. TERMS AND DEFINITIONS

The following terms as used herein shall have the meanings as set forth below:

A. "Landlord" means WCB II MORE LIMITED PARTNERSHIP, a Delaware limited
partnership, and its successors and assigns.

B. "Tenant" means NEWGEN RESULTS CORPORATION, a California corporation.

C. "Building" means Building "B" of the Project, in which the Premises are
located, which Building has approximately 53,697 square feet of Rentable
Area and is located at 12680 High Bluff Drive in the City of San Diego,
California.

D. "Project" means Del Mar Corporate Plaza located at 12670 and 12680 High
Bluff Drive in the City of San Diego, California in which Project the
Building is located as shown on the site plan attached hereto as EXHIBIT A.

E. "Premises" means suites 300 and 400 located on the third and fourth floors
of the Building and consisting, in the aggregate, of approximately
Twenty-Seven Thousand Six Hundred Eighty-Nine (27,689) square feet of
Rentable Area, as more particularly shown on EXHIBIT B attached hereto and
incorporated herein by this reference.

F. "Term" means the five (5) year period commencing on the Lease Commencement
Date and expiring on the Expiration Date. SEE ADDENDUM SECTION XXXV.A.

G. "Lease Commencement Date" means the date on which Landlord tenders delivery
of the Premises to Tenant with "Landlord's Work" (as defined in EXHIBIT C
hereto) therein "Substantially Completed" (as defined in Section III.B.
hereto), which is currently estimated to be October 1, 1996; provided,
however, that upon determination of the Lease Commencement Date pursuant to
Section III.C. below, Landlord and Tenant shall execute and attach hereto
as a new EXHIBIT F a Confirmation of Lease Commencement Date in the form of
EXHIBIT F hereto, which shall specify the Lease Commencement Date and
Expiration Date. SEE ADDENDUM SECTION XXXV.A.(1)

H. "Expiration Date" means the day before the fifth (5th) anniversary of the
Lease Commencement Date which shall be confirmed in the Confirmation of
Lease Commencement Date executed as provided above.

I. "Monthly Rental" means the amounts specified in Section IV. below and in
the Rent Schedule attached hereto as EXHIBIT D and incorporated herein.

J. "Base Operating Expense" means the amount of Common Operating Costs (as
defined in Section V. below) actually incurred for the period from January
1, 1996 to December 31, 1996 which shall be paid by Landlord and not
Tenant. SEE ADDENDUM SECTION XXXV.B.

K. "Rentable Area" is defined in EXHIBIT D attached hereto.

L. "Security Deposit" means Forty Three Thousand Three Hundred Eighty-Eight
and 66/100ths Dollars ($43,388.66). SEE ADDENDUM SECTION XXXV.C.

M. "Permitted Use" means general office. SEE ADDENDUM SECTION XXXV.D.(1)

<PAGE>

N. "Broker" means Ramsey Commercial Properties.

0. "Landlord's Address for Notice" means c/o Croudace & Dietrich, 5 Park
Plaza, Suite 1050, Irvine, California 92714, Attn: Virginia P. Croudace,
Esq., with a copy to WCB II More Ltd., 450 Newport Center Drive, Suite 304,
Newport Beach, California 92660, Attn: Ronald A. Lack.

P. "Tenant's Address for Notice" means 12680 High Bluff Drive, Suite 300, San
Diego, California 92130.

Q. "Tenant's Proportionate Share" for Tenant's reimbursement of Common
Operating Costs and other expenses to be pro-rated hereunder means 51.6%
which is the quotient obtained by dividing the total number of square feet
of Rentable Area in the Building into the total number of square feet of
Rentable Area within the Premises.

SECTION II. PROPERTY LEASED

A. PREMISES

Upon and subject to the terms, covenants and conditions hereinafter set
forth, Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises; reserving to Landlord, however, (a) the use of the
exterior walls, roof, return air plenum and the area under the Premises
floor and (b) the rights to make structural (building) modifications and
the right to install, maintain, use, repair and replace pipes, ducts,
conduits, and wires to serve or serving other tenant premises in the
Building through the Premises in locations which will not materially
interfere with Tenant's use thereof.

B. COMMON AREAS

Subject to the terms, covenants and conditions of this Lease, Tenant shall
have the right, for the benefit of Tenant and its employees, suppliers,
shippers, customers and invitees, to the non-exclusive use of all of the
Common Areas as hereinafter defined.

C. MINOR VARIATIONS IN AREA

Subject to the provisions of EXHIBIT D, the Rentable Area of the Premises
contained in Section I. is agreed to be the Rentable Area of the Premises
regardless of minor variations resulting from construction of the Building
and/or tenant improvements.

D. [INTENTIONALLY DELETED]

SECTION III. COMMENCEMENT OF TERM AND POSSESSION OF PREMISES

A. LEASE COMMENCEMENT DATE SEE ADDENDUM SECTION XXXV.A.

The Term of the Lease shall commence on the Lease Commencement Date (as
extended only pursuant to Section III.C. below, if applicable), and shall
continue, subject to earlier termination as provided herein, until the
Expiration Date (as extended only pursuant to subsection C. below).

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<PAGE>

B. COMPLETION OF TENANT IMPROVEMENTS AND POSSESSION OF PREMISES

Upon execution of this Lease by the parties, Landlord shall proceed to
complete the tenant improvements in the Premises described as "Landlord's
Work" in the "Construction Work Letter" attached hereto and incorporated
herein as EXHIBIT C. At the time such work has been substantially completed
in accordance with the Construction Work Letter ("Substantial Completion"),
Landlord shall notify Tenant thereof and Tenant shall take possession of
the Premises on the Lease Commencement Date. In the event permission is
given to Tenant to enter or occupy all or a portion of the Premises prior
to the Lease Commencement Date, such occupancy shall be subject to all of
the terms and conditions of this Lease. Tenant shall complete all tenant
improvements described as "Tenant's Work" in EXHIBIT C hereto on or before
the Lease Commencement Date. Any professional fees or costs and expenses
incurred by Landlord in reviewing plans and specifications for Tenant's
Work shall be applied to the "Tenant Allowance" described in EXHIBIT C
hereto and, if the Tenant Allowance is exhausted, shall be paid to Landlord
by Tenant upon demand as additional rent. All tenant improvements
constructed in the Premises, whether by Landlord or by (or on behalf of)
Tenant and whether at Landlord's or Tenant's expense, shall become part of
the Premises and shall be and remain the property of Landlord unless
Landlord specifically agrees otherwise in writing.

C. EXTENSION OF LEASE COMMENCEMENT DATE

If the Premises are not ready for occupancy by Tenant on the estimated
Lease Commencement Date specified in Section I. due to one or more delays
caused by Landlord or caused by matters beyond the control of Landlord,
this Lease and the obligations of Landlord and Tenant hereunder shall
nevertheless continue in full force and effect. However, in such event
Landlord and Tenant shall agree on an amendment of the original Lease
Commencement Date to reflect such delay or delays and shall, in each
instance, execute and attach hereto an amendment in the form of that
attached as EXHIBIT F hereto stating such amended Lease Commencement Date
and confirming the Expiration Date and no rental shall be payable by Tenant
hereunder until the amended Lease Commencement Date. The delay in
commencement of the Term and in the accrual of rent described in the
foregoing sentence shall constitute full settlement of all claims that
Tenant might otherwise have by reason of the Premises not being ready for
occupancy on the originally estimated Lease Commencement Date.
Notwithstanding the foregoing sentence, in the event the Lease Commencement
Date fails to occur, subject to force majeure (as described in Section
XXXIII.K. below) and Tenant delay, on or before the "Termination Date" (as
defined herein), then Tenant shall have the right, exercised by written
notice to Tenant given, if at all, in the twenty (20) day period after the
Termination Date and prior to Substantial Completion of Landlord's Work, to
terminate this Lease. As used herein the term "Termination Date" means
December 1, 1996 as extended (i.e., moved later in time) one day for each
day (a) of Tenant delay and/or force majeure and (b) from and after July 1,
1996 and execution by Tenant and delivery to Landlord of this Lease, in the
exact form distributed by Landlord for execution, together with all other
items required to be delivered by Tenant hereunder concurrently with the
execution and delivery of this Lease.

If the Premises are not ready for occupancy by Tenant on the Lease
Commencement Date due to one or more delays caused by Tenant, or anyone
acting under or for Tenant, Landlord shall have no liability for such delay
and the Lease Commencement Date shall nevertheless begin as of the
estimated Lease Commencement Date stated in Section I. (as extended only
because of Landlord's delay pursuant to this subsection C., if applicable).

D. ACCEPTANCE AND SUITABILITY

Within twenty (20) days following the date Tenant takes possession of the
Premises, Tenant may provide Landlord with a "punch list" which sets forth
any itemization of any corrective work to be performed by Landlord with
respect to the Landlord's Work as set

3
<PAGE>

forth in the Construction Work Letter; provided, however, that Tenant's
obligation to pay Monthly Rental as provided below shall not be affected
thereby. If Tenant fails to submit such "punch list" to Landlord within
such twenty (20) day period, Tenant agrees that by taking possession of the
Premises it will conclusively be deemed to have inspected the same and
found the same in satisfactory condition. Tenant acknowledges that neither
Landlord, nor any agent, employee or servant of Landlord, has made any
representation with respect to the Premises or the Project, or with respect
to the suitability of them for the conduct of Tenant's business, nor has
Landlord agreed to undertake any modifications, alterations, or
improvements of the Premises or Project, except as specifically provided in
this Lease.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD HEREBY
DISCLAIMS, AND TENANT WAIVES THE BENEFIT OF, ANY AND ALL IMPLIED
WARRANTIES, INCLUDING IMPLIED WARRANTIES OF HABITABILITY, FITNESS OR
SUITABILITY FOR PURPOSE, OR THAT THE BUILDING OR THE IMPROVEMENTS IN THE
PREMISES HAVE BEEN CONSTRUCTED IN A GOOD AND WORKMANLIKE MANNER. TENANT
EXPRESSLY ACKNOWLEDGES THAT LANDLORD DID NOT CONSTRUCT OR APPROVE THE
QUALITY OF CONSTRUCTION OF THE BUILDING.

/s/ [ILLEGIBLE]
----------------------
Tenant's Initials

SECTION IV. RENT

A. MONTHLY RENTAL

Commencing on the Lease Commencement Date (subject, however, to any
modifications or adjustments specified hereinbelow and/or in the "Rent
Schedule" attached hereto as EXHIBIT D) Tenant shall pay to Landlord during
the Term, rental for the entire Term in the total amount as set forth
in EXHIBIT D payable in monthly installments (the "Monthly Rental")
in the amount set forth in EXHIBIT D, which sum shall be payable by
Tenant on or before the first day of each month, in advance, without
further notice, at the address specified for Landlord in Section I.,
or such other place as Landlord shall designate, without any prior
demand therefor and without any abatement, deduction or setoff whatsoever.
Monthly Rental for the first full month of the Term when rental is due
shall be paid upon the execution hereof. If the Lease Commencement
Date should occur on a day other than the first day of a calendar month, or
the Expiration Date should occur on a day other than the last day of a
calendar month, then the rental for such fractional month shall be prorated
on a daily basis upon a thirty (30) day calendar month.

B. [Paragraph Deleted]

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<PAGE>

C. RENT AND ADDITIONAL RENT

As used in this Lease, the term "rent" shall mean Monthly Rental and
additional rent, and the term "additional rent" shall mean all other
amounts payable by Tenant to Landlord pursuant to this Lease other than
Monthly Rental, including without limitation, Tenant's Proportionate Share
of Common Operating Costs in excess of the Base Operating Expense. All
Monthly Rental and additional rent shall be paid in lawful money of the
United States which shall be legal tender at the time of payment. Where no
other time is stated herein for payment, payment of any amount payable from
Tenant to Landlord hereunder shall be due, and made, within ten (10) days
after Tenant's receipt of Landlord's invoice or statement therefor.

SECTION V. REIMBURSEMENT OF COMMON EXPENSES

A. DEFINITIONS SEE ADDENDUM SECTION XXXV.B.

(1) "Common Areas" means all areas, space, equipment and special services
provided by Landlord for the common or joint use and benefit of the
tenants, their employees, agents, servants, suppliers, customers and
other invitees, including, by way of illustration, but not limitation,
retaining walls, fences, landscaped areas, parks, curbs, sidewalks,
private roads, restrooms, stairways, elevators, private lobbies,
hallways, patios, service quarters, parking areas, all common areas
and other areas within the exterior of the Building and in the Project
or as shown on the site plan attached to this Lease as EXHIBIT A.

(2) "Taxes" shall mean all real property taxes, personal property taxes,
improvement bonds, and other charges and assessments which are levied
or assessed upon or with respect to the Building and Project and the
land on which the Building and Project are located and any
improvements, fixtures and equipment and all other property of
Landlord, real or personal, located in the Building and Project and
used in connection with the operation of the Building and Project and
the land on which the Building and Project are located, including any
increase in such taxes, whether resulting from a reassessment of the
value of the land, the Building or the Project, personal property, or
for any other reason, imposed by any governmental authority, and any
tax which shall be levied or assessed in addition to or in lieu of
such real or personal property taxes and any license fees, commercial
rental tax, or other tax upon Landlord's business of leasing the
Building and the Project, but shall not include any federal or state
income tax, or any franchise, capital stock, estate, inheritance,
succession, transfer and excess profit taxes imposed upon Landlord,
and shall also include any tax consultant fee or other costs incurred
by Landlord to review or contest any tax assessed against the
Premises, Building or Project.

<PAGE>

(3) "Common Operating Costs" shall mean the aggregate of all costs and
expenses payable by Landlord in connection with the operation and
maintenance of the Premises, Building, Project, and Common Areas,
including, but not limited to, (a) the cost of landscaping, repaving,
resurfacing, repairing, replacing, painting, lighting, cleaning,
removing trash, janitorial services, security services and other
similar items; (b) the total cost of compensation and benefits of
personnel to implement the services referenced herein; (c) all Taxes;
(d) the cost of any insurance obtained by Landlord in connection with
the Building and Project, including, but not limited to, the insurance
required to be obtained by Landlord pursuant to this Lease; (e) the
cost of operating, repairing and maintaining life, safety, and access
systems, including, without limitation, sprinkler systems; (f) the
cost of monitoring services, if provided by Landlord, including,
without limitation, any monitoring or control devices used by Landlord
in regulating the parking areas; (g) the cost of water, electricity,
gas and any other utilities; (h) legal, accounting and consulting fees
and expenses; (i) compensation (including employment taxes and fringe
benefits) of all persons who perform duties connected with the
operation, maintenance and repair of the Premises, Project, Building
or Common Areas; (j) energy allocation, energy use surcharges or
environmental charges; (k) expenditures made, and costs, fees,
assessments and other charges paid, by Landlord in connection with
traffic or energy management programs applicable to the Project or in
connection with Landlord's compliance with laws or other governmental
requirements; (l) municipal inspection fees or charges; (m) any other
costs or expenses incurred by Landlord under this Lease which are not
otherwise reimbursed directly by tenants; (n) the amount charged by
any management firm (who may be an affiliate of Landlord) contracted
by Landlord to provide any or all of the foregoing services; and (o)
any fees, costs, expenses or dues payable pursuant to the terms of any
covenants, conditions or restrictions or owners' association
pertaining to the Building and/or the Project. The computation of
Common Operating Costs shall be made in accordance with generally
accepted accounting principles.

(4) In the event during all or any portion of any calendar year (including
the base year) the Building is not at least ninety-five percent (95%)
rented and occupied, Landlord shall make an appropriate adjustment to
the Common Operating Costs for such year, employing sound accounting
and management principles, to determine the Common Operating Costs
that would have been paid or incurred by Landlord had the Building
been ninety-five percent (95%) rented and occupied and the amount so
determined shall be deemed to have been the Common Operating Costs for
such year.

B. REIMBURSEMENT SEE ADDENDUM SECTION XXXV.B.(2)

Within a reasonable time before the commencement of each calendar year
during the Term, Landlord shall deliver to Tenant a reasonable estimate of
the anticipated Common Operating Costs for the forthcoming calendar year.
Tenant shall pay to Landlord, as additional rental, commencing on January
1, 1997, and continuing on the first day of each calendar month thereafter,
an amount equal to one-twelfth (1/12th) of the product obtained by
multiplying (1) the remainder of the then estimated Common Operating Costs
less the Base Operating Expense paid by Landlord, times (2) Tenant's
Proportionate Share; provided, however, that such amount shall not be less
than zero dollars ($0). The estimated monthly charge for Tenant's
Proportionate Share may be adjusted periodically by Landlord during the
calendar year on the basis of Landlord's reasonably anticipated costs. Any
expenditure by Landlord (e.g. resurfacing of parking areas, painting
buildings, refurbishing landscaping or walkways and similar items) during
the year which was not included in determining the estimated Common
Operating Costs, may be billed separately to Tenant according to Tenant's
Proportionate Share.

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<PAGE>

C. REBATE OR ADDITIONAL CHARGES SEE ADDENDUM SECTION XXXV.B.(2)

Within a reasonable time after the end of each calendar year, Landlord
shall furnish to Tenant a statement (each, an "Annual Statement") showing
the total Common Operating Costs and Tenant's Proportionate Share of the
Common Operating Costs less the Base Operating Expense for the calendar
year just ended. Tenant shall have the right, by written notice to Landlord
given within thirty (30) days after receipt of an Annual Statement, to
protest specific items on the most recent Annual Statement; to be
effective, Tenant's notice must state with specificity the item(s) to which
Tenant objects, for which Landlord shall provide reasonable backup
documentation at Tenant's sole cost and expense. Tenant's failure to object
to an Annual Statement as, when and in the manner provided in the preceding
sentence shall render such Annual Statement binding on Tenant. Any
objections raised by Tenant in Tenant's notice must be resolved within
sixty (60) days after the same are raised, unless Landlord agrees otherwise
in writing. If the amount of estimated Common Operating Costs less the
Base Operating Expense paid by Tenant for any year during the Term exceeds
the actual Common Operating Costs less the Base Operating Expense for such
year, Landlord shall apply any amounts due to Tenant hereunder to any
outstanding amounts due or amounts next coming due from Tenant to Landlord.
If the estimated Common Operating Costs less the Base Operating Expense
for such year are less than the actual Common Operating Costs less the Base
Operating Expense for such year, then Tenant shall pay to Landlord, within
thirty (30) days of Tenant's receipt of the Annual Statement as additional
rent, Tenant's Proportionate Share of the difference between the amount of
actual Common Operating Costs in excess of the Base Operating Expense and
the amount of estimated Common Operating Costs in excess of the Base
Operating Expense. In the event the Term of this Lease expires, or this
Lease is otherwise terminated, Landlord shall compute and prorate the
credit or deficiency up to the date the Lease expired or was terminated
and may apply any credit due Tenant to any outstanding amounts due by
Tenant hereunder at that time and, at the end of the Lease, so long as
Tenant is not then in default, shall refund any excess to Tenant.

D. CONTROL OF COMMON AREAS

Landlord shall have the sole and exclusive control of the Common Areas, as
well as the right to make changes to the Common Areas. Notwithstanding the
preceding sentence, Landlord is not responsible for any harm or damage to
any of Tenant's officers, agents, or employees as a result of their use of
the Common Areas. Landlord's rights shall include, but not be limited to,
the right to (a) restrain the use of the Common Areas by unauthorized
persons, (b) utilize from time to time any portion of the Common Areas for
promotional and related matters, (c) temporarily close any portion of the
Common Areas for repairs, improvements or alterations, (d) change the shape
and size of the Common Areas or change the location of improvements within
the Common Areas, including, without limitation, parking areas, roadways
and curb cuts, and (e) prohibit access to or use of Common Areas that are
designated for the storage of supplies or operation of equipment necessary
to operate the Project or Building. Landlord may determine the nature, size
and extent of the Common Areas as well as make changes to the Common Areas
from time to time which, in its opinion, are deemed desirable.

SECTION VI. SECURITY DEPOSIT SEE ADDENDUM SECTION XXXV.C.

Upon execution of this Lease, Tenant shall deposit with Landlord the Security
Deposit defined in Section I. above, which shall be held by Landlord as security
for the performance by Tenant of all terms, covenants and conditions of this
Lease. It is expressly understood and agreed that such deposit is not an advance
rental deposit or a measure of Landlord's damages in case of Tenant's default.
If Tenant defaults with respect to any provision of this Lease, including, but
not limited to, the provisions relating to the payment of rent or the obligation
to repair and maintain the Premises or to perform any other term, covenant or
condition contained herein,

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<PAGE>

Landlord may (but shall not be required to), without prejudice to any other
remedy provided herein or provided by law and without notice to Tenant, use the
Security Deposit, or any portion of it, to cure the default or to compensate
Landlord for all damages sustained by Landlord resulting from Tenant's default.
Tenant shall immediately on demand pay to Landlord a sum equivalent to the
portion of the Security Deposit so expended or applied by Landlord as provided
in this paragraph so as to maintain the Security Deposit in the sum initially
deposited with Landlord. In addition, upon any increase in Monthly Rental due
hereunder, Tenant shall promptly deposit with Landlord additional money as an
additional security deposit such that the amount of the Security Deposit shall
at all times be equal to the then-current Monthly Rental due hereunder. Although
the Security Deposit shall be deemed the property of Landlord, if Tenant is not
in default at the expiration or termination of this Lease, Landlord shall return
the Security Deposit to Tenant. Landlord shall not be required to keep the
Security Deposit separate from its general funds and Landlord, not Tenant, shall
be entitled to all interest, if any, accruing on any such deposit. Upon any sale
or transfer of its interest in the Building, Landlord shall transfer the
Security Deposit to its successor in interest and thereupon, Landlord shall be
released from any liability or obligation with respect thereto.

SECTION VII. TENANT'S TAXES

To the extent not covered as a Common Operating Cost, Tenant shall be liable for
any tax (now or hereafter imposed by any governmental entity) applicable to or
measured by or on the rents or any other charges payable by Tenant under this
Lease, including (but not limited to) any gross income tax, gross receipts tax
or excise tax with respect to the receipt of such rent or other charges or the
possession, leasing or operation, use or occupancy of the Premises, but not
including any net income, franchise, capital stock, estate or inheritance taxes.
If any such tax is required to be paid to the governmental taxing entity
directly by Landlord, then Landlord shall pay the amount due and, upon demand,
shall be fully reimbursed by Tenant for such payment.

Tenant shall also be liable for all taxes levied against the leasehold held by
Tenant or against any personal property, leasehold improvements, additions,
alterations and fixtures placed by or for Tenant in, on or about the Premises,
Building and Project or constructed by Landlord for Tenant in the Premises; and
if any such taxes are levied against Landlord or Landlord's property, or if the
assessed value of such property is increased (whether by special assessment or
otherwise) by the inclusion therein of value placed on such leasehold, personal
property, leasehold improvements, additions, alterations and fixtures, and
Landlord pays any such taxes (which Landlord shall have the right to do
regardless of the validity thereof), Tenant, upon demand, shall fully reimburse
Landlord for the taxes so paid by Landlord or for the proportion of such taxes
resulting from such increase in any assessment.

SECTION VIII. USE OF PREMISES

A. PERMITTED USES SEE ADDENDUM SECTION XXXV.D.(1)

Tenant shall use the Premises and Common Areas solely for the Permitted Use
specified in subsection I.M. above, and for no other use, and under the
name specified in subsection I.B. above. Tenant shall, at its own cost and
expense, obtain any and all licenses and permits necessary for any such
use. Tenant shall not do or permit anything to be done in or about the
Premises, Common Areas, Building or Project which will in any way obstruct
or interfere with the rights of other tenants or occupants of the Project
or injure or annoy them or use or allow the Premises to be used for any
unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises and Common Areas or permit any odors to
emanate from the Premises and intrude upon the Common Areas or the premises
of other tenants. Tenant shall not commit or suffer to be committed any
waste in or upon the Premises, Common Areas, Building or Project. Tenant
shall not do or permit anything to be done in or about the Premises, Common
Areas, Building or Project which may render the insurance thereon

8
<PAGE>

void or increase the insurance risk thereon. If an increase in any fire and
extended coverage insurance premiums paid by Landlord for the Building and
Project is caused by Tenant's use and occupancy of the Premises, then
Tenant shall pay as additional rental the amount of such increase to
Landlord.

B. COMPLIANCE WITH LAWS SEE ADDENDUM SECTION XXXV.D.(2)

Tenant shall not use the Premises, Building, Project or Common Areas in any
way (or permit or suffer anything to be done in or about the same) which
will conflict with any law, statute, ordinance or governmental rule or
regulation or any covenant, condition or restriction (whether or not of
public record) affecting the Premises, Project or Building, now in force or
which may hereafter be enacted or promulgated including, but not limited
to, the provisions of any city or county zoning codes regulating the use
thereof. Tenant shall, at its sole cost and expense, promptly comply with
(a) all laws, statutes, ordinances and governmental rules and regulations,
now in force or which may hereafter be in force, applicable to Tenant or
its use of or business or operations in the Premises, (b) all covenants,
conditions and restrictions, now in force or which may hereafter be in
force, which affect the Premises, and (c) all requirements, now in force or
which may hereafter be in force, of any board of fire underwriters or other
similar body now or hereafter constituted relating to or affecting the
condition, use or occupancy of the Premises, Building or Project. The
judgment of any court of competent jurisdiction or the admission by Tenant
in any action against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated any law, statute, ordinance, governmental rule or
regulation or any requirement, covenant, condition or restriction shall be
conclusive of the fact as between Landlord and Tenant. Tenant agrees to
fully indemnify Landlord against any liability, claims or damages arising
as a result of a breach of the provisions of this subsection by Tenant, and
against all costs, expenses, fines or other charges arising therefrom,
including, without limitation, reasonable attorneys' fees and related costs
incurred by Landlord in connection therewith, which indemnity shall survive
the expiration or earlier termination of this Lease. Without limiting the
generality of the foregoing, it is expressly understood and agreed that,
subject to performance by Landlord of Landlord's Work described in EXHIBIT
C hereto, Tenant is accepting the Premises "AS IS," in its present state
and condition, without any representations or warranties from Landlord of
any kind whatsoever, either express or implied, with respect to the
Premises or the Building, including without limitation the compliance of
the Premises or the Building with The Americans With Disabilities Act and
the rules and regulations promulgated thereunder, as amended from time to
time (the "ADA"). Except as otherwise provided for in EXHIBIT C hereto, if
Tenant's use of the Premises or operations therein cause Landlord to incur
any obligation under the ADA, as reasonably determined by Landlord, then
Tenant shall reimburse Landlord for Landlord's costs and expenses in
connection therewith. If Tenant's initial use of the Premises is not a
"place of public accommodation" within the meaning of the ADA, then Tenant
may not thereafter change the use of the Premises to cause the Premises to
become a "place of public accommodation." In the event that Tenant desires
or is required hereby to make Alterations (as defined below) to the
Premises in order to satisfy its obligations under the ADA, then all such
Alterations shall be subject to any requirements in the Lease with respect
to Alterations of the Premises, and shall be performed at Tenant's sole
cost and expense. Except for Alterations to the Premises, Tenant shall have
no right whatsoever to make any alterations or modifications to any
portion of the Building or its appurtenant facilities. Tenant shall be
responsible for insuring that the Premises and Tenant's use thereof and
operations therein fully and completely comply with the ADA.

C. HAZARDOUS MATERIALS SEE ADDENDUM SECTION XXXV.D.(3)

Tenant covenants and agrees that it shall not cause or permit any Hazardous
Material (as defined below) to be brought upon, kept, or used in or about
the Premises, Building or Project by Tenant, its agents, employees,
contractors or invitees. The foregoing covenant shall not extend to
substances typically found or used in general office

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applications so long as (i) such substances and any equipment which
generates such substances are maintained only in such quantities as are
reasonably necessary for Tenant's operations in the Premises, (ii) such
substances are used strictly in accordance with the manufacturers'
instructions therefor, (iii) such substances are not disposed of in or
about the Project in a manner which would constitute a release or discharge
thereof, and (iv) all such substances and any equipment which generates
such substances are removed from the Project by Tenant upon the expiration
or earlier termination of this Lease. Any use, storage, generation,
disposal, release or discharge by Tenant of Hazardous Materials in or about
the Project as is permitted pursuant to this subsection C. shall be carried
out in compliance with all applicable federal, state and local laws,
ordinances, rules and regulations. Moreover, no hazardous waste resulting
from any operations by Tenant shall be stored or maintained by Tenant in or
about the Project for more than ninety (90) days prior to removal by
Tenant. Tenant shall, annually within thirty (30) days after Tenant's
receipt of Landlord's written request therefor, provide to Landlord a
written list identifying any Hazardous Materials then maintained by Tenant
in the Project, the use of each such Hazardous Material and the approximate
quantity of each such Hazardous Material so maintained by Tenant, together
with written certification by Tenant stating, in substance, that neither
Tenant nor any person for whom Tenant is responsible has released or
discharged any Hazardous Materials in or about the Project.

In the event that Tenant proposes to conduct any use or to operate any
equipment which will or may utilize or generate a Hazardous Material other
than as specified in the first paragraph of this subsection, Tenant shall
first in writing submit such use or equipment to Landlord for approval. No
approval by Landlord shall relieve Tenant of any obligation of Tenant
pursuant to this subsection, including the removal, clean-up and
indemnification obligations imposed upon Tenant by this subsection. Tenant
shall, within five (5) days after receipt thereof, furnish to Landlord
copies of all notices or other communications received by Tenant with
respect to any actual or alleged release or discharge of any Hazardous
Material in or about the Premises or the Project and shall, whether or not
Tenant receives any such notice or communication, notify Landlord in
writing of any discharge or release of Hazardous Material by Tenant or
anyone for whom Tenant is responsible in or about the Premises or the
Project. In the event that Tenant is required to maintain any Hazardous
Materials license or permit in connection with any use conducted by Tenant
or any equipment operated by Tenant in the Premises, copies of each such
license or permit, each renewal or revocation thereof and any communication
relating to suspension, renewal or revocation thereof shall be furnished to
Landlord within five (5) days after receipt thereof by Tenant. Compliance
by Tenant with the two immediately preceding sentences shall not relieve
Tenant of any other obligation of Tenant pursuant to this subsection.

Upon any violation of the foregoing covenants, Tenant shall be obligated,
at Tenant's sole cost, to clean-up and remove from the Project all
Hazardous Materials introduced into the Project by Tenant or any person or
entity for whom Tenant is responsible. Such clean-up and removal shall
include all testing and investigation required by any governmental
authorities having jurisdiction and preparation and implementation of any
remedial action plan required by any governmental authorities having
jurisdiction. All such clean-up and removal activities of Tenant shall, in
each instance, be conducted to the satisfaction of Landlord and all
governmental authorities having jurisdiction. Landlord's right of entry
pursuant to Section XI. shall include the right to enter and inspect the
Premises for violations of Tenant's covenants herein.

Tenant shall indemnify, defend and hold harmless Landlord, its partners,
and its and their successors, assigns, partners, officers, employees,
agents, lenders and attorneys from and against any and all claims,
liabilities, losses, actions, costs and expenses (including attorneys' fees
and costs of defense) incurred by such indemnified persons, or any of them,
as the result of (A) the introduction into or about the Project by Tenant
or anyone for whom Tenant is responsible of any Hazardous Materials, (B)
the usage,

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storage, maintenance, generation, disposition or disposal by Tenant or
anyone for whom Tenant is responsible of Hazardous Materials in or about
the Project, (C) the discharge or release in or about the Project by Tenant
or anyone for whom Tenant is responsible of any Hazardous Materials, (D)
any injury to or death of persons or damage to or destruction of property
resulting from the use, introduction, maintenance, storage, generation,
disposal, disposition, release or discharge by Tenant or anyone for whom
Tenant is responsible of Hazardous Materials in or about the Project, and
(E) any failure of Tenant or anyone for whom Tenant is responsible to
observe the foregoing covenants of this subsection.

Upon any violation of the foregoing covenants, Landlord shall be entitled
to exercise all remedies available to a landlord against a defaulting
tenant, including but not limited to those set forth in Section XX. Without
limiting the generality of the foregoing, Tenant expressly agrees that upon
any such violation Landlord may, at its option, (I) immediately terminate
this Lease or (II) continue this Lease in effect until compliance by
Tenant with its clean-up and removal covenant notwithstanding any earlier
expiration date of the term of this Lease. No action by Landlord
hereunder shall impair the obligations of Tenant pursuant to this
subsection.

As used in this subsection, "Hazardous Materials" is used in its broadest
sense and shall include any petroleum based products, pesticides, paints
and solvents, polychlorinated biphenyl, lead, cyanide, DDT, acids,
ammonium compounds and other chemical products and any substance or
material defined or designated as hazardous or toxic, or other similar
term, by any federal, state or local environmental statute, regulation, or
ordinance affecting the Premises, Building or Project presently in effect
or that may be promulgated in the future, as such statutes, regulations and
ordinances may be amended from time to time, including but not limited to
the statutes listed below:

Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901 ET SEQ.

Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U.S.C. Section 9601 ET SEQ:

Clean Air Act, 42 U.S.C. Sections 7401-7626.

Water Pollution Control Act (Clean Water Act of 1977), 33 U.S.C.
Section 1251 ET SEQ.

Insecticide, Fungicide, and Rodenticide Act (Pesticide Act of 1987),
7 U.S.C. 135 ET SEQ.

Toxic Substances Control Act, 15 U.S.C., Section 2601 ET SEQ.

Safe Drinking Water Act, 42 U.S.C. Section 300(f) ET SEQ.

National Environmental Policy Act (NEPA) 42 U.S.C.
Section 4321 ET SEQ.

Refuse Act of 1899, 33 U.S.C. Section 407 ET SEQ.

California Health and Safety Code Section 25316 ET SEQ.

By its signature to this Lease, Tenant confirms that it has had an
opportunity to conduct its own examination of the Premises and the Project
with respect to Hazardous Materials and accepts the same "AS IS" and with
no Hazardous Materials present thereon except as reflected in the Report
(as defined in Addendum Section XXXV.D.(3)) provided to Tenant.

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Tenant acknowledges that incorporation of any material containing asbestos
into the Premises is absolutely prohibited. Tenant agrees, represents and
warrants that it shall not incorporate or permit or suffer to be
incorporated, knowingly or unknowingly, any material containing asbestos
into the Premises.

D. LANDLORD'S RULES AND REGULATIONS

Tenant shall, and Tenant agrees to cause its agents, servants, employees,
invitees and licensees to, observe and comply fully and faithfully with the
rules and regulations attached hereto as EXHIBIT E or such rules and
regulations which may hereafter be adopted by Landlord (the "Rules") for
the care, protection, cleanliness, and operation of the Premises, Building
and Project, and any modifications or additions to the Rules adopted by
Landlord, provided that, Landlord shall give written notice thereof to
Tenant. Landlord shall not be responsible to Tenant for failure of any
other tenant or occupant of the Building or Project to observe or comply
with any of the Rules.

E. TRAFFIC AND ENERGY MANAGEMENT

Landlord and Tenant agree to cooperate and use their best efforts to
participate in governmentally mandated or voluntary traffic management
programs generally applicable to businesses located in the area in which
the Project is situated or to the Project and, initially, shall encourage
and support van and car pooling by employees and shall encourage and
support staggered and flexible working hours for employees to the fullest
extent permitted by the requirements of Tenant's business. Neither this
subsection nor any other provision in this Lease, however, is intended to
or shall create any rights or benefits in any other person, firm, company,
governmental entity or the public.

Landlord and Tenant agree to cooperate and use their best efforts to comply
with any and all guidelines or controls imposed upon either Landlord or
Tenant by federal or state governmental organizations or by any energy
conservation association to which Landlord is a party concerning energy
management.

Any costs, fees, fines or other levies assessed against Landlord as the
result of failure of Tenant to comply with this subsection shall be
reimbursed by Tenant to Landlord as additional rent.

SECTION IX. SERVICE AND UTILITIES

A. STANDARD BUILDING SERVICES AND REIMBURSEMENT BY TENANT SEE ADDENDUM
SECTION XXXV.E.

So long as Tenant is not in default hereunder (including any default of a
type described in clauses (4) - (6) of Section XX.A. below), Landlord
agrees to make available to the Premises, during the Building's normal
business hours of 7:00 a.m. to 6:00 p.m. Monday through Friday and 8:00
a.m. and 1:00 p.m. on Saturday (holidays excepted), which hours are subject
to change from time to time as reasonably determined by Landlord, such heat
and air conditioning (hereinafter "HVAC"), water and electricity, as may be
required in Landlord's judgment for the comfortable use and occupation of
the Premises for general office purposes and at a level which is usual and
customary in similar office buildings in the area where the Project is
located, all of which shall be subject to the Rules of the Building as well
as any governmental requirements or standards relating to, among other
things, energy conservation. Tenant agrees to pay, as a Common Operating
Cost in accordance with Section V. above, Tenant's Proportionate Share in
excess of the Base Operating Expense of the full cost of all utilities
supplied to the Premises, together with any taxes thereon; provided,
however, if any such service or utilities are separately metered to the
Premises, Tenant shall pay the cost thereof in a timely manner directly to
the utility company providing such service.

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Tenant's obligations in this Section regarding utilities include, but are
not limited to, initial connection charges, all charges for gas, water and
electricity used on the Premises, and for all electric light lamps or
tubes. If any such utility or service is not separately metered to the
Premises, Tenant shall be required to pay any increased cost, as additional
rent, of any such utility and service, including without limitation water,
electricity and HVAC, resulting from any use of the Premises at any time
other than the schedule of normal business hours for providing such
utilities and services as reasonably determined by Landlord or any unusual
or non-customary use beyond that which Landlord has agreed to make
available as described above, or resulting from special electrical, cooling
and ventilating needs created in certain areas by telephone equipment,
computers and other similar equipment or uses. If the Building is designed
for individual tenant operation of the HVAC, Tenant agrees to pay the cost
of operating the HVAC at any time other than the schedule of hours for
providing the same set forth above, which cost may include the operation of
the HVAC for space located outside the Premises when such space is serviced
concurrently with the operation of the HVAC for the benefit of the
Premises.

B. LIMITATION ON LANDLORD'S OBLIGATIONS

Landlord shall not be in breach of its obligations under this Section
unless Landlord fails to make any repairs or perform maintenance which it
is obligated to perform hereunder and such failure persists for an
unreasonable time after written notice of a need for such repairs or
maintenance is given to Landlord by Tenant. Landlord shall not be liable
for and Tenant shall not be entitled to any abatement or reduction of rent
by reason of Landlord's failure to furnish any of the foregoing when such
failure is caused by accidents, breakage, repairs, strikes, brownouts,
blackouts, lockouts or other labor disturbances or labor disputes of any
character, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord, nor shall such failure under such
circumstances be construed as a constructive or actual eviction of Tenant.
Landlord shall not be liable under any circumstances for loss or injury to
property or business, however occurring, through or in connection with or
incidental to Landlord's failure to furnish any of said service or
utilities.

C. EXCESS SERVICE

Tenant shall not, without the written consent of Landlord, use any
apparatus or device in the Premises, including, without limitation,
electronic data processing machines, punch card machines or machines using
in excess of one hundred twenty (120) volts, except for the two hundred
twenty (220) volt usage reflected on the Working Drawings approved by
Landlord, or which consumes more electricity than is usually furnished or
supplied for the Permitted Use of the Premises, as determined by Landlord.
Tenant shall not consume water or electric current in excess of that
usually furnished or supplied for the use of the Premises (as determined by
Landlord), without first procuring the written consent of Landlord, which
Landlord may refuse in the event the same would require a system upgrade or
exceed available Building capacity (assuming full occupancy of the
Building). The excess cost (including any penalties imposed by third
parties such as utility companies for excess usage) for such water and
electric current shall be established by an estimate made by a utility
company or independent engineer hired by Landlord at Tenant's expense and
Tenant shall pay such excess costs each month with the Monthly Rental. All
costs and expenses of modifying existing equipment, cables, lines, etc. or
installing additional equipment, cables, lines, etc. to accommodate such
excess usage or use by Tenant of such apparatus or device shall be borne by
Tenant.

D. SECURITY SERVICES

Certain security measures (both by electronic equipment and personnel) may
be provided by Landlord in connection with the Building and Common Areas.
However, Tenant hereby acknowledges that such security is intended to be
only for the benefit of the

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Landlord in protecting its property from fire, theft, vandalism and similar
perils and while certain incidental benefits may accrue to the Tenant
therefrom, such security is not for the purpose of protecting either the
property of Tenant or the safety of its officers, employees, servants or
invitees. By providing such security, Landlord assumes no obligation to
Tenant and shall have no liability arising therefrom. If, as a result of
Tenant's occupancy of the Premises, Landlord in its sole discretion
determines that it is necessary to provide security or implement additional
security measures or devices in or about the Building or the Common Areas,
Tenant shall be required to pay, as additional rent, the cost or increased
cost, as the case may be, of such security.

SECTION X. MAINTENANCE AND REPAIRS

A. LANDLORD'S

Except for special or non-standard systems and equipment installed for
Tenant's exclusive use, Landlord shall keep in good condition and repair,
at Landlord's initial cost and expense subject to reimbursement by Tenant
of Tenant's Proportionate Share of such cost and expense, heating,
ventilating and air conditioning systems which service the Premises as well
as other premises within the Building, the foundations, exterior walls,
structural condition of interior bearing walls and roof of the Premises,
interior walls, interior surfaces of exterior walls, ceilings, windows,
doors, cabinets, draperies, electrical and lighting facilities within the
Premises, window coverings, carpeting and other floor coverings, plate
glass and skylights located within the Premises and the Building, as well
as the parking lots, walkways, driveways, landscaping, fences, signs, and
utility installations of the Project. Janitorial services to the Premises
shall initially be provided as described in EXHIBIT G. which specifications
are subject to change from time to time in the reasonable discretion of
Landlord. Landlord shall not be required to make any repairs that are the
obligation of any other tenant or occupant within the Building or Project
or repairs for damage caused by any negligent or intentional act or
omission of Tenant or any person claiming through or under Tenant or any of
Tenant's employees, suppliers, shippers, customers or invitees, in which
event Tenant shall repair such damage at its sole cost and expense. Tenant
hereby waives and releases its right to make repairs at Landlord's expense
under any law, statute, ordinance, rules and regulations now or hereafter
in effect in any jurisdiction in which the Project is located.

B. TENANT'S OBLIGATIONS

Tenant shall, at its sole cost and expense, make all repairs and
replacements as and when Landlord deems reasonably necessary to preserve in
good working order and condition any special or supplementary heating,
ventilating and air conditioning systems located within the Premises and
installed for the exclusive use of the Premises, Tenant's cabling and
telephone lines and all other non-standard utility facilities and systems
exclusively serving the Premises, and all of Tenant's trade fixtures
located within the Premises. Tenant shall not commit or permit any waste in
or about the Premises, the Building or the Project. Tenant shall, at its
sole cost and expense, make all repairs to the Premises, Building and
Project which are required, in the reasonable opinion of Landlord, as a
result of any misuse, neglect, negligent or intentional act or omission
committed or permitted by Tenant or by any subtenant, agent, employee,
supplier, shipper, customer, invitee or servant of Tenant.

C. LANDLORD'S RIGHT TO MAKE REPAIRS

In the event that Tenant fails to maintain the Premises, Building or
Project in good and sanitary order, condition and repair as required by
this Lease, then, following written notification to Tenant (except in the
cue of an emergency, in which case no prior notification shall be
required), Landlord shall have the right, but not the obligation, to enter
the Premises and to do such acts and expend such funds at the expense of
Tenant

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as are required to place the Premises, Building and Project in good, safe
and sanitary order, condition and repair. Any amount so expended by
Landlord shall be paid by Tenant promptly upon demand as additional rent.

D. CONDITION OF PREMISES UPON SURRENDER

Except as otherwise provided in this Lease, Tenant shall, upon the
expiration or earlier termination of the Term, surrender the Premises to
Landlord in the same condition as on the date Tenant took possession,
reasonable wear and tear excepted. All appurtenances, fixtures,
improvements, additions and other property attached to or installed in the
Premises whether by Landlord or by or on behalf of Tenant, and whether at
Landlord's expense or Tenant's expense, shall be and remain the property of
Landlord unless Landlord specifically agrees otherwise in writing. Any
furnishings and personal property of Tenant located in the Premises,
whether the property of Tenant or leased by Tenant (including the fixtures,
improvements and other items agreed, in writing, by Landlord to belong to
the Tenant as provided in the preceding sentence and all data, telephone or
other cabling or wiring installed by or on behalf of Tenant in the
Premises, including the plenum area above the ceiling of the Premises),
shall be and remain the property of Tenant and shall be removed by Tenant
at Tenant's sole cost and expense at the expiration of the Term. Tenant
Shall promptly repair any damage to the Premises or the Building resulting
from such removal. Any of Tenant's property not removed from the Premises
prior to the expiration of the Term shall, at Landlord's option, either
become the property of Landlord or may be removed by Landlord and Tenant
shall pay to Landlord the cost of such removal within ten (10) days after
delivery of a bill therefor or Landlord, at its option, may deduct such
amount from the Security Deposit. Any damage to the Premises, including any
structural damage, resulting from Tenant's use or from the removal of
Tenant's fixtures, furnishings and equipment, shall be repaired by Tenant
at Tenant's expense.

SECTION XI. ENTRY BY LANDLORD

Landlord reserves and shall at any and all times have the right to enter the
Premises at reasonable times to inspect the same to determine whether Tenant is
complying with its obligations hereunder; to supply janitorial service and any
other service to be provided by Landlord hereunder; and, upon reasonable notice
to Tenant, may exhibit the Premises to prospective purchasers, mortgagees or
prospective tenants; to post notices of nonresponsibility; and to alter, improve
or repair the Premises and any portion of the Building and Project, without
abatement of rent, and may for that purpose erect scaffolding and other
necessary structures that are reasonably required by the character of the work
to be performed by Landlord, provided that the business of Tenant shall not be
interfered with unreasonably. For each of the aforesaid purposes, Landlord shall
at all times have and retain a key with which to unlock all of the doors in,
upon and about the Premises, excluding Tenant's vaults and safes, and Landlord
shall have the right to use any and all means which Landlord may deem proper to
open such doors in the event of an emergency. Any entry to the Premises or
portions thereof obtained by Landlord by any of said means, or otherwise, shall
not under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises, or any portion thereof.

SECTION XII. ALTERATIONS, ADDITIONS AND TRADE FIXTURES

Tenant shall not make any alterations, additions or improvements to the
Premises, or any part thereof, whether structural or nonstructural (hereafter
"Alterations"), without Landlord's prior written consent; provided, however,
that Tenant may, without Landlord's prior consent but subject to the remaining
terms and conditions of this Section XII., make cosmetic, non-structural
Alterations to the Premises which (a) do not affect the Building systems or the
traffic flow within the Premises, (b) are consistent with the Tenant
Improvements, (c) do not, in any respect,

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increase the capacity of density of or work stations within the Premises and (d)
cost, in the aggregate over a twelve (12) month period, less than Five Thousand
Dollars ($5,000.00). In order to obtain Landlord's preliminary consent where
required to be obtained hereunder, which preliminary consent may be given or
denied in Landlord's sole discretion, Tenant shall submit such information as
Landlord may require, including without limitation plans and specifications for
the Alterations. Any professional fees or other costs and expenses incurred by
Landlord in reviewing such plans and specifications shall be paid to Landlord by
Tenant as additional rent upon demand. After Landlord gives preliminary consent
(where required), in order to obtain Landlord's final consent (which is required
whenever Landlord's preliminary consent is required to be obtained, and which
consent may not be unreasonably withheld, Tenant shall submit (i) permits,
licenses, bonds, and the construction contract, all in conformance with the
plans and specifications preliminarily approved by Landlord; (ii) evidence of
insurance coverage in such types and amounts and from such insurers as Landlord
deems satisfactory; and (iii) such other information as Landlord deems
reasonably necessary. The construction contract shall, at a minimum, require the
general contractor and all subcontractors to obey the rules and regulations of
the Building and Project. All Alterations shall be done in a good workmanlike
manner by qualified and licensed contractors or mechanics, as approved by
Landlord. In no event shall any Alterations affect the structure of the Building
or its exterior appearance. All Alterations made by or for Tenant (other than
Tenant's moveable trade fixtures), shall, unless Landlord expressly requires or
agrees otherwise in writing, immediately become the property of Landlord,
without compensation to Tenant, but Landlord has no obligation to repair,
maintain or insure those Alterations. Carpeting, shelving and cabinetry are
considered improvements of the Premises and not movable trade fixtures,
regardless of how or where affixed. No Alterations will be removed by Tenant
from the Premises either during or at the expiration or earlier termination of
the Term, and they shall be surrendered as a part of the Premises unless
Landlord has required that Tenant remove them. At Landlord's discretion,
Alterations are subject to removal by Tenant and at Tenant's sole cost and
expense. Upon any such removal, Tenant shall repair any damage caused to the
Premises thereby, and shall return the Premises to the condition they were in
prior to installation of such Alterations so removed. Tenant shall indemnify,
defend and keep Landlord free and harmless from and against all liability, loss,
damage, cost, attorneys' fees and any other expense incurred on account of
claims by any person performing work or furnishing materials or supplies for
Tenant or any person claiming under Tenant. Landlord may require Tenant to
provide Landlord, at Tenant's sole cost and expense, a lien and completion bond
in an amount equal to one and one-half times the estimated cost of such
improvements, to insure Landlord against any liability for mechanic's liens and
to insure completion of the work. Landlord shall have the right at all times to
post on the Premises any notices permitted or required by law, or that Landlord
shall deem proper, for the protection of Landlord, the Premises, the Building
and the Project, and any other party having an interest therein, from mechanics'
and materialmen's liens, and Tenant shall give to Landlord written notice of the
commencement of any construction in or on the Premises at least thirty (30)
business days prior thereto. Prior to the commencement of any such construction,
Landlord shall be furnished certificates of insurance, naming Landlord as an
additional insured, evidencing that each contractor performing work has
insurance acceptable to Landlord, including but not limited to general liability
insurance of not less than Two Million Dollars ($2,000,000.00) and worker's
compensation insurance in the statutorily required amount.

SECTION XIII. MECHANIC'S LIENS

Tenant shall keep the Premises, the Building and the Project free from any liens
arising out of any work performed, material furnished or obligation incurred by
or for Tenant or any person or entity claiming through or under Tenant, In the
event that Tenant shall not, within ten (10) days following the imposition of
any such lien, cause the same to be released of record by payment or posting of
a proper bond, Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause such lien to be
released by such means as Landlord deems proper, including payment of the claim
giving rise to such lien. All such sums paid and all expenses incurred by
Landlord in connection therewith shall be due and payable to Landlord by Tenant
on demand.

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SECTION XIV. INSURANCE

A. TENANT

During the Term hereof, Tenant shall keep in full force and effect the
following insurance and shall provide appropriate insurance certificates to
Landlord prior to the Lease Commencement Date and annually thereafter
before the expiration of each policy:

(1) Commercial general liability insurance for the benefit of Tenant and
Landlord as an additional insured, with a limit of not less than Two
Million Dollars ($2,000,000.00) combined single limit per occurrence,
against claims for personal injury liability including, without
limitation, bodily injury, death or property damage liability and
covering (i) the business(es) operated by Tenant and by any subtenant
of Tenant on the Premises, (ii) operations of independent contractors
engaged by Tenant for services or construction on or about the
Premises, and (iii) contractual liability;

(2) Fire, extended coverage, vandalism and malicious mischief insurance,
insuring the personal property, furniture, furnishings and fixtures
belonging to Tenant located on the Premises for not less than one
hundred percent (100%) of the actual replacement value thereof;

(3) Workers' compensation in the amount required by law;

(4) Business interruption or loss of income insurance in amounts
satisfactory to Landlord, with a rental interruption rider assuring
Landlord that the rent due hereunder will be paid for a period of not
less than twelve (12) months if the Premises are destroyed or rendered
inaccessible by a risk insured against by a policy of all risk
insurance; and

(5) Such other insurance as Landlord deems reasonably necessary.

Each insurance policy obtained by Tenant pursuant to this Lease shall
contain a clause that the insurer will provide Landlord with at least
thirty (30) days' prior written notice of any material change, non-renewal
or cancellation of the policy, shall be in a form satisfactory to Landlord
and shall be taken out with an insurance company authorized to do business
in the State in which the Project is located and rated not less than Best's
Financial Class X and Best's Policy Holder Rating "A". In addition, any
insurance policy obtained by Tenant shall be written as a primary policy,
and shall not be contributing with or in excess of any coverage which
Landlord may carry, and shall have loss payable clauses satisfactory to
Landlord and in favor of Landlord naming Landlord, and any other party
reasonably designated by Landlord, as an additional insured. The liability
limits of the above described insurance policies shall in no matter limit
the liability of Tenant under the terms of Section XV. below.

Not more frequently than every two (2) years, if, in the reasonable opinion
of Landlord, the amount of liability insurance specified in this Section
XIV. is not adequate, the above-described limits of coverage shall be
adjusted by Landlord, by written notification to Tenant, in order to
maintain the level of insurance protection at least equal to the protection
afforded on the date the Term commences. If Tenant fails to maintain and
secure the insurance coverage required under this Section XIV., then
Landlord shall have, in addition to all other remedies provided herein and
by law, the right, but not the obligation, to procure and maintain such
insurance, the cost of which shall be due and payable to Landlord by Tenant
on demand.

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If, on account of the failure of Tenant to comply with the provisions of
this Section, Landlord is deemed a co-insurer by its insurance carrier,
then any loss or damage which Landlord shall sustain by reason thereof
shall be borne by Tenant and shall be immediately paid by Tenant as
additional rent upon receipt of a bill therefor and evidence of such loss.

B. LANDLORD

During the Term hereof, Landlord shall keep in full force and effect the
following insurance:

(1) Commercial general liability insurance with a limit of not less than
One Million Dollars ($1,000,000.00) combined single limit per
occurrence, against claims for bodily injury, death or property damage
liability at the Project;

(2) Fire, extended coverage and vandalism and malicious mischief insurance
insuring the Building and Project of which the Premises are a part, in
an amount not less than eighty percent (80%) (or such greater
percentage as may be required by law) of the full replacement cost
thereof; and

(3) Such other insurance as Landlord deems necessary in its sole and
absolute discretion.

All insurance policies shall be issued in the names of Landlord and
Landlord's lender, and any other party reasonably designated by Landlord as
an additional insured, as their interests appear. The insurance policies
shall provide that any proceeds shall be made payable to Landlord, or to
the holders of mortgages or deeds of trust encumbering Landlord's interest
in the Premises, Building, and Project, or to any other party reasonably
designated by Landlord as an additional insured, as their interests shall
appear. All insurance premiums for Landlord's insurance shall be included
in Common Operating Costs.

C. WAIVER OF SUBROGATION

Landlord and Tenant each hereby waives any and all rights of recovery
against the other, and against any other tenant or occupant of the Project
and against the officers, employees, agents, representatives, customers and
business visitors of such other party and of each such other tenant or
occupant of the Project, for loss of or damage to such waiving party or its
property or the property of others under its control, arising from any
cause insured against under any policy of property insurance required to be
carried by such waiving party pursuant to the provisions of this Lease (or
any other policy of property insurance carried by such waiving party in
lieu thereof) at the time of such loss or damage. The foregoing waiver
shall be effective whether or not a waiving party actually obtains and
maintains such insurance which such waiving party is required to obtain and
maintain pursuant to this Lease (or any substitute therefor). Landlord and
Tenant shall, upon obtaining the policies of insurance which they are
required to maintain hereunder, give notice to their respective insurance
carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.

SECTION XV. INDEMNITY

A. TENANT

Notwithstanding anything to the contrary herein, including without
limitation Section XV.B. and/or Section XV.C. above, Tenant agrees to
indemnify, defend and hold Landlord and its officers, directors, partners
and employees entirely harmless from and against all liabilities, losses,
demands, actions, expenses or claims, including reasonable

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attorneys' fees and court costs (collectively, "Claims"), for injury to or
death of any person or for damages to any property or for violation of law
arising out of or in any manner connected with (i) the use, occupancy or
enjoyment of the Premises, Building or Project by Tenant or Tenant's
agents, employees, invitees or contractors (the "Tenant's Agents") or any
work, activity or other things allowed or suffered by Tenant or Tenant's
Agents to be done in or about the Premises, Building or Project, (ii) any
breach or default in the performance of any obligation of Tenant under this
Lease, and (iii) any act or failure to act, whether negligent or otherwise
tortious, by Tenant or Tenant's Agents in or about the Premises, Building
or Project. The foregoing indemnification and hold harmless obligations of
Tenant shall not apply, however (but subject to Sections XIV.C. and XV.B.),
if and to the extent any Claim is determined by a court of competent
jurisdiction to have been caused by the gross negligence or willful
misconduct of Landlord; provided, however, that pending any such
determination, Tenant shall comply with its defense obligations pursuant to
the foregoing.

B. LIMITATION ON LANDLORD'S LIABILITY; RELEASE OF DIRECTORS, OFFICERS AND
PARTNERS OF LANDLORD

Tenant agrees that, in the event Tenant shall have any claim against
Landlord under this Lease arising out of the subject matter of this Lease,
Tenant's sole recourse shall be against the Landlord's interest in the
Building, for the satisfaction of any claim, Judgment or decree requiring
the payment of money by Landlord as a result of a breach hereof or
otherwise in connection with this Lease, and no other property or assets of
Landlord, its successors or assigns, shall be subject to the levy,
execution or other enforcement procedure for the satisfaction of any such
claim, judgment, injunction or decree. Moreover, Tenant agrees that
Landlord shall in no event and under no circumstances be responsible for
any consequential damages incurred or sustained by Tenant, or its
employees, agents, contractors or invitees as a result of or in any way
connected to Tenant's occupancy of the Premises. Tenant further hereby
waives any and all right to assert any claim against or obtain any damages
from, for any reason whatsoever, the directors, officers and partners of
Landlord, including all injuries, damages or losses to Tenant's property,
real and personal, whether known, unknown, foreseen, unforeseen, patent or
latent, which Tenant may have against Landlord or its directors, officers
or partners. Tenant understands and acknowledges the significance and
consequence of such specific waiver.

Landlord shall not be liable or responsible to Tenant for any loss or
damage to any property or person occasioned by theft, fire, act of God,
public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, or order of governmental body or authority, or for any damage
or inconvenience that may arise through repair or alteration of any part of
the Project, the Building or the Premises, or a failure to make any such
repairs, except as expressly provided in this Lease.

SECTION XVI. ASSIGNMENT AND SUBLETTING BY TENANT

A. Tenant shall not, directly or indirectly, voluntarily or by operation of
law, sell, assign, encumber, pledge or otherwise transfer or hypothecate
all or any part of the Premises or Tenant's leasehold estate hereunder
(collectively "Assignment"), or permit the Premises to be occupied by
anyone other than Tenant or sublet the Premises ("Sublease") or any portion
thereof without Landlord's prior written consent being had and obtained in
each instance, subject to the terms and conditions contained in this
Section; provided, however, that Landlord's consent shall not be required
in connection with, and the provisions of subsections XVI.C. and D. shall
not apply to, an Assignment of this Lease or a Sublease of the entire
Premises to any "affiliate" of Tenant, which as used in this Section XVI.,
shall mean an entity under common control with the original Tenant
hereunder, the surviving entity resulting from a merger or consolidation of
Tenant by or with another entity or the purchaser of all or substantially
all of Tenant's assets.

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<PAGE>

B. If Tenant desires at any time to enter into an Assignment of this Lease or
a Sublease of the Premises or any portion thereof, Tenant shall request, in
writing, at least sixty (60) days prior to the effective date of the
Assignment or Sublease, Landlord's consent to the Assignment or Sublease,
and shall provide Landlord with the following information:

(1) The name of the proposed assignee, subtenant or occupant;

(2) The nature of the proposed assignee's, subtenant's or occupant's
business to be carried on in the Premises;

(3) The terms and provisions of the proposed Assignment or Sublease and a
copy of such documents; and

(4) Such financial information concerning the proposed assignee,
subtenant or occupant which Landlord shall have requested following
its receipt of Tenant's request for consent.

C. At any time within thirty (30) days after Landlord's receipt of the notice
specified above, Landlord may by written notice to Tenant elect either to
(a) consent to the proposed Assignment or Sublease, (b) refuse to consent
to the proposed Assignment or Sublease, or (c) terminate this Lease in full
with respect to an Assignment or terminate in part with respect to a
Sublease and enter into a lease directly with the proposed assignee or
sublessee. Landlord and Tenant agree (by way of example and without
limitation) that Landlord shall be entitled to take into account any fact
or factor which Landlord reasonably deems relevant to such decision,
including but not necessarily limited to the following, all of which are
agreed to be reasonable factors for Landlord's consideration:

(1) The financial strength of the proposed assignee or subtenant (which
shall be at least equal to that of Tenant as of the date of execution
of this Lease).

(2) The experience of the proposed assignee or subtenant with respect to
businesses of the type and size which such assignee or subtenant
proposes to conduct in the Premises.

(3) The quality and nature of the business and/or services to be conducted
in or from the Premises by the proposed assignee or subtenant and in
any other locations which it has.

(4) Violation of exclusive use rights previously granted by Landlord to
other tenants of the Building or Project.

(5) The effect of the type of services and business which the proposed
assignee or subtenant proposes to conduct in the Premises upon the
tenant mix in the Building or in the portion of the Project which
contains the Premises, including duplication of services offered by
surrounding tenants and compatibility of the services and business
which such assignee or subtenant proposes to conduct in or offer from
the Premises with business and services conducted by surrounding
tenants in the Project.

(6) The quality of the appearance of the Premises resulting from any
remodeling or renovation to be conducted by the proposed assignee or
subtenant, and the compatibility of such quality with that of other
premises in the Building.

(7) Whether the business in the Premises is, and whether the business to
be operated by the proposed assignee or subtenant will be, a "place of
public accommodation."

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<PAGE>

(8) Whether there then exists any default by Tenant pursuant to this Lease
or any non-payment or non-performance by Tenant under this Lease
which, with the passage of time and/or the giving of notice, would
constitute a default under this Lease.

(9) Any fact or factor upon which Landlord reasonably concludes that the
business to be conducted by such assignee or subtenant will not be a
financial success in the Premises.

Moreover, Landlord shall be entitled to be reasonably satisfied that each
and every covenant, condition or obligation imposed upon Tenant by this
Lease and each and every right, remedy or benefit afforded Landlord by this
Lease is not impaired or diminished by such Assignment or Sublease. In no
event shall there be any substantial change in the use of the Premises in
connection with any Assignment or Sublease except as expressly approved in
writing by Landlord in advance. Landlord and Tenant acknowledge that the
express standards and provisions set forth in this Lease dealing with
Assignment and Sublease, including those set forth in subsections XVI.D.,
E. and G. have been freely negotiated and are reasonable at the date hereof
taking into account Tenant's proposed use of the Premises and the nature
and quality of the Building and Project. No withholding of consent by
Landlord for any reason deemed sufficient by Landlord shall give rise to
any claim by Tenant or any proposed assignee or subtenant or entitle Tenant
to terminate this Lease or to any abatement of rent. Approval of any
Assignment of Tenant's interest shall, whether or not expressly so stated,
be conditioned upon such assignee assuming in writing all obligations of
Tenant hereunder by a written instrument satisfactory to Landlord.

D. If Landlord consents to the Sublease or Assignment within said thirty (30)
day period, Tenant may enter into such Assignment or Sublease of the
Premises or portion thereof, but only upon the terms and conditions set
forth in the notice furnished by Tenant to Landlord pursuant to subsection
B. above; provided, however, that in connection with such Assignment or
Sublease, as a condition to Landlord's consent, Tenant shall pay to
Landlord one hundred percent (100%) of the excess, if any, of (i) in the
case of an Assignment, the rental and other payment obligations of the
proposed assignee under the terms of the proposed Assignment over the
rental and other payment obligations of Tenant under the terms of this
Lease, or (ii) in the case of a Sublease, the amount proposed to be paid by
the sublessee over the proportionate amount of rental and other payment
obligations required to be paid by Tenant to Landlord under the terms of
this Lease as applicable to the portion of the Premises so subleased.

E. No consent by Landlord to any Assignment or Sublease by Tenant, and no
Assignment or Subletting permitted hereunder for which Landlord's consent
is not required, shall relieve Tenant of any obligation to be performed by
Tenant under this Lease, whether arising before or after the Assignment or
Sublease. The consent by Landlord to any Assignment or Sublease shall not
relieve Tenant of the obligation to obtain Landlord's express written
consent to any other Assignment or Sublease. Any Assignment or Sublease
that is not in compliance with this Section shall be void and, at the
option of Landlord, shall constitute a material default by Tenant under
this Lease. The acceptance of rent by Landlord or payment to Landlord of
any other monetary obligation from a proposed assignee or sublessee shall
not constitute the consent by Landlord to such Assignment or Sublease.
Tenant shall promptly provide to Landlord a copy of the fully executed
Sublease or Assignment.

F. Any sale or other transfer, including transfer by consolidation, merger or
reorganization, of fifty percent (50%) or more of the voting stock of
Tenant, if Tenant is a corporation, or any sale or other transfer of fifty
percent (50%) or more of the partnership interest in Tenant, if Tenant is a
partnership, shall be an Assignment for purposes of this Section. As used
in this subsection, the term "Tenant" shall also mean any entity that has

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<PAGE>

guaranteed Tenant's obligation under this Lease, and the prohibition hereof
shall be applicable to any sales or transfers of stock or partnership
interests of said guarantor.

G. Each assignee, sublessee or other transferee, other than Landlord, shall
assume, as provided in this subsection all obligations of Tenant under this
Lease and shall be and remain liable jointly and severally with Tenant for
the payment of Monthly Rental and all other monetary obligations hereunder,
and for the performance of all the terms, covenants, conditions and
agreements herein contained on Tenant's part to be performed for the Term;
provided, however, that the assignee, sublessee, or other transferee shall
be liable to Landlord for rent only in the amount set forth in the
Assignment or Sublease. No Assignment shall be binding on Landlord unless
the assignee or Tenant shall deliver to Landlord a counterpart of the
Assignment and an instrument in recordable form that contains a covenant of
assumption by the assignee satisfactory in substance and form to Landlord,
consistent with the requirements of this subsection but the failure or
refusal of the assignee to execute such instrument of assumption shall not
release or discharge the assignee from its liability as set forth above.

H. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 ET SEQ., (the
"Bankruptcy Code"), any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid
or delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the estate of
Tenant within the meaning of the Bankruptcy Code. Any and all monies or
other considerations constituting Landlord's property under the preceding
sentence not paid or delivered to Landlord shall be held in trust for the
benefit of Landlord and be promptly paid or delivered to Landlord.

I. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, shall be deemed, without further act or
deed, to have assumed all of the obligations arising under this Lease on
and after the date of such assignment. Any such assignee shall upon demand
execute and deliver to Landlord an instrument confirming such assumption.

J. Tenant shall pay Landlord's expenses and attorneys' fees incurred in
processing an Assignment or Sublease, but in no event less than Five
Hundred Dollars ($500.00) for each such proposed transfer to cover the
legal review and processing expenses of Landlord, whether or not Landlord
shall grant its consent to such proposed transfers.

K. All options to extend, renew or expand, if any, contained in this Lease are
personal to Tenant and to any Affiliate to whom this Lease may be assigned
or to whom the Premises may be subleased. Consent by Landlord to any
Assignment or Subletting to any entity other than an Affiliate of Tenant
shall not include consent to the assignment or transfer of any such rights
with respect to the Premises or any special privileges or extra services
granted to Tenant by this Lease, or any addendum or amendment hereto or
letter of agreement. All such options, rights, privileges and extra
services shall terminate upon any such assignment or subletting to any
entity other than an Affiliate of Tenant unless Landlord specifically
grants in writing such options, rights, privileges and extra services to
such assignee or subtenant.

SECTION XVII. TRANSFER OF LANDLORD'S INTEREST

In the event Landlord shall sell or otherwise convey its title to the Building,
then, after the effective date of such sale or conveyance, Landlord shall have
no further liability under this

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<PAGE>

Lease to Tenant except as to matters of liability which have accrued and are
unsatisfied as of the date of sale or conveyance, and Tenant shall seek
performance solely from Landlord's purchaser or successor in title. In
connection with such sale or transfer, Landlord may assign its interest under
this Lease without notice to or consent by Tenant. In such event, Tenant agrees
to be bound to any successor Landlord.

SECTION XVIII. DAMAGE AND DESTRUCTION

A. MINOR INSURED DAMAGE

In the event the Premises or the Building, or any portion thereof, is
damaged or destroyed by any casualty that is covered by the insurance
maintained by Landlord pursuant to Section XIV. above, then Landlord shall
rebuild, repair and restore the damaged portion thereof, provided that (1)
the amount of insurance proceeds available to Landlord equals or exceeds
the cost of such rebuilding, restoration and repair, (2) such rebuilding,
restoration and repair can be completed within one hundred eighty (180)
days after the work commences in the opinion of a registered architect or
engineer appointed by Landlord, (3) the damage or destruction has occurred
more than twelve (12) months before the expiration of the Term, and (4)
such rebuilding, restoration or repair is then permitted, under applicable
governmental laws, rules and regulations, to be done in such a manner as to
return the damaged portion thereof to substantially its condition
immediately prior to the damage or destruction, including, without
limitation, the same net rentable floor area. To the extent that insurance
proceeds must be paid to a mortgagee or beneficiary under, or must be
applied to reduce any indebtedness secured by, a mortgage or deed of trust
encumbering the Premises, Building or Project, such proceeds, for the
purposes of this subsection, shall be deemed not available to Landlord
unless such mortgagee or beneficiary permits Landlord to use such proceeds
for the rebuilding, restoration and repair of the damaged portion thereof.
Notwithstanding the foregoing, Landlord shall have no obligation to repair
any damage to, or to replace any of, Tenant's personal property,
furnishings, trade fixtures, equipment or other such property or effects of
Tenant.

B. MAJOR OR UNINSURED DAMAGE

In the event the Premises or the Building, or any portion thereof, is
damaged or destroyed by any casualty to the extent that Landlord is not
obligated, under subsection A. above, to rebuild, repair or restore the
damaged portion thereof, then Landlord shall, within sixty (60) days after
such damage or destruction, notify Tenant of its election, at its option,
to either (1) rebuild, restore and repair the damaged portions thereof, in
which case Landlord's notice shall specify the time period within which
Landlord estimates such repairs or restoration can be completed; or (2)
terminate this Lease effective as of the date the damage or destruction
occurred. If Landlord does not give Tenant written notice within sixty (60)
days after the damage or destruction occurs of its election to rebuild or
restore and repair the damaged portions thereof, Landlord shall be deemed
to have elected to terminate this Lease. Notwithstanding the foregoing,
where the estimated repair time exceeds one hundred eighty (180) days,
Tenant shall have the right to terminate the Lease provided Tenant is not
then in default hereunder and the damage or destruction was not caused in
whole or in part by Tenant or anyone for whom Tenant is responsible, and
provided further that Tenant notifies Landlord of its election to terminate
the Lease in writing within ten (10) days after Landlord's notice is given
pursuant to the first sentence of this subsection B. If Tenant is entitled
to and properly exercises the foregoing option strictly in the manner and
within the time set forth herein, then the Lease shall terminate effective
as of the later of the date of Tenant's election notice or the date Tenant
vacated the Premises.

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<PAGE>

C. ABATEMENT OF RENT

There shall be an abatement of rent by reason of damage to or destruction
of the Premises or the Building, or any portion thereof, to the extent that
Landlord receives insurance proceeds for loss of rental income attributable
to the Premises, commencing on the date that the damage to or destruction
of the Premises or Building has occurred.

D. WAIVER

Tenant shall have no claim against Landlord for any damage suffered by
Tenant by reason of any such damage, destruction, repair or restoration.
Tenant waives the provisions of Civil Code Sections 1932(2) and 1933(4) and
any present or future laws or case decisions to the same effect. Upon
completion of such repair or restoration, Tenant shall promptly refixture
the Premises substantially to the condition they were in prior to the
casualty and shall reopen for business if closed by the casualty.

SECTION XIX. CONDEMNATION

A. TOTAL OR PARTIAL TAKING

If all or substantially all of the Premises is condemned or taken in any
manner for public or quasi-public use, including but not limited to, a
conveyance or assignment in lieu of the condemnation or taking, this Lease
shall automatically terminate as of the earlier of the date on which actual
physical possession is taken by the condemnor or the date of dispossession
of Tenant as a result of such condemnation or other taking. If less than
all or substantially all of the Premises is so condemned or taken, this
Lease shall automatically terminate only as to the portion of the Premises
so taken as of the earlier of the date on which actual physical possession
is taken by the condemnor or the date of dispossession of Tenant as a
result of such condemnation or taking. If such portion of the Building is
condemned or otherwise taken so as to require, in the opinion of Landlord,
a substantial alteration or reconstruction of the remaining portions
thereof, this Lease may be terminated by Landlord, as of the date on which
actual physical possession is taken by the condemnor or dispossession of
Tenant as a result of such condemnation or taking, by written notice to
Tenant within sixty (60) days following notice to Landlord of the date on
which such physical possession is taken or dispossession will occur.

B. AWARD

Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi-public use,
including, without limitation, any award made for the value of the
leasehold estate created by this Lease. No award for any partial or total
taking shall be apportioned, and Tenant hereby assigns to Landlord any
award that may be made in such condemnation or other taking, together with
any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof. Although all damages in the event of any condemnation are
to belong to Landlord whether such damages are awarded as compensation for
diminution in value of the leasehold or to the fee of the Premises, Tenant
shall have the right to claim and recover from the condemnor, but not from
Landlord, such compensation as may be separately awarded or recoverable by
Tenant in Tenant's own right on account of damages to Tenant's business by
reason of the condemnation and for or on account of any cost or loss to
which Tenant might be put in removing Tenant's merchandise, furniture and
other personal property, fixtures, and equipment or for the interruption of
or damage to Tenant's business.

<PAGE>

C. ABATEMENT IN RENT

In the event of a partial condemnation or other taking that does not result
in a termination of this Lease as to the entire Premises pursuant to this
Section the rent and all other charges shall abate in proportion to the
portion of the Premises taken by such condemnation or other taking. If this
Lease is terminated, in whole or in part, pursuant to any of the provisions
of this Section all rentals and other charges payable by Tenant to Landlord
hereunder and attributable to the Premises taken shall be paid up to the
date upon which actual physical possession shall be taken by the condemnor.
Landlord shall be entitled to retain all of the Security Deposit until such
time as this Lease is terminated as to all of the Premises.

D. TEMPORARY TAKING

If all or any portion of the Premises is condemned or otherwise taken for
public or quasi-public use for a limited period of time, this Lease shall
remain in full force and effect and Tenant shall continue to perform all
terms, conditions and covenants of this Lease; provided, however, the rent
and all other charges payable by Tenant to Landlord hereunder shall abate
during such limited period in proportion to the portion of the Premises
that is rendered untenantable and unusable as a result of such condemnation
or other taking. Landlord shall be entitled to receive the entire award
made in connection with any such temporary condemnation or other taking.
Tenant shall have the right to claim and recover from the condemnor, but
not from Landlord, such compensation as may be separately awarded or
recoverable by Tenant in Tenant's own right on account of damages to
Tenant's business by reason of the condemnation and for or on account of
any cost or loss to which Tenant might be put in removing Tenant's
merchandise, furniture and other personal property, fixtures and equipment
or for the interruption of or damage to Tenant's business.

E. TRANSFER OF LANDLORD'S INTEREST TO CONDEMNOR

Landlord may, without any obligation to Tenant, agree to sell and/or convey
to the condemnor the Premises, the Building, the Project or any portion
thereof, sought by the condemnor, free from this Lease and the rights of
Tenant hereunder, without first requiring that any action or proceeding be
instituted or, if instituted, pursued to a judgment.

SECTION XX. DEFAULT

A. TENANT'S DEFAULT

The failure by Tenant to perform any one or more of the following
obligations shall constitute a default hereunder by Tenant:

(1) If Tenant abandons all or a substantial portion of the Premises
(vacation of the Premises while continuing to pay rent and perform all
other obligations of the tenant hereunder shall not be deemed
"abandonment");

(2) If Tenant fails to pay any rent or other charges required to be paid
by Tenant under this Lease and such failure continues for five (5)
days after such payment is due and payable; provided, however, that
the obligation of Tenant to pay a late charge or interest pursuant to
this Lease below shall commence as of the due date of the rent or such
other monetary obligation and not on the expiration of such five (5)
day grace period;

<PAGE>

(3) If Tenant involuntarily transfers Tenant's interest in this Lease or
voluntarily transfers (attempted or actual) its interest in this Lease
or makes any Alterations, in either case without Landlord's prior
written consent;

(4) If Tenant files a voluntary petition for relief or if a petition
against Tenant in a proceeding under the Federal Bankruptcy Laws or
other insolvency laws is filed and not withdrawn or dismissed within
forty-five (45) days thereafter, or if under the provisions of any law
providing for reorganization or winding up of corporations, any court
of competent jurisdiction assumes jurisdiction, custody or control of
Tenant or any substantial part of the Premises or any of Tenant's
personal property located at the Premises and such jurisdiction,
custody or control remains in force unrelinquished, unstayed or
unterminated for a period of forty-five (45) days;

(5) If in any proceeding or action in which Tenant is a party, a trustee,
receiver, agent or custodian is appointed to take charge of the
Premises or any of Tenant's personal property located at the Premises
(or has the authority to do so) for the purpose of enforcing a lien
against the Premises or Tenant's personal property;

(6) If Tenant shall make any general assignment for the benefit of
creditors or convene a meeting of its creditors or any class thereof
for the purpose of effecting a moratorium upon or composition of its
debts, or any class thereof;

(7) If Tenant fails to discharge any lien placed upon the Premises, the
Building or the Project by Tenant or any person claiming under, by or
through Tenant within ten (10) days of the imposition of such lien;

(8) If Tenant fails to promptly and fully perform any other covenant,
condition or agreement contained in this Lease (other than
subparagraphs (1) through (7) above) and such failure continues for
ten (10) days after written notice thereof from Landlord to Tenant, or
if such failure cannot be completely cured within such ten (10) day
period, then if Tenant fails to commence such cure within such ten
(10) day period and thereafter proceed to completely cure such failure
within thirty (30) days after such written notice; or

(9) If Tenant is a partnership or consists of more than one (1) person or
entity, if any partner of the partnership or other person or entity is
involved in any of the acts or events described in subparagraphs (1)
through (8) above.

B. REMEDIES

Upon the occurrence of a default by Tenant that is not cured by Tenant
within any applicable grace period specified above, Landlord shall have the
following rights and remedies in addition to all other rights and remedies
available to Landlord at law or in equity, which shall be cumulative and
non-exclusive:

(1) The right to declare this Lease and the term of this Lease terminated;
re-enter the Premises and the improvements located thereon, with or
without process of law; to eject all parties in possession thereof
therefrom; repossess and enjoy the Premises together with all said
improvements; and to recover from Tenant all of the following:

(a) The worth at the time of award of the unpaid rent which had been
earned at the time of termination;

(b) The worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the
time of award

<PAGE>

exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided;

(c) The worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds
the amount of rental loss that Tenant proves could be reasonably
avoided; and

(d) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not
limited to, any attorneys' fees, broker's commissions or
finder's fees (not only in connection with the reletting of the
Premises, but also that portion of any leasing commission paid
by Landlord in connection with this Lease which is applicable
to that portion of the Term which is unexpired as of the date
on which this Lease is terminated); the then unamortized cost
of any tenant improvements constructed for or on behalf of
Tenant by or at the expense of Landlord or of any moving
allowance or other concession made available to Tenant and/or
paid by Landlord pursuant to this Lease; any costs for repairs,
clean-up, refurbishing, removal (including the repair of any
damage caused by such removal) and storage (or disposal) of
Tenant's personal property, equipment, fixtures, and anything
else that Tenant is required (under this Lease) to remove but
does not remove; any costs for alterations, additions and
renovations; and any other costs and expenses, including
reasonable attorneys' fees and costs, incurred by Landlord in
regaining possession of and reletting (or attempting to relet)
the Premises.

(2) The right to continue this Lease in effect and to enforce all of
Landlord's rights and remedies under this Lease, including the right
to recover rent and any other additional monetary charges as they
become due, for as long as Landlord does not terminate Tenant's right
to possession. Acts of maintenance or preservation, efforts to relet
the Premises or the appointment of a receiver upon Landlord's
initiative to protect its interest under this Lease or Landlord's
withholding of consent to an Assignment or Subletting pursuant to the
terms and conditions of Section XVI. above shall not constitute a
termination of Tenant's right to possession.

(3) The foregoing provisions of clause (2) shall apply even though Tenant
has breached the Lease and abandoned the Premises, in which case
Landlord shall have the right to re-enter the Premises with or without
process of law to eject therefrom all parties in possession thereof,
and, without terminating this Lease, at any time and from time to
time, but without obligation to do so, to relet the Premises and the
improvements located therein or any part or parts of any thereof for
the account of Tenant, or otherwise, on such conditions as Landlord in
its discretion may deem proper, with the right to make alterations and
repairs to the Premises in connection therewith, and to receive and
collect the rents therefor, and apply the same (i) first to the
payment of such costs and expenses as Landlord may have paid, assumed
or incurred: (A) in recovering possession of the Premises and said
improvements, including attorneys' fees, and costs; (B) expenses for
placing the Premises and said improvements in good order and
condition, for decorating and preparing the Premises for reletting;
(C) for making any alterations, repairs, changes or additions to the
Premises that may be necessary or convenient; and (D) all other costs
and expenses, including leasing and subleasing commissions, and
charges paid, assumed or incurred by Landlord in or upon reletting the
Premises and said improvements, or in fulfillment of the covenants of
Tenant under this Lease; (ii) then to the payment of Monthly Rental,
Tenant's Proportionate Share of Common Operating Costs, and other
monetary obligations due and unpaid hereunder; and (iii) any balance
shall be held by

<PAGE>

Landlord and applied in payment of future amounts as the same may
become due and payable hereunder. Any such reletting may be for the
remainder of the term of this Lease or for a longer or shorter period.
Landlord may execute any lease or sublease made pursuant to the terms
of this clause (3) either in its own name or in the name of Tenant as
its agent, as Landlord may see fit. The tenant(s) or subtenant(s)
thereunder shall be under no obligation whatsoever with regard to the
application by Landlord of any rent collected by Landlord from such
tenant or subtenant to any and all sums due and owing or which may
become due and owing under the provisions of this Lease, nor shall
Tenant have any right or authority whatever to collect any rent
whatever from such tenant(s) or subtenant(s). If Tenant has been
credited with any rent received by such reletting and such rent shall
not be promptly paid to Landlord by the tenant(s) or subtenant(s), or
if such rentals received from reletting during any month are less than
those to be paid during that month by Tenant hereunder, Tenant shall
pay any such deficiency to Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord as soon
as ascertained, any costs and expenses incurred by Landlord in such
reletting or in making such alterations and repairs not covered by the
rentals received from such reletting. For all purposes set forth in
this subsection, Landlord is hereby irrevocably appointed as agent for
Tenant. No taking of possession of the Premises by Landlord shall be
construed as Landlord's acceptance of a surrender of the Premises by
Tenant or an election of Landlord's part to terminate this Lease
unless written notice of such intention is given to Tenant.
Notwithstanding any such subletting without termination, Landlord may
at any time thereafter elect to terminate this Lease for such previous
breach. Election by Landlord to proceed pursuant to this clause (3)
shall be made upon written notice to Tenant and shall be deemed an
election of the remedy described in California Civil Code Section
1951.4 (providing that a lessor of real property may continue a lease
in effect after a lessee's breach or abandonment and recover rent as
it becomes due, if the lessee has the right to sublet or assign,
subject only to reasonable limitations). If Landlord elects to pursue
such remedy, unless Landlord relets the Premises, Tenant shall have
the right to sublet the Premises and to assign its interest in this
Lease, subject to all of the standards and conditions set forth in
Section XVI. Landlord may elect to terminate the prosecution of such
remedy at any time by written notice to Tenant, and the right of
Tenant to sublet or assign shall terminate upon receipt by Tenant of
such notice.

(4) The right to have a receiver appointed for Tenant, upon application by
Landlord to take possession of the Premises and to apply any rental
collected from Premises and to exercise all other rights and remedies
granted to Landlord pursuant to this subsection.

SECTION XXI. LATE PAYMENTS/INTEREST AND LATE CHARGES

A. INTEREST

Any amount due from Tenant to Landlord which is not paid when due shall
bear interest at the maximum rate permitted by law from the date such
payment is due until paid, except that amounts spent by Landlord on behalf
of Tenant shall bear interest at such rate from the date of disbursement by
Landlord which Tenant agrees is to compensate Landlord for Tenant's use of
Landlord's money after it is due. Payment of such interest shall not excuse
or cure any default by Tenant pursuant to this Lease. Such rate shall
remain in effect after the occurrence of any breach or default hereunder by
Tenant to and until payment of the entire amount due.

<PAGE>

B. LATE CHARGES

TENANT HEREBY ACKNOWLEDGES THAT IN ADDITION TO LOST INTEREST, THE LATE
PAYMENT BY TENANT TO LANDLORD OF RENT OR ANY OTHER SUMS DUE HEREUNDER WILL
CAUSE LANDLORD TO INCUR OTHER COSTS NOT CONTEMPLATED IN THIS LEASE, THE
EXACT AMOUNT OF WHICH WILL BE EXTREMELY DIFFICULT AND IMPRACTICABLE TO
ASCERTAIN. SUCH OTHER COSTS INCLUDE, BUT ARE NOT LIMITED TO, PROCESSING,
ADMINISTRATIVE AND ACCOUNTING COSTS, AND LATE CHARGES WHICH MAY BE IMPOSED
UPON LANDLORD BY THE TERMS OF ANY ENCUMBRANCE COVERING THE PREMISES.
ACCORDINGLY, IF ANY INSTALLMENT OF RENT OR ANY ADDITIONAL RENT OR OTHER SUM
DUE FROM TENANT SHALL NOT BE RECEIVED BY LANDLORD WHEN SUCH AMOUNT SHALL BE
DUE (WITHOUT REGARD TO ANY GRACE PERIOD GRANTED IN THIS LEASE), TENANT
SHALL PAY TO LANDLORD AS ADDITIONAL RENT HEREUNDER A LATE CHARGE EQUAL TO
TEN PERCENT (10%) OF SUCH OVERDUE AMOUNT. THE PARTIES HEREBY AGREE THAT (I)
SUCH LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS
LANDLORD WILL INCUR IN PROCESSING SUCH DELINQUENT PAYMENT BY TENANT, (II)
SUCH LATE CHARGE SHALL BE PAID TO LANDLORD AS LIQUIDATED DAMAGES FOR EACH
DELINQUENT PAYMENT, AND (III) THE PAYMENT OF THE LATE CHARGE IS TO
COMPENSATE LANDLORD FOR THE ADDITIONAL ADMINISTRATIVE EXPENSE INCURRED BY
LANDLORD IN HANDLING AND PROCESSING DELINQUENT PAYMENTS.

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
---------------------- ----------------------
Landlord's Initials Tenant's Initials

C. CONSECUTIVE LATE PAYMENT OF RENT

Following each second consecutive late payment of rent, Landlord shall have
the option (i) to require that beginning with the first payment of rent
next due, rent shall no longer be paid in monthly installments but shall be
payable quarterly three (3) months in advance and/or (ii) to require that
Tenant increase the amount, if any, of the Security Deposit by one hundred
percent (100%), which additional Security Deposit shall be retained by
Landlord, and may be applied by Landlord, in the manner provided for
Security Deposits in this Lease.

D. NO WAIVER

Neither assessment nor acceptance of partial payments, interest or late
charges by Landlord shall constitute a waiver of Tenant's default with
respect to such overdue amount, nor prevent Landlord from exercising any of
its other rights and remedies under this Lease. Nothing contained in this
Section shall be deemed to condone, authorize, sanction or grant to Tenant
an option for the late payment of rent, additional rent or other sums due
hereunder, and Tenant shall be deemed in default with regard to any such
payments should the same not be made by the date on which they are due.

SECTION XXII. [INTENTIONALLY DELETED]

SECTION XXIII. HOLDING OVER

Any holding over by Tenant in the possession of the Premises, or any portion
thereof, after the expiration or earlier termination of the Term, with or
without the consent of Landlord, shall be construed to be a tenancy from
month to month at two hundred percent (200%) of the Monthly Rental herein
specified for the last month in the Term (prorated on a monthly basis) unless

<PAGE>

Landlord shall specify a lesser amount for rent in its sole discretion, together
with an amount estimated by Landlord for the monthly Common Operating Costs
payable under this Lease, and shall otherwise be on the terms and conditions
herein specified as far as applicable. Any holding over without Landlord's
consent shall constitute a default by Tenant and shall entitle Landlord to
pursue all remedies provided in this Lease and Tenant shall be liable for any
and all direct or consequential damages or losses of Landlord resulting from
Tenant's holding over without Landlord's consent.

SECTION XXIV. ATTORNEYS' FEES

Tenant shall pay to Landlord all amounts for costs and expenses, including, but
not limited to, reasonable attorneys' fees and amounts paid to any collection
agency, incurred by Landlord in connection with any breach or default by Tenant
under this Lease or incurred in order to enforce or interpret the terms or
provisions of this Lease. Tenant shall also pay to Landlord all such amounts,
including attorneys' fees, incurred by Landlord in responding to any request by
Tenant (a) to amend or modify this Lease or (b) to prepare any statement or
document in connection with this Lease, including without limitation estoppel
certificates or subordination agreements or the like. Such amounts shall be
payable upon demand. In addition, if any action shall be instituted by either
Landlord or Tenant for the enforcement or interpretation of any of its rights
or remedies in or under this Lease, the prevailing party shall be entitled to
recover from the losing party all costs incurred by the prevailing party in said
action and any appeal therefrom, including reasonable attorneys' fees and court
costs to be fixed by the court therein. In the event Landlord is made a party to
any litigation between Tenant and any third party, then Tenant shall pay all
costs and attorneys' fees incurred by or imposed upon Landlord in connection
with such litigation; provided, however, if Landlord is ultimately held to be
liable, then Landlord shall reimburse Tenant for the cost of any attorneys' fees
paid by Tenant on behalf of Landlord.

SECTION XXV. MORTGAGE PROTECTION/SUBORDINATION

A. SUBORDINATION

The rights of Tenant under this Lease are and shall be, at the option of
Landlord, either subordinate or superior to any mortgage or deed of trust
(including a consolidated mortgagee or deed of trust) constituting a lien
on the Premises, Building or Project, or Landlord's interest therein or any
part thereof, whether such mortgage or deed of trust has heretofore been,
or may hereafter be, placed upon the Premises by Landlord, and to any
ground or master lease if Landlord's title to the Premises or any part
thereof is or shall become a leasehold interest. Notwithstanding the
foregoing, unless and until Tenant, Landlord and Landlord's lender with a
beneficial interest under the deed of trust recorded against the Project
prior to the date of mutual execution and delivery hereof, shall have
mutually executed and delivered a Subordination, Non-Disturbance and
Attornment Agreement, substantially in the form of EXHIBIT I hereto (which
Tenant shall, upon request by Landlord, execute and deliver, and Tenant's
failure to do so within ten (10) days after written demand therefor by
Landlord shall constitute a default by Tenant under this Lease), but
subject to Tenant's obligation to pay Monthly Rental for the first month of
the initial Term upon execution and delivery hereof by Tenant, Tenant's
obligation to pay Monthly Rental shall be suspended (but not excused or
waived) until Landlord delivers to Tenant an agreement, executed by
Landlord and Landlord's lender, substantially in the form of EXHIBIT I
hereto, upon receipt of which Tenant shall forthwith and without any
further demand pay to Landlord any Monthly Rental accrued but payment of
which was suspended pursuant to the foregoing sentence. To further assure
the foregoing subordination or superiority, Tenant shall, upon Landlord's
request, together with the request of any mortgagee under a mortgage or
beneficiary under a deed of trust or ground or master lessor, execute any
instrument (including without limitation an amendment to this Lease that
does not materially and adversely affect Tenant's rights or duties under
this Lease), or instruments intended to subordinate this Lease, or at the

<PAGE>

option of Landlord, to make it superior to any mortgage, deed of trust, or
ground or master lease. Notwithstanding any such subordination, Tenant's
right to occupy the Premises pursuant to this Lease shall remain in effect
for the full Term as long as Tenant is not in default hereunder.

B. ATTORNMENT

Notwithstanding subsection A. above, Tenant agrees (1) to attorn to any
mortgagee of a mortgage or beneficiary of a deed of trust encumbering the
Premises and to any party acquiring title to the Premises by judicial
foreclosure, trustee's sale, or deed in lieu of foreclosure, and to any
ground or master lessor, as the successor to Landlord hereunder, (2) to
execute any attornment agreement reasonably requested by a mortgagee,
beneficiary, ground or master lessor, or party so acquiring title to the
Premises, and (3) that this Lease, subject to the rights under any
outstanding non-disturbance agreement, at the option of such mortgagee,
beneficiary, or ground or master lessor, or other party, shall remain in
force notwithstanding any such judicial foreclosure, trustee's sale, deed
in lieu of foreclosure, or merger of titles. Notwithstanding the foregoing,
neither a mortgagee of a mortgage or beneficiary of a deed of trust
encumbering the Premises, any party acquiring title to the Premises by
judicial foreclosure, trustee sale, or deed in lieu of foreclosure, or any
ground lessor or master lessor, as the successor to Landlord hereunder,
shall be liable or responsible for any breach of a covenant contained in
this Lease that occurred before such party acquired its interest in the
Premises or for any continuing breach thereof until after the successor
Landlord has received the notice and right to cure as provided herein, and
no such party shall be liable or responsible for any security deposits held
by Landlord hereunder which have not been transferred or actually received
by such party, and such party shall not be bound by any payment of rent or
additional rent for more than two (2) months in advance.

C. AMENDMENT

If any lending institution with which Landlord has negotiated or may
negotiate for financing for the Building or Project requires any changes to
this Lease, Tenant shall promptly execute and deliver an amendment to this
Lease prepared by Landlord and embodying such changes, so long as such
changes do not materially increase Tenant's obligations hereunder. In the
event that Tenant shall fail to execute and deliver such amendment within
twenty (20) days after receipt thereof by Tenant, such failure shall
constitute a default hereunder by Tenant and shall entitle Landlord to all
remedies available to a landlord against a defaulting tenant pursuant to a
written lease, including but not limited to those remedies set forth in
Section XX.

SECTION XXVI. ESTOPPEL CERTIFICATE/FINANCIAL STATEMENTS

A. ESTOPPEL CERTIFICATE

Tenant, at any time and from time to time upon not less than ten (10) days'
prior written notice from Landlord, agrees to execute and deliver to
Landlord a statement in the form provided by Landlord (a) certifying that
this Lease is unmodified and in full force and effect, or, if modified,
stating the nature of such modification and certifying that this Lease, as
so modified, is in full force and effect and the date to which the rent and
other charges are paid in advance, if any; (b) acknowledging that there are
not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if they are claimed evidencing the
status of this Lease; (c) acknowledging the amount of the Security Deposit
held by Landlord; and (d) containing such other information regarding this
Lease or Tenant as Landlord reasonably requests. Tenant's failure to
deliver an estoppel certificate within such time shall be conclusive upon
Tenant that (i) this Lease is in full force and effect without modification
except as may be represented by Landlord, (ii) to Tenant's knowledge there
are no uncured defaults in

<PAGE>

Landlord's performance, (iii) no rent has been paid in advance except as
set forth in this Lease, and (iv) such other information regarding this
Lease and Tenant set forth therein by Landlord is true and complete.

B. FURNISHING OF FINANCIAL STATEMENTS

Landlord has reviewed the financial statements, if any, requested of the
Tenant and has relied upon the truth and accuracy thereof with Tenant's
knowledge and representations of the truth and accuracy of such statements
and that said statements accurately and fairly depict the financial
condition of Tenant. Said financial statements are an inducing factor and
consideration for the entering into of this Lease by Landlord with this
particular Tenant. Tenant shall, at any time and from time to time upon not
less than ten (10) days' prior written notice from Landlord, furnish
Landlord with (a) Tenant's most recent audited financial statements,
including a balance sheet and income statement, or a document in which
Tenant states that its books are not independently audited and (b)
unaudited financial statements, including a balance sheet and income
statement, dated within ninety (90) days of the request from Landlord.

SECTION XXVII. PARKING SEE ADDENDUM SECTION XXXV.F.

Landlord agrees to maintain or cause to be maintained an automobile parking area
and to maintain and operate, or cause to be maintained and operated, said
automobile parking area during the Term of this Lease for the benefit and use of
the customers, service suppliers, other invitees and employees of Tenant.
Whenever the words "automobile parking area" or "parking area" are used in this
Lease, it is intended that the same shall include, whether in a surface parking
area or a parking structure, the automobile parking stalls, driveways, loading
docks, truck areas, service drives, entrances and exits and sidewalks,
landscaped areas, pedestrian passageways in conjunction therewith and other
areas designed for parking. Landlord shall keep said automobile parking area in
a neat, clean and orderly condition, lighted and landscaped, and shall repair
any damage to the facilities thereof, the cost of which shall be included in
Common Operating Costs. Nothing contained herein shall be deemed to impose
liability upon Landlord for personal injury or theft, for damage to any motor
vehicle, or for loss of property from within any motor vehicle, which is
suffered by Tenant or any of its employees, customers, service suppliers or
other invitees in connection with their use of said automobile parking area.
Landlord shall also have the right to establish such reasonable rules and
regulations as may be deemed desirable, at Landlord's sole discretion, for the
proper and efficient operation and maintenance of said automobile parking area.
Such rules and regulations may include, without limitation, the establishment of
charges for parking therein (on either a reserved or unreserved basis if
required by applicable governmental requirements, for the initial Term only and,
thereafter, in Landlord's sole discretion) by tenants of the Building and
Project as well as by their employees, customers and service suppliers.

Landlord shall at all times during the Term hereof have the sole and
exclusive control of the automobile parking area, and may at any time during
the Term hereof exclude and restrain any person from use or occupancy
thereof; excepting, however, Tenant and employees, customers, service
suppliers and other invitees of Tenant and of other tenants in the Building
and Project who make use of said area in accordance with any rules and
regulations established by Landlord from time to time with respect thereto.
The rights of Tenant and its employees, customers, service suppliers and
invitees referred to in this Section XXVII. shall at all times be subject to
(i) the rights of Landlord and other tenants in the Building and Project to
use the same in common with Tenant and its employees, customers, service
suppliers and invitees, (ii) the availability of parking spaces in said
automobile parking area, and (iii) Landlord's right to change the location of
any assigned reserved parking spaces in such instances as shall be determined
at Landlord's sole discretion. Notwithstanding Landlord's exclusive control
and obligations to provide a parking area, Landlord is not responsible or
liable for any damage to any automobiles or persons in the parking area.
Without in any way limiting the generality of the foregoing or of Section
IX.D. above, Tenant specifically acknowledges and agrees that it

<PAGE>

shall be solely responsible, and hereby assumes the risk, for any damage or
injury arising from, pertaining to or otherwise connected with any use of the
parking areas by Tenant, its employees, invitees, contractors and agents at any
time after the Building's normal business hours.

SECTION XXVIII. SIGNS; NAME OF BUILDING SEE ADDENDUM SECTION XXXV.G.

Tenant shall not have the right to place, construct, or maintain on or about the
Premises, Building or Project, or in any interior portions of the Premises that
may be visible from the exterior of the Building or Common Areas, any signs,
names, insignia, trademark, advertising placard, descriptive material or any
other similar item ("Sign") without Landlord's prior written consent, which
consent may be withheld in Landlord's sole discretion; provided, however, any
Signs are further subject to approval of any applicable governmental authority
and/or compliance with applicable governmental requirements. In the event
Landlord consents to Tenant placing a Sign on or about the Premises, Building or
Project, any such Sign shall be subject to Landlord's approval of the color,
size, style and location of such Sign, and shall conform to any current or
future Sign criteria established by Landlord for the Building or Project. If
Landlord enacts a Sign criteria or revises an existing Sign criteria, after
Tenant has erected a Sign to which Landlord has granted its consent, if Landlord
so elects, Tenant agrees, at Landlord's expense, subject to Landlord's prior
approval of the cost thereof, to make the necessary changes to its Sign in order
to conform the Sign to Landlord's Sign criteria, as enacted or revised,
provided that such changes shall be limited to the color, size, style and
location of Tenant's Sign and that Tenant shall not be required to change the
content of its Sign. In the event Landlord consents to Tenant's placement of a
Sign on the Building, Tenant shall, at its sole cost, remove such Sign from the
Building at the end of the Term, restore the Building to the same condition as
before the installation of the Sign, ordinary wear and tear excepted and remove
any discoloration of the Building caused by the presence of such sign.

Landlord reserves the right at any time it deems necessary or appropriate to (a)
place Signs at any location on the Building and Project as it deems necessary
and (b) change the name, address or designation of the Building and Project.

SECTION XXIX. QUIET ENJOYMENT

Upon payment by Tenant of the rents herein provided, and upon the observance and
performance of all the covenants, terms and conditions on Tenant's part to be
observed and performed, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term without hindrance or interruption by Landlord or any other
person or persons lawfully or equitably claiming by, through or under Landlord,
subject, nevertheless, to the terms and conditions of this Lease, and any
mortgage and/or deed of trust to which this Lease is subordinate.

SECTION XXX. BROKER

Tenant warrants and represents that it has not dealt with any real estate broker
or agent in connection with this Lease or its negotiation except the Broker
identified in Section I.N. Tenant shall indemnify and hold Landlord harmless
from any cost, expense or liability (including costs of suit and reasonable
attorneys' fees) for any compensation, commission or fees claimed by any other
real estate broker or agent in connection with this Lease or its negotiation by
reason of any act of Tenant.

SECTION XXXI. NOTICES

Any notice, demand, approval, consent, bill, statement or other communication
("Notice") required or desired to be given under this Lease shall be in writing,
shall be directed to Tenant at Tenant's Address for Notice or to Landlord at
Landlord's Address for Notice and shall be

<PAGE>

personally served or given by pre-paid certified U.S. Mail or "overnight"
delivery service. In the case of personal delivery, any Notice shall be deemed
to have been given when delivered; in the case of service by certified mail, any
Notice shall be deemed delivered of the date of receipt, refusal or non-delivery
indicated on the return receipt; and in the case of overnight delivery service,
any Notice shall be deemed given when delivered as evidenced by a receipt. If
more than one Tenant is named under this Lease, service of any Notice upon any
one of said Tenants shall be deemed as service upon all of such Tenants. The
parties hereto and their respective heirs, successors, legal representatives,
and assigns may from time to time change their respective addresses for Notice
by giving at least fifteen (15) days' written notice to the other party,
delivered in compliance with this Section.

SECTION XXXII. NOTICE AND CURE TO LANDLORD AND MORTGAGEE

On any act or omission by Landlord which might give, or which Tenant claims or
intends to claim gives, Tenant the right to damages from Landlord or the right
to terminate this Lease by reason of a constructive or actual eviction from all
or part of the Premises, or otherwise, Tenant shall not sue for damages or
attempt to terminate this Lease until it has given written notice of the act or
omission to Landlord and to the holder(s) of the indebtedness or other
obligations secured by any mortgage or deed of trust affecting the Premises as
identified by Landlord, and a reasonable period of time for remedying the act or
omission has elapsed following the giving of the notice, during which time
Landlord and the lienholder(s), or either of them, their agents or employees,
may enter upon the Premises and do therein whatever is necessary to remedy the
act or omission. During the period after the giving of notice and during the
remedying of the act or omission, the Monthly Rental payable by Tenant shall not
be abated and apportioned except to the extent that the Premises are
untenantable.

SECTION XXXIII. GENERAL

A. PARAGRAPH HEADINGS

The paragraph headings used in this Lease are for the purposes of
convenience only. They shall not be construed to limit or to extend the
meaning of any part of this Lease.

B. INCORPORATION OF PRIOR AGREEMENTS: AMENDMENTS

This Lease contains all agreements of Landlord and Tenant with respect to
any matter mentioned, or dealt with, herein. No prior agreement or
understanding pertaining to any such matter shall be binding upon Landlord.
Any amendments to or modifications of this Lease shall be in writing,
signed by the parties hereto, and neither Landlord nor Tenant shall be
liable for any oral or implied agreements.

LANDLORD HAS NOT MADE, AND TENANT MAY NOT RELY ON, ANY REPRESENTATIONS OR
WARRANTIES, EXPRESSED OR IMPLIED, WITH REGARD TO THE PROJECT, THE BUILDING,
THE PREMISES OR OTHERWISE OR THE SUITABILITY THEREOF FOR TENANT'S BUSINESS,
EXCEPT AS EXPRESSLY STATED IN THIS LEASE. IN PARTICULAR, LANDLORD HAS NOT
AUTHORIZED ANY AGENT OR BROKER TO MAKE A REPRESENTATION OR WARRANTY
INCONSISTENT WITH THE TERMS OF THIS LEASE AND TENANT MAY NOT RELY ON ANY
SUCH INCONSISTENT REPRESENTATION OR WARRANTY.

C. WAIVER

Any waiver by Landlord of any breach of any term, covenant, or condition
contained in this Lease shall not be deemed to be a waiver of such term,
covenant, or condition or of any subsequent breach of the same or of any
other term, covenant, or condition

34
<PAGE>

contained in this Lease. Landlord's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Landlord's
consent to, or approval of, any subsequent act by Tenant. The acceptance of
rent or other sums payable hereunder by Landlord shall not be a waiver of
any preceding breach by Tenant of any provision hereof, other than failure
of Tenant to pay the particular rent or other sum so accepted, regardless
of Landlord's knowledge of such preceding breach at the time of acceptance
of such rent, or sum equivalent to rent.

D. SHORT FORM OR MEMORANDUM OF LEASE

Tenant agrees, at the request of Landlord, to execute, deliver, and
acknowledge a short form or memorandum of this Lease satisfactory to
counsel for Landlord, and Landlord may, in its sole discretion, record such
short form or memorandum in the county where the Premises are located.
Tenant shall not record this Lease, or a short form or memorandum of this
Lease, without Landlord's prior written consent.

E. TIME OF ESSENCE

Time is of the essence in the performance of each provision of this Lease.

F. EXAMINATION OF LEASE

Submission of this instrument for examination or signature by Tenant does
not constitute a reservation of or option for lease, and it is not
effective as a lease or otherwise until execution by and delivery to both
Landlord and Tenant.

G. SEVERABILITY

If any term or provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision
to persons or circumstances other than those as to which it is held invalid
or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

H. SURRENDER OF LEASE NOT MERGER

Neither the voluntary or other surrender of the Lease by Tenant nor the
mutual cancellation thereof shall cause a merger of the titles of Landlord
and Tenant, but such surrender or cancellation shall, at the option of
Landlord, either terminate all or any existing subleases or operate as an
assignment to Landlord of any such subleases.

I. CORPORATE AUTHORITY

If Tenant is a corporation, each individual executing this Lease on behalf
of Tenant represents and warrants (1) that he is duly authorized to execute
and deliver this Lease on behalf of Tenant in accordance with a duly
adopted resolution of the Board of Directors of Tenant in accordance with
the By-laws of Tenant and (2) that this Lease is binding upon and
enforceable by Landlord against Tenant in accordance with its terms. If
Tenant is a corporation, Tenant shall, concurrently with delivery of an
executed Lease to Landlord, deliver to Landlord a certified copy of a
resolution of its Board of Directors authorizing or ratifying the execution
of this Lease.

J. GOVERNING LAW

This Lease and the rights and obligations of the parties hereto shall be
interpreted, construed and enforced in accordance with the local laws of
the State in which the Project is located.

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K. FORCE MAJEURE

If the performance by Landlord of any provision of this Lease is delayed or
prevented by any act of God, strike, lockout, shortage of material or
labor, restriction by any governmental authority, civil riot, flood, and
any other cause not within the control of Landlord, then the period for
Landlord's performance of the provision shall be automatically extended for
the same time Landlord is so delayed or hindered.

L. USE OF LANGUAGE

Words of gender used in this Lease include any other gender, and words in
the singular include the plural, unless the context otherwise requires.

M. SUCCESSORS

The terms, conditions and covenants contained in the Lease inure to the
benefit of and are binding on, the parties hereto and their respective
successors in interest, assigns and legal representatives, except as
otherwise herein expressly provided. All rights, privileges, immunities and
duties of Landlord under this Lease, including without limitation, notices
required or permitted to be delivered by Landlord to Tenant hereunder, may,
at Landlord's option, be exercised or performed by Landlord's agent or
attorney.

N. NO REDUCTION OF RENTAL

Except as otherwise expressly and unequivocally provided in this Lease,
Tenant shall not for any reason withhold or reduce the amounts payable by
Tenant under this Lease, it being understood that the obligations of
Landlord hereunder are independent of Tenant's obligations. If Landlord is
required by governmental authority to reduce energy consumption or impose a
parking or similar charge with respect to the Premises, Building or
Project, to restrict the hours of operation of, limit access to, or reduce
parking spaces available at the Building, or take other limiting actions,
then Tenant is not entitled to abatement or reduction of rent or to
terminate this Lease.

0. NO PARTNERSHIP

Notwithstanding anything else to the contrary, Landlord is not, and under
no circumstances shall it be considered to be, a partner of Tenant, or
engaged in a joint venture with Tenant.

P. EXHIBITS

All exhibits attached hereto are made a part hereof and are incorporated
herein by a reference. A complete list of said exhibits is set forth in the
Table of Contents.

Q. INDEMNITIES

The obligations of the indemnifying party under each and every
indemnification and hold harmless provision contained in this Lease shall
survive the expiration or earlier termination of this Lease to and until
the last to occur of (a) the last date permitted by law for the bringing of
any claim or action with respect to which indemnification may be claimed by
the indemnified party against the indemnifying party under such provision
or (b) the date on which any claim or action for which indemnification may
be claimed under such provision is fully and finally resolved and, if
applicable, any compromise thereof or judgment or award thereon is paid in
full by the indemnifying party and the indemnified party is reimbursed by
the indemnifying party for any amounts paid by the indemnified party in
compromise thereof or upon a judgment or award thereon and in defense of
such action or claim, including reasonable attorneys' fees incurred.
Payment

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shall not be a condition precedent to recovery upon any indemnification
provision contained herein.

R. NONDISCLOSURE OF LEASE TERMS

Landlord and Tenant agree that the terms of this Lease are confidential and
constitute proprietary information of the parties hereto. Disclosure of the
terms hereof could adversely affect the ability of Landlord to negotiate
with other tenants of the Project. Each of the parties hereto agrees that
such party, and its respective partners, officers, directors, employees,
agents and attorneys, shall not disclose the terms and conditions of this
Lease to any other person without the prior written consent of the other
party hereto except pursuant to an order of a court of competent
jurisdiction. Provided, however, that Landlord may disclose the terms
hereof to any lender now or hereafter having a lien on Landlord's interest
in the Project, or any portion thereof, and either party may disclose the
terms hereof to its respective independent accountants who review its
respective financial statements or prepare its respective tax returns, to
any prospective transferee of all or any portions of their respective
interests hereunder (including a prospective sublessee or assignee of
Tenant), to any lender or prospective tender to such party, to any
governmental entity, agency or person to whom disclosure is required by
applicable law, regulation or duty of diligent inquiry and in connection
with any action brought to enforce the terms of this Lease, on account of
the breach or alleged breach hereof or to seek a judicial determination of
the rights and obligations of the parties hereunder.

SECTION XXXIV. EXECUTION

This Lease may be executed in several duplicate counterparts, each of which
shall be deemed an original of this Lease for all purposes.

SECTION XXXV. ADDENDUM

See Addendum attached hereto and incorporated herein by this reference.

IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions, any typed addenda appended hereto and all Exhibits
appended hereto, on the dates indicated below, the later of which shall be
deemed the date of execution of this Lease.

"TENANT" "LANDLORD"

NEWGEN RESULTS CORPORATION, WCB II MORE LIMITED
a California corporation PARTNERSHIP, a Delaware limited
partnership

By: WCB II MORE INCORPORATED, a
By: /s/ Sam Simkin Delaware corporation
--------------------------------
Name: Sam Simkin
---------------------------
Title: VICE PRESIDENT & CFO
--------------------------

By: By: /s/ Brad E. Baker
-------------------------------- ----------------------------
Name: Brad E. Baker
--------------------------- Senior Vice President
Title:
--------------------------
Dated: 8-2-96
Dated: -------------------------
-----------------------------

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ADDENDUM TO LEASE BETWEEN WCB II MORE LIMITED PARTNERSHIP,
AS LANDLORD, AND NEWGEN RESULTS CORPORATION, AS TENANT,
DATED JULY 31, 1996

SECTION XXXV. ADDENDUM

A. OPTION TO EXTEND. Provided that Tenant is not in default hereunder either
at the date Tenant's notice of exercise is given or on the date the
Additional Term (as defined below) would otherwise commence, Tenant shall
have the option to extend the Term by one (1) additional period of three
(3) years (the "Additional Term"). The Additional Term shall commence, if
at all, on the day after the Expiration Date and shall continue through the
third (3rd) anniversary of the Expiration Date specified in Section I.
above (as amended pursuant to Section III. above, if applicable), subject
to earlier termination as provided herein.

Such option shall be exercised, if at all, by written notice to Landlord
given at least nine (9) and no more than twelve (12) months prior to the
Expiration Date of the initial Term. If Tenant is entitled to and gives
notice in the manner and within the time set forth in this subsection A.,
then the Term shall be extended by the Additional Term, on all of the
conditions set forth in this Lease for the original Term except as
otherwise provided herein and except that:

(1) Monthly Rental for the Additional Term shall be ninety-five percent
(95%) of the fair market rental rate or rates for comparable (in terms
of location, utility, age, appearance, and quality) buildings located
within the general geographic location of the Project, as reasonably
determined by Landlord. Landlord shall, upon receipt of Tenant's
notice provided for above and at least six (6) months prior to the
Expiration Date, notify Tenant in writing of its determination of the
fair market rental rate or rates for the Additional Term. Within ten
(10) days after such notice is given, Tenant may elect by written
notice to Landlord either to (a) unequivocally accept such Monthly
Rental as determined by Landlord for the Additional Term or (b)
terminate this Lease as of the Expiration Date. Tenant's failure to
make a written election strictly in accordance with the preceding
sentence shall be deemed to be an acceptance of the Monthly Rental as
determined by Landlord, EXCEPT that an equivocal acceptance of the
Monthly Rental shall be deemed an election by Tenant to terminate the
Lease as of the Expiration Date;

(2) The provisions of Section III. and Exhibit C of this Lease shall not
apply; and

(3) There shall be no further options to extend the Term.

B. COMMON OPERATING COSTS

(1) The Project consists of the Building and one other building,
consisting in the aggregate of approximately 122,799 square feet of
Rentable Area, together with surface parking, hardscaping and
landscaping. Included in Common Operating Costs for the purposes of
this Lease are the Building's proportionate share of "Project
Operating Costs", which shall be the aggregate of all commercially
reasonable costs and expenses payable by Landlord in connection with
the operation and maintenance of the Common Areas of the Project
(i.e., those areas of the Project which service both of the
buildings within the Project), including, but not limited to, those
items of costs and expenses set forth in clauses (a) through (o) of
Section V.A. (3) of the Lease. Landlord may allocate one or more items
included within Project Operating Costs between the buildings within
the Project other than strictly pro rata based on their respective
Rentable Area if Landlord determines in its sole but reasonable
discretion that it is appropriate to

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do so in order to reflect usage of items or services included in
Project Operating Costs.

(2) Notwithstanding anything to the contrary in the Lease, Tenant's
Proportionate Share of any and all costs of providing utilities to the
Premises, Building and Project which are includable in Common
Operating Costs in accordance with this Lease shall be payable by
Tenant, commencing on the Lease Commencement Date and on the first day
of each calendar month in the Term thereafter, without any deduction
for the Base Operating Expense attributable to such utility costs.
Accordingly, utility costs shall be excluded from the Base Operating
Expense, and Tenant's Proportionate Share of all Common Operating
Costs, other than utility costs, shall be determined by reference to
the Base Operating Expense, as so reduced. Moreover, any costs of
providing janitorial supplies to the Premises in excess of those
allocable to standard premises within the Building or Project ("Excess
Janitorial Costs") shall be estimated by Landlord based on information
received from the provider of janitorial services for the Building.
Tenant acknowledges that the Base Operating Expense attributable to
janitorial services shall not be applied to Excess Janitorial Costs,
but rather only to the costs of providing Building standard janitorial
supplies and services and that, accordingly, the Excess Janitorial
Costs shall not be included in Common Operating Costs for the
purposes of this Lease, but shall be paid by Tenant as additional
rent, commencing on the Lease Commencement Date and on the first day
of each calendar month in the Term thereafter, without any deduction.

(3) EXCLUDED ITEMS. Notwithstanding anything to the contrary in the Lease,
the following shall be excluded or deducted from Common Operating
Costs for the purpose of determining Tenant's Proportionate Share
thereof:

(a) Any ground lease rental for the land underlying the Project;

(b) Costs of capital repairs, improvements and equipment, except for
those (i) acquired to reduce Common Operating Costs (amortized at
an annual rate reasonably calculated to equal the amount of
Common Operating Costs to be saved in each calendar year
throughout the Term (as determined at the time Landlord elected
to proceed with the capital improvement or acquisition of the
capital equipment to reduce Common Operating Costs)), together
with interest at the actual interest rate incurred by Landlord;
or (ii) costs of capital tools not in excess of Ten Thousand
Dollars ($10,000.00) in any twelve (12) month period; or (iii)
required by applicable law not in effect or not applicable to the
building as of the date of this Lease; or (iv) which are
allocable to routine maintenance and/or repair (e.g., periodic
replacement of Common Area carpeting and wall covering,
resurfacing a parking lot, patching or repairing a roof,
repairing or replacing a generator or condenser in or for an HVAC
unit or system);

(c) Costs incurred by Landlord for the repair of damage to the
Building, to the extent (only) that Landlord is reimbursed by
insurance proceeds;

(d) Costs, including permit, license and inspection costs, incurred
with respect to the installation of improvements made for tenants
or other occupants in the Building or incurred in renovating or
otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Building, except that
the foregoing shall not apply to any management office in the
Building or to routine maintenance or repairs required to be made
by Landlord to tenant area premises within the Building;

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<PAGE>

(e) Depreciation, amortization and interest payments, except as
provided herein and except on materials, tools, supplies and
equipment purchased by Landlord to enable Landlord to supply
services that Landlord might otherwise contract therefor with a
third party where such depreciation, amortization and interest
payments would otherwise have been included in the charge for
such third party's services, all as determined in accordance with
generally accepted accounting principles as applied to real
estate, consistently applied, and when depreciation or
amortization is permitted or required, the item shall be
amortized over its reasonably anticipated useful life;

(f) Marketing costs including leasing commissions and attorneys' fees
incurred in connection with the negotiation and preparation of
letters, deal memos, letters of intent, leases, subleases and/or
assignments, space planning costs, and other costs and expenses
incurred in lease, sublease and/or assignment negotiations and
transactions with present or prospective tenants or other
occupants of the Building;

(g) Costs incurred by Landlord for alterations which are considered
capital improvements and replacements under generally accepted
accounting principles as applied to real estate, consistently
applied, except as may be permitted in (b) above;

(h) Costs incurred in providing services or other benefits to tenants
of the Project which are not offered to Tenant or for which
Tenant is charged directly;

(i) Costs incurred by Landlord due to the violation by Landlord of
the terms and conditions of any lease of space in the Building
that, but for such violation, would not be included in Common
Operating Costs;

(j) Overhead and profit increment paid to Landlord or to subsidiaries
or affiliates of Landlord for goods and/or services in the
Building, to the extent the same exceeds the costs of such goods
and/or services if rendered by unaffiliated third parties on a
competitive basis;

(k) Interest, principal, points and fees on debts or amortization on
any mortgage or mortgages or any other debt instrument secured by
the Project;

(l) Landlord's general corporate overhead and general and
administrative expenses, except if and to the extent Landlord
might otherwise contract with a third party for such services and
the same would then be includable in Common Operating Costs;

(m) Any compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord or in the parking
garage of the Project or wherever else Tenant is granted parking
privileges and/or all fees paid to any parking facility operator
(on or off site), if and to the extent (only) that Landlord is
compensated therefor by revenue received by Landlord from such
commercial concession and/or parking fees, as applicable;

(n) Except for making repairs, performing maintenance or keeping
permanent systems in operation while repairs are being made, and
except if and to the extent the same reduces Common Operating
Costs, rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment ordinarily
considered to be of a capital nature, except

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<PAGE>

equipment not affixed to the Building which is used in providing
janitorial or similar services;

(o) Advertising and promotional expenditures, and costs of signs
(other than lobby directory and common monument signage) in or on
the Building identifying the owner of the Building or other
tenants' signs;

(p) Electric power costs incurred by a tenant for which such tenant
directly contracts with the local public service company;

(q) Services provided, income or payroll taxes attributable to, and
costs incurred in connection with the operation of any retail,
restaurant, or garage operation operated by Landlord in the
Building, and any replacement garage or parking facility and any
shuttle services, if and only to the extent that Landlord is
compensated therefor by revenue received by Landlord from the
operation;

(r) Tax penalties incurred as a result of Landlord's negligence,
inability or unwillingness to make payments and/or to file any
income tax or informational returns when due, except in
connection with a tax protest filed by or on behalf of Landlord;

(s) All assessments and premiums which are not specifically charged
to Tenant because of what Tenant has done, which can be paid by
Landlord in installments without penalty or premium, shall be
included in Common Operating Costs as if paid by Landlord in the
maximum number of installments permitted by law, and only in the
year in which the assessment or premium installment would be
paid;

(t) Costs for which Landlord has been compensated by a management
fee;

(u) Notwithstanding any contrary provision of this Lease, including,
without limitation, any provision relating to capital
expenditures, costs of cleaning up and abating Hazardous
Materials in or about the Building or Project; and

(v) Costs of curing latent defects in Building structural elements,
or in improvements installed by Landlord, to the extent
reimbursed to Landlord under warranty.

C. SECURITY DEPOSIT

In addition to the cash portion of the Security Deposit described in
Section I.L. of the Lease, Tenant shall deliver to Landlord, concurrently
with the execution hereof, an irrevocable letter of credit in the amount of
$566,105.00 (or, at Tenant's option, two separate letters of credit, one in
the amount of $415,335.00 and the other in the amount of $150,770.00) from
an independent financial institution selected by Tenant and acceptable to
Landlord in the form of Exhibit "H" hereto (collectively (if applicable)
the "Letter of Credit") as security for Tenant's full and faithful
performance of its obligations and payment of amounts due pursuant to this
Lease. The Letter of Credit shall be as available to Landlord as if the
same were a cash security deposit made pursuant to Section VI. of the
Lease. The Letter of Credit shall be renewed by Tenant annually, on or
before its expiration date and, if Landlord does not receive an original
replacement letter of credit at least three (3) business days prior to the
expiration date of an expiring Letter of Credit, then Landlord shall have
the right to draw the as-yet unexpired Letter of Credit in full; provided,
however, that (i) in the absence of the occurrence, prior to the first
(1st) anniversary of the Lease Commencement Date, of any event giving rise
to Landlord's right to use, apply or retain all or any part of the security

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deposit pursuant to Section VI. of the Lease (herein, an "Event"), then
Tenant's obligation shall be to renew the Letter of Credit in an amount
equal to eighty percent (80%) of the amount in which it was originally
issued (i.e., in an (aggregate, if applicable) amount of $452,884.00); (ii)
in the absence of the occurrence of an Event prior to the second (2nd)
anniversary of the Lease Commencement Date, then Tenant's obligation shall
be to renew the Letter of Credit in an amount equal to sixty percent (60%)
of the amount in which it was originally issued (i.e., in an (aggregate, if
applicable) amount of $339,663.00); (iii) in the absence of the occurrence
of an Event prior to the third (3rd) anniversary of the Lease Commencement
Date, then Tenant's obligation shall be to renew the Letter of Credit in an
amount equal to forty percent (40%) of the amount in which it was
originally issued (i.e., in an (aggregate, if applicable) amount of
$266,442.00); (iv) in the absence of the occurrence of an Event prior to
the fourth (4th) anniversary of the Lease Commencement Date, then Tenant's
obligation shall be to renew the Letter of Credit in an amount equal to
twenty percent (20%) of the amount in which it was originally issued (i.e.,
in an (aggregate, if applicable) amount of $113,221.00); and (v) in the.
absence of the occurrence of an Event prior to the original Expiration
Date, then Tenant's obligation to renew the Letter of Credit shall
terminate. The occurrence of an Event prior to any of the periods set forth
above shall cause Tenant's obligation to provide the Letter of Credit
pursuant to this Addendum Section to continue thereafter without the
subsequent reductions set forth above. Notwithstanding the foregoing, any
failure of Tenant to pay to Landlord the additional HVAC costs as required
by subsection E. below, as a result of which Landlord successfully draws on
the Letter of Credit, shall not constitute an "Event" within the meaning of
the immediately preceding two sentences. If Tenant shall fail to cause any
new and irrevocable Letter of Credit to be issued as required hereunder,
then Landlord shall have the option to terminate this Lease, and such
failure by Tenant shall be deemed an event of default by Tenant and shall
be subject to all of the provisions of Section XX. of the Lease.
Notwithstanding the foregoing, in the event that the total Tenant Allowance
actually disbursed pursuant to EXHIBIT C to this Lease is less than
$415,335.00, then the aggregate amount of the Letter of Credit required to
be posted by Tenant hereunder (and, if two separate letters of credit are
obtained as permitted above, then the letter of credit required to be
obtained in the amount of $415,335.00) may be reduced by Tenant by an
amount equal to the difference between $415,335.00 and the total Tenant
Allowance actually disbursed (the "Unused Allowance"), and Tenant shall
provide to Landlord a substitute Letter of Credit in the exact form of the
original Letter of Credit required to be provided by Tenant hereunder
except that the amount thereof shall be reduced by the Unused Allowance. As
a condition precedent to Tenant's right to reduce the Letter of Credit by
an amount equal to the Unused Allowance, the parties shall execute an
amendment to this Lease in the form of EXHIBIT F hereto, reflecting such
reduction in the amount of the Letter of Credit and in the subsequent
percentage reductions described above.

D. USE OF PREMISES/HAZARDOUS MATERIALS

(1) In no event shall Tenant be permitted to install more than the number
of work stations and/or desks in the Premises reflected in the Working
Drawings approved by Landlord. By its approval of the number of work
stations and/or desks for the Premises reflected in the Working
Drawings approved by Landlord, Landlord is NOT approving, permitting,
condoning or authorizing use by Tenant of in excess of 3.6 parking
spaces per 1,000 square feet of usable area.

(2) Notwithstanding anything to the contrary in Section VIII.B. of the
Lease, as part of Landlord's obligations pursuant to Section X.A.
Landlord shall be responsible to cause the Common Areas and the
structural elements of the Premises to comply with laws and statutes
which may be in effect and applicable to the Project, if, as and when
such compliance is required by applicable governmental authorities. In
addition, in the event any applicable governmental authority cites
Tenant and/or Landlord for failure of Landlord's Work to comply with
laws in

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effect, applicable to the Building and applied to Landlord's Work as a
condition to issuance of a certificate of occupancy for the Premises,
then Landlord shall be responsible to replace and/or repair such
portions of Landlord's Work so as to cause the same to comply with
such laws.

(3) Landlord has disclosed to Tenant certain information regarding the
presence (or lack thereof) of Hazardous Materials in or about the
Project by delivery to Tenant of a copy of the Phase I Environmental
Assessment Report dated January 19, 1994 prepared by Woodward-Clyde
Consultants with respect to the Project (the "Report"), receipt and
review of which Tenant acknowledges by its execution and delivery of
this Lease. To the extent that the Report indicates the presence of
Hazardous Materials which would require removal, remediation or
adoption of an "OEM" plan, Tenant agrees to cooperate fully with
Landlord in connection therewith and comply fully with the provisions
of any such plan implemented by Landlord. Landlord shall, at its sole
cost and expense (but subject to recovery as Common Operating Costs to
the extent permitted hereby), comply promptly, if, as and when
required by applicable governmental authorities, with all laws, rules,
regulations and governmental requirements now in force or which may
hereafter be in force, with respect to Hazardous Materials; provided,
however, that Tenant shall, at its sole cost and expense, comply with
its obligations under this Lease with respect to Hazardous Materials
pursuant to Section VIII.C. of the Lease and/or this clause (3).

E. SERVICE AND UTILITIES

Access to the Premises, and, subject to Section IX. of the Lease, utility
service, is available 24 hours a day, 365 days a year, in each case subject
to the provisions of Section XXXIII.K. of the Lease. Landlord and Tenant
acknowledge and agree that the Tenant Improvements to be performed in
accordance with the Working Drawings to be approved by Landlord pursuant to
EXHIBIT C are expected to include the installation of additional HVAC
capacity in order to enable Landlord to provide HVAC service to the
Premises and other premises within the Project in accordance with Project
standards. Preliminary engineering indicates that up to 20 additional tons
of capacity, via either 4 ton or 5 ton individual roof-mounted units or
enhancements to the existing cooling plant (either of which will include
modifications within the Premises as well), may be required. Tenant
acknowledges and agrees that, except if and to the extent that the Tenant
Allowance is available to cover the same, Tenant will be required to pay
all costs, expenses and fees incurred by Landlord in designing,
implementing and installing such additional capacity. Notwithstanding the
foregoing, at Tenant's request, Landlord has agreed, on the terms and
subject to the conditions set forth herein, to upgrade the HVAC capacity in
phases, if, as and when the same becomes necessary, in Landlord's sole
opinion. Without in any way limiting Landlord's discretion hereunder,
Tenant acknowledges that a variety of factors are pertinent to Landlord's
decision in this regard, including without limitation providing a
comfortable and healthy temperature and air flow within the Premises and
other premises in the Project and eliminating or reducing wear and tear on
existing HVAC equipment, systems and/or plants. After completion of
Landlord's Work (which may include implementation of some of the additional
HVAC capacity referred to herein), Landlord may, in its sole discretion,
determine that implementation of additional HVAC capacity or equipment as
contemplated herein is necessary or desirable and, if Landlord does so,
Landlord will provide to Tenant written notice of its intention to upgrade
the HVAC capacity. Within fifteen (15) days after such notice is given,
Tenant may, by written notice to Landlord, suggest modifications to the
Premises and/or Tenant's operations therein which could eliminate or reduce
the necessity for additional HVAC capacity. If and to the extent (only)
that Landlord, in its sole discretion, accepts Tenant's proposed
modifications as a full or partial solution to the problem(s) identified by
Landlord, then Tenant shall, within forty-five (45) days from the date
Tenant's notice is given to Landlord, implement the measures identified by
Tenant and accepted by Landlord as curative (in whole or in part) of the
problem(s)

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identified by Landlord. Notwithstanding that Landlord may have permitted
Tenant to implement its suggestions rather than upgrading the HVAC capacity
at any one or more points in time, in the event that Landlord thereafter
determines, in its sole discretion, and whether or not the forty-five (45)
day period described above shall have then expired, that the additional
capacity has become necessary, then Landlord may proceed to upgrade the
capacity as Landlord determines necessary or desirable. Tenant shall pay to
Landlord, within thirty (30) days after Landlord's demand therefor,
accompanied by documentary evidence supporting the amount requested, all
costs, expenses, fees and other charges incurred by Landlord in connection
with the design, implementation and/or installation of additional HVAC
equipment or capacity pursuant to this subsection. If Tenant fails to pay
any such amount to Landlord, Landlord may draw on the Letter of Credit an
amount equal to the sum(s) so demanded by Landlord. In consideration of
Landlord's agreement to phase in the additional HVAC capacity that Landlord
believes is required for the Project, Tenant, on behalf of its employees,
invitees and agents, hereby waives any and all claims of interference with
Tenant's business, and all other claims, losses, liabilities, damages,
costs, expenses or judgments arising from, pertaining to or in any way
related to Landlord's phasing in, whether prior to or after the Lease
Commencement Date, of the additional HVAC equipment or capacity as
contemplated herein.

F. PARKING

Parking within the parking area adjacent to the Building (1) is currently
provided at a ratio of 3.6 spaces for every 1,000 square feet leased and
(2) is in common with other tenants of the Project. Notwithstanding the
foregoing, out of the one hundred (100) spaces available for Tenant's use,
Landlord will designate, for Tenant's use, up to ten (10) of the spaces
allocable to the Premises as reserved spaces, six (6) of which shall be
covered, all of which shall be in locations designated by Landlord, but
Landlord shall have no obligation to monitor or enforce usage of such
spaces by Tenant or other persons. Tenant may, at Tenant's sole cost and
expense, and in a manner subject to Landlord's prior written approval,
designate such reserved spaces as reserved for the use of Tenant.
Initially, the six (6) covered reserved spaces shall be located on the
lower level of the garage, but the location of such spaces shall be subject
to change from time to time in Landlord's sole but reasonable discretion.
During the Additional Term, if any, Landlord may charge for the use of
parking stalls.

Landlord and Tenant are both aware, as of the date hereof, that Tenant's
proposed use of the Premises could present parking problems, particularly
overcrowding, for the Project. Accordingly, if, in Landlord's sole and
absolute discretion, Tenant's operations at the Premises are causing
parking difficulties or problems, then if Tenant fails to cure such
difficulties or problems to Landlord's satisfaction within five (5) days
after Landlord first advises Tenant in writing thereof, at Tenant's sole
cost and expense Landlord may implement such remedial measures as Landlord,
in its sole discretion, determines to be necessary or desirable to
alleviate the situation, including without limitation implementation of a
valet service and/or parking attendants, installation of gates and/or
implementation of a card-key system, all in an effort to control and/or
restrict access to parking.

G. SIGNAGE

Subject to approval by applicable governmental authorities and to any
approvals required to be obtained pursuant to the CC&Rs, Landlord will
permit Tenant to erect one (1) sign on the Building facing the freeway
approximately adjacent to the Building (the exact location of which shall
be specified by Landlord) at Tenant's sole cost and expense, the contents,
design, size, materials, location and method of application of which shall
be subject to Landlord's prior written approval and any approvals required
to be obtained pursuant to the CC&Rs for the Project, and shall be further
subject to compliance with the CC&Rs, all applicable sign programs and
other governmental requirements then in

44
<PAGE>

effect for the Project; provided, however, that Landlord's approval shall
not be unreasonably withheld to Building signage of a quality, in terms of
size, design, materials, location and method of application, comparable to
that of Peregrine Systems Inc.'s building signage. Landlord shall also
install, at Tenant's sole cost and expense (subject to Section 4 of EXHIBIT
C hereto), one sign indicating Tenant's name (on a nonexclusive basis) on a
new monument sign in front of the Building, the contents, design, size,
materials, location and method of application of which shall be proposed by
Tenant and shall be subject to Landlord's prior written approval and any
approvals required to be obtained pursuant to the CC&Rs for the Project,
and shall be further subject to compliance with such CC&Rs, all applicable
sign programs and all other governmental requirements then in effect for
the Project. In no event shall any failure or refusal of any governmental
authority or a CC&R review board or its equivalent to approve any Building
or monument signage constitute a default by Landlord hereunder and, upon
any such failure or refusal, Landlord shall be discharged of any obligation
to erect or permit erection of the disapproved sign. In the event that,
during the initial Term of this Lease, Landlord grants to another tenant or
occupant of the Project (who is not a sublessee, assignee, parent,
affiliate or subsidiary of Tenant) signage rights on the monument sign
contemplated to be erected pursuant to this subsection G., then, so long
as Tenant is not otherwise in breach or default hereunder at the time
recovery would otherwise be permitted hereunder, Tenant shall be entitled
to recover the unamortized portion of the costs of erecting such monument
sign included in the Tenant Allowance (if any), calculated by amortizing
the costs of erecting the monument sign included in the Tenant Allowance
(exclusive of the costs of placing Tenant's name thereon) over the initial
Term on a straight-line basis, multiplying such amortization by the number
of months remaining in the initial Term at the time the other tenant or
occupant's name is added to such sign, and multiplying the product so
obtained by a fraction, the numerator of which shall be the area of the
sign devoted to such other tenant or occupant and the denominator of which
shall be the area of the sign devoted to Tenant after such other tenant or
occupant's name is added thereto. The foregoing shall apply only to the
first tenant or occupant of the Project (other than Tenant) who is granted
sign rights on the monument sign erected pursuant to this subsection G.
and, at Landlord's sole option, either shall be applied as a lump-sum
credit to the next Monthly Rental coming due under this Lease or shall be
amortized evenly over the remaining initial Term of the Lease and Monthly
Rental for the balance of the initial Term shall be reduced to reflect
such credit.

Tenant shall be solely responsible to insure all signage erected by Tenant
pursuant to this subsection G. and to maintain all signage erected by
Tenant in first-class condition at all times; provided, however, if Tenant
fails to insure, repair or otherwise maintain any such signage within ten
(10) days after request therefor by Landlord, Landlord may obtain insurance
and/or perform any necessary repairs or maintenance for the account of
Tenant, and any and all amounts incurred by Landlord in connection
therewith shall be due and payable by Tenant to Landlord within ten (10)
days after demand therefor as additional rent. Notwithstanding anything to
the contrary in this Lease, upon the expiration or earlier termination of
this Lease, Tenant shall be responsible for any costs incurred by Landlord
for removing any signs installed by Landlord for Tenant and shall be
further responsible, as to both cost and performance, for removing any
signs installed by Tenant hereunder, in each case including the costs of
returning the surface to which such signs were affixed to the condition
they were in prior to such installation, including without limitation
removal of any discoloration.

H. CONDITION TO EFFECTIVENESS OF LEASE

A condition to the effectiveness of this Lease is Landlord's review and
approval of Tenant's financial statements. Accordingly, concurrently with
or prior to the execution hereof, Tenant shall deliver to Landlord its
financial statements as described in Section XXVI.B. of the Lease.
Landlord's delivery to Tenant of a fully executed copy of this Lease shall
constitute Landlord's approval of such financial statements.

45
<PAGE>

I. INTERPRETATION

This Addendum is attached to and forms a part of the Lease. In the event of
any inconsistency between the provisions of this Addendum and the balance
of the Lease, the provisions of this Addendum shall control.

46
<PAGE>

EXHIBIT A
SITE PLAN FOR THE PROJECT

EXHIBIT A

<PAGE>

EXHIBIT B

FLOOR PLAN OF THE PREMISES

EXHIBIT B

<PAGE>

EXHIBIT C

CONSTRUCTION WORK LETTER
(Turn-Key, Tenant Allowance)

In connection with the Lease to which this Work Letter is attached and in
consideration of the mutual covenants hereinafter contained, Landlord and Tenant
agree as follows:

1. WORK SCHEDULE

Landlord shall deliver to Tenant, for Tenant's review and approval, a schedule
(the "Work Schedule") setting forth a timetable for the preparation and approval
of all space plans and working drawings and for the planning and completion of
the installation of tenant improvements to be constructed in the Premises (the
"Tenant Improvements"). The Work Schedule shall set forth each of the various
items of work to be done by or approval to be given by Landlord and Tenant in
connection with the completion of the Tenant Improvements. The Work Schedule
shall be submitted to Tenant for its approval and, upon approval by both
Landlord and Tenant, such schedule shall become the basis for completing the
Tenant Improvements. If Tenant shall fail to approve the Work Schedule, as it
may be modified after discussions between Landlord and Tenant, within three (3)
business days after the date such Work Schedule is first received by Tenant,
then Tenant shall be deemed to have approved such Work Schedule.

2. SPACE PLANS AND WORKING DRAWINGS

(a) SPACE PLANS. Tenant agrees to cooperate with Landlord's space planner
and/or architect, who shall prepare detailed space plans for the Premises which
shall include, but not be limited to, locations of doors, partitioning,
electrical fixtures, outlets and switches, plumbing fixtures, extraordinary
floor loads and other special requirements. Tenant shall approve such space
plans in writing within three (3) business days following receipt of the same
from Landlord (the "Space Plan Approval Date"). If Tenant fails to so notify
Landlord within such three (3) business days, Tenant shall be deemed to have
approved such space plans. If Tenant timely notifies Landlord of any disapproval
of the space plans, Tenant's notice of disapproval shall also set forth its
reasons for disapproval and suggested revisions to the space plans in order to
satisfy the concerns of Tenant,

(b) WORKING DRAWINGS. Based upon the approved space plans (the "Space
Plans") for the Premises, Landlord's architect and engineer shall prepare final
working drawings of the Tenant Improvements. The working drawings shall include
architectural, mechanical and electrical drawings for building standard work to
be furnished by Landlord, as reasonably determined by Landlord. Landlord shall
then submit such working drawings to Tenant for its review, and Tenant shall
approve or disapprove any such drawings within three (3) business days after
receipt thereof. If Tenant fails to so notify Landlord within such three (3)
business days, Tenant shall be deemed to have approved such working drawings. If
Tenant timely notifies Landlord of any disapproval of the working drawings,
Tenant's notice of disapproval shall also set forth its reason for disapproval
and suggested revisions to the working drawings in order to satisfy the concerns
of Tenant.

(c) CHANGES IN PLANS. Any changes requested by Tenant in the Space Plans,
working drawings or other plans and specifications after approval thereof by
Tenant shall be prepared by Landlord's architect and/or engineer at Tenant's
sole cost and expense, and any excess costs of Tenant Improvements resulting
from such changes shall also be at Tenant's sole cost and expense. Furthermore,
Tenant shall be liable for any delays in completing the Tenant Improvements, if
any, resulting from such changes.

EXHIBIT C
Page 1 of 4
<PAGE>

3. BUILDING PERMIT

After approval by Landlord and Tenant of the working drawings for the Tenant
Improvements, Landlord shall submit the drawings to the appropriate governmental
body for plan checking and a building permit. Landlord, with Tenant's
cooperation, shall cause to be made any change in the working drawings necessary
to obtain the building permit. After final approval of the working drawings (as
so approved, the "Working Drawings"), no further changes thereto may be made
without the prior written approval of both Landlord and Tenant, and then only
after agreement by Tenant to pay any excess costs resulting from such changes.

4. COST OF TENANT IMPROVEMENTS

Landlord shall pay the cost of the Tenant Improvements to be made pursuant to
the Space Plans, up to the total amount (inclusive of all architectural,
engineering, space planning, construction management, permitting and other fees
of Landlord in connection therewith) of $15.00 per square foot of Rentable Area
(the "Tenant Allowance"). In the event that the estimated costs of the Tenant
Improvements exceed the Tenant Allowance, Landlord shall so notify Tenant,
submitting such estimate and Landlord's calculation of the excess. Any changes
in the Space Plans or Working Drawings shall be at Tenant's sole cost and
expense, both as to professional fees and cost of materials and labor.
Concurrently with implementing any changes in the Space Plans and/or Working
Drawings requested by Tenant, Landlord shall prepare and submit to Tenant a
written estimate of the cost required by the changes. In the event that the
aggregate cost of the Tenant Improvements is less than the Tenant Allowance,
Tenant may apply the balance towards the cost of monument signage described in
Section XXXV.G. of the Lease and, if any balance remains thereafter, to the next
payments of Monthly Rental due under the Lease until such balance is exhausted.

Landlord may credit against the Tenant Allowance all costs incurred in
connection with the Tenant Improvements, including without limitation costs of
preparing the Space Plans and the Working Drawings, including fees of
professionals such as space planners, architects and engineers, permit fees,
construction management fees, profit and general conditions and other costs
payable to Landlord's general contractor for the Tenant Improvements and all
hard construction costs.

If Tenant approves any such estimate, it shall pay Landlord the full amount of
such estimate within seven (7) days after receipt of the estimate. If Tenant
shall fail to pay any estimate in full within such seven (7) day period, Tenant
shall be deemed to have disapproved the estimate, and Landlord shall not proceed
with the Tenant Improvements affected thereby. Landlord and Tenant shall
thereafter cooperate to amend the plans and specifications for the Premises as
necessary to obtain Tenant's approval of the cost of the Tenant Improvements of
implementing the changes requested by Tenant; provided, however, that Tenant
shall pay any costs resulting from such amendments and Tenant shall be liable
for the delay in completing the Tenant Improvements and the increased costs in
completing the affected Tenant Improvements, if any, resulting from such delay.

In the event the premises are a portion of a larger premises or any portion of
the Premises is a portion of a larger premises, the Tenant Improvements shall
include, and the Tenant Allowance shall be applied to cover, any and all costs
and expenses, including professional and construction management fees, incurred
or required to be paid by Landlord to reconstitute the premises of which the
Premises (or a portion thereof) are a part as separate premises (including
without limitation separation of HVAC and electrical and repair or replacement
of wall and/or floor coverings or treatments). In addition, the cost of the
changes requested by Tenant which are to be Paid by Tenant as set forth above
shall include (i) the contractor's charges and (ii) a fee to defray Landlord's
overhead and indirect costs in coordinating all work, which fee shall equal five
percent (5%) of the total cost of construction of the additional work.

EXHIBIT C,
Page 2 of 4

<PAGE>

Upon completion by Landlord of the Tenant Improvements, Landlord shall determine
the actual final cost of the work for the Premises to be paid for by Tenant in
accordance herewith and shall submit a written statement of such amount to
Tenant. If the estimate previously paid by Tenant for such work exceeds the
actual cost of such work, such excess shall be credited by Landlord against the
next rental coming due under the Lease. If the actual cost of such work exceeds
the estimate therefor previously paid by Tenant, then Tenant shall pay such
excess in full within ten (10) days of receipt of Landlord's invoice therefor.

5. CONSTRUCTION OF TENANT IMPROVEMENTS

After the Working Drawings for the Tenant Improvements have been approved by
Tenant and Landlord and a building permit has been issued, Landlord shall cause
its contractor to complete the Tenant Improvements in accordance with the
approved plans, specifications and Working Drawings ("Landlord's Work"), subject
to "Force Majeure" (as that term is defined in Section XXXIII.K. of the Lease).
Landlord's contractor shall obtain three (3) competitive bids for each sub-trade
included within the scope of Landlord's Work. However, and notwithstanding the
foregoing, installation or construction of Tenant Improvements requested by
Tenant after approval of Space Plans, or otherwise affected by such request,
shall not commence until Tenant shall have approved the estimated cost thereof
in accordance with Section 4 above. Landlord shall use reasonable efforts to
secure completion of the Tenant Improvements on or before the target Lease
Commencement Date set forth in Section I.G. of the Lease. Unless specified to
the contrary herein, all Tenant Improvements shall be included in Landlord's
Work.

6. COMPLETION AND LEASE COMMENCEMENT DATE

If the Lease Commencement Date of the Lease as determined under Sections I.G.
and III.C. of the Lease is delayed by any of the following, then the Lease
Commencement Date of the Lease and the payment of rent shall be accelerated by
the number of days of such delay:

(a) Tenant's failure to approve or furnish Space Plans or Working Drawings
or failure to approve any other item or perform any other obligation in
accordance with and by the dates specified herein or in the Work Schedule.

(b) Delays of any nature within Tenant's control resulting from Tenant's
decision to use any materials, finishes, or installations other than building
standard.

(c) Tenant's changes in the Space Plans, Working Drawings or other plans
and specifications after the approval thereof by Tenant.

(d) Delays in the construction of building standard work as a result of
Tenant's failure to approve written estimates in accordance with Section 4.

(e) Delays in Tenant obtaining any necessary governmental approvals or
permits for Tenant's intended use of the Premises.

7. FURNITURE AND TELEPHONE SYSTEM

Tenant acknowledges and agrees that Tenant is solely responsible, both as to
performance and payment of costs, for "Tenant's Work", which includes obtaining,
delivering and installing the Portable Sign and the Lettering, and obtaining,
delivering and installing in the Premises all necessary or desired furniture,
telephone equipment, telephone cabling (all telephone cabling provided by Tenant
shall be teflon coated), telephone service, business equipment, art work and
other similar items, and that Landlord shall have no responsibility whatsoever
with regard thereto. Tenant further acknowledges and agrees that neither the
Lease Commencement Date of the Lease nor the payment of rent shall be delayed
for any period of time whatsoever due to any delay in the furnishing of the
Premises with such items. Installation of all telephone, computer and other
electronic wires and cables within the Premises and within the common ducts

EXHIBIT C,
Page 3 of 4

<PAGE>

and shafts of the Building is subject to Landlord's prior approval and shall be
performed in accordance with Landlord's reasonable rules and regulations. Tenant
may enter the Premises, with Landlord's prior written consent, prior to
Substantial Completion for the purpose of performing Tenant's Work so long as,
in Landlord's sole but reasonable discretion, such early entry would not in any
way interfere with the performance of Landlord's Work. Any such early occupancy
shall be on all of the terms and conditions of this Lease except the obligation
to pay Monthly Rental.

8. FAILURE OF TENANT TO COMPLY

Any failure of Tenant to comply with any of the provisions contained in this
EXHIBIT C, within the times for compliance herein set forth, shall be deemed a
default pursuant to the Lease. In addition to the remedies provided to Landlord
in this EXHIBIT C, upon the occurrence of such a default by Tenant, Landlord
shall have all remedies available at law or equity to a landlord against a
defaulting tenant pursuant to a written lease, including but not limited to
those set forth in Section XX. DEFAULT and Section XXIV. ATTORNEYS' FEES of the
Lease.

9. AUTHORIZED APPROVALS

All approvals required pursuant to the terms of this Work Letter or requests for
changes and modifications to the Space Plans, Working Drawings or any other
matter relating to the construction of the Tenant Improvements shall be deemed
given if approved or requested in writing by Tenant's Construction
Representative, for Tenant.

DESTRUCTION

If at any time prior to the completion of the Tenant Improvements a casualty
occurs resulting in any damage or destruction of the partially completed Tenant
Improvements or the Premises or Building, the terms and conditions of Section
XVIII. DAMAGE AND DESTRUCTION of the Lease shall govern the rights and
obligations of the parties.

EXHIBIT C,
PAGE 4 OF 4

<PAGE>

EXHIBIT D

RENT SCHEDULE

<TABLE>
<CAPTION>
Monthly Rental Monthly
Rate (Per Sq. Ft. Rental Monthly
Months of Rentable Area)* Waiver ** Rental Payable*
------ ------------------ --------- ---------------
<S> <C> <C> <C>
1, 2, 13, 25 $1.567 $43,926.14 $0.00

3-12, 14-24 1.567 0.00 $43,926.14

26-30 1.567 0.00 $43,926.14

31 - Expiration Date 1.667 0.00 $46,729.34
</TABLE>

* The Monthly Rental payable hereunder shall be adjusted by an amount equal
to the Unused Allowance (as defined in Addendum Section XXXV.C.), by, at
Landlord's sole election either applying the Unused Allowance as a credit
to Monthly Rental next coming due under the Lease or amortizing the amount
of the Unused Allowance over the number of months in the initial Term and
reducing the Monthly Rental payable, and the Monthly Rental rate,
accordingly. As a condition precedent to any such adjustment, the parties
shall execute and deliver an amendment in the form of EXHIBIT F hereto. The
Monthly Rental may be subject to adjustment pursuant to Addendum Section
XXXV.G., on the terms and conditions and under the circumstances specified
therein.

** Landlord hereby conditionally excuses Tenant from the payment of Monthly
Rental during the months and in the amounts designated as "Monthly Rental
Waiver" as specified above provided that Tenant shall pay all other charges
under this Lease from and after the Lease Commencement Date and that Tenant
shall not be in default in its obligations under this Lease. Should Tenant
at any time during the Term be in default under the Lease and not cure such
default within the cure periods provided in the Lease, then the total sum
of such Monthly Rental so conditionally excused shall become immediately
due and payable by Tenant to Landlord. If at the date of expiration of the
Term, Tenant has not so defaulted, Landlord shall waive any payment of all
such Monthly Rental so conditionally excused.

The term "Rentable Area" as used in the Lease shall mean:

(1) As to each floor of the Building on which the entire space rentable to
tenants is or will be leased to one tenant (hereinafter referred to as
a "Single Tenant Floor"), Rentable Area shall be the entire area
bounded by the inside surface of the four exterior glass walls (or the
inside surface of the permanent exterior wall(s) where there is no
glass) on such floor, including all areas used for elevator lobbies,
corridors, special stairways, or elevators, restrooms, mechanical
rooms, electrical rooms and telephone closets without deduction for
columns and other structural portions of the Building or vertical
penetrations that are included for the special use of the tenant of
such floor together with a portion of the covered or enclosed common
facilities which constitute a part of the Building and which are
maintained by Landlord for the common benefit of all tenants of the
Building which bears the same proportion to the total area of such
common facilities as the Rentable Area of each Single Tenant Floor
bears to the Rentable Area of the Building (excluding such common
facilities), but excluding the area contained within the exterior
walls of the Building stairs, fire towers, vertical ducts, elevator
shafts, flues, vents, stacks and pipe shafts.

(2) As to each floor of the Building on which space is or will be leased
to more than one tenant, Rentable Area attributable to each such
lease shall be the total of (i) the entire area included within the
premises covered by such lease, being the area bounded by the inside
surface of any exterior glass walls (or the inside surface

EXHIBIT D
Page 1 of 2

<PAGE>

of the permanent exterior wall(s) where there is no glass) of the
Building bounding such premises, the exterior of all walls separating
such premises from any public corridors or other public areas on such
floor, and the centerline of all walls separating such premises from
other areas leased or to be leased to other tenants on such floor,
(ii) that portion outside the Premises but within space intended for
use or occupancy as premises by another tenant utilized by Tenant for
wiring, ducts, vents or other requirements of Tenant's operation in
the Premises, (iii) that portion of the covered or enclosed common
facilities which constitute a part of the Building and which are
maintained by Landlord for the common benefit of all tenants of the
Building which bears the same proportion to the total area of such
common facilities as the Rentable Area of such Premises bears to the
Rentable Area of the Building (excluding such common facilities), and
(iv) a pro rata portion of any area of the Building devoted to common
features such as elevator lobbies, corridors, restrooms, mechanical
rooms, electrical rooms and telephone closets, but excluding any area
contained within the exterior walls of the Building for stairs, fire
towers, vertical ducts, elevator shafts, flues, vents, stacks and pipe
shafts.

(3) For purposes of establishing the Monthly Rental, the Rentable Area of
the Premises is deemed to be as set forth in Section I.E. above, and
the Rentable Area of the Building is deemed to be 53,697 square feet.
Prior to the Lease Commencement Date, and from time to time thereafter
at Landlord's option, Landlord's architect shall determine and certify
in writing to Tenant and Landlord the actual Rentable Area of the
Premises and the Building, respectively, in accordance with the
foregoing, which such determinations and certifications shall be
conclusive and thereupon the Monthly Rental and Tenant's Proportionate
Share shall be adjusted accordingly.

EXHIBIT D
Page 2 of 2

<PAGE>

EXHIBIT E

RULES AND REGULATIONS

ATTACHED TO AND MADE A PART OF THE LEASE

The following Rules and Regulations shall be in effect at the Building. Landlord
reserves the right to adopt reasonable modifications and additions hereto. In
the case of any conflict between these regulations and the Lease, the Lease
shall be controlling. Landlord shall have the right to waive one or more rules
for the benefit of a particular tenant in Landlord's reasonable discretion.

1. Except with the prior written consent of Landlord, no tenant shall conduct
any retail sales in or from the Premises, or any business other than that
specifically provided for in the Lease. There shall be no solicitation by
Tenant of other tenants or occupants of the Building.

2. Landlord reserves the right to prohibit personal goods and services
vendors from access to the Building except upon such reasonable terms and
conditions, including but not limited to a provision for insurance
coverage, as are related to the safety, care and cleanliness of the
Building, the preservation of good order thereon, and the relief of any
financial or other burden on Landlord occasioned by the presence of such
vendors or the sale by them of personal goods or services to a tenant or
its employees. If reasonably necessary for the accomplishment of these
purposes, Landlord may exclude a particular vendor entirely or limit the
number of vendors who may be present at any one time in the Building. The
term "personal goods or services vendors" means persons who periodically
enter the Building of which the Premises are a part for the purpose of
selling goods or services to a tenant, other than goods or services which
are used by a tenant only for the purpose of conducting its business on the
Premises. "Personal goods or services" include, but are not limited to,
drinking water and other beverages, food, barbering services, and
shoeshining services.

3. The sidewalks, halls, passages, elevators and stairways shall not be
obstructed by any tenant or used by it for any purpose other than for
ingress to and egress from their respective Premises. The halls, passages,
entrances, elevators, stairways, balconies, janitorial closets, and roof
are not for the use of the general public, and Landlord shall in all cases
retain the right to control and prevent access thereto of all persons whose
presence in the judgment of Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building and its tenants,
provided that nothing herein contained shall be construed to prevent such
access to persons with whom Tenant normally deals only for the purpose of
conducting its business on the Premises (such as clients, customers, office
suppliers and equipment vendors, and the like) unless such persons are
engaged in illegal activities. No tenant and no employees of any tenant
shall go upon the roof of the Building without the written consent of
Landlord. The Common Areas of the Project, including the patios, are
available for the use of all tenants and/or occupants of the Project in
general and their respective employees and/or invitees, and no tenant shall
have the right to exclude any other tenant or occupant of the Project,
their employees or invitees, therefrom, without Landlord's prior written
consent.

4. The sashes, sash doors, windows, glass lights, and any lights or skylights
that reflect or admit light into the halls or other places of the Building
shall not be covered or obstructed. The toilet rooms, water and wash
closets and other water apparatus shall not be used for any purpose other
than that for which they were constructed, and no foreign substance of any
kind whatsoever shall be thrown therein, and the expense of any

EXHIBIT E,
Page 1
<PAGE>

breakage, stoppage or damage, resulting from the violation of this rule
shall be borne by the tenant who, or whose clerks, agents, employees, or
visitors, shall have caused it.

5. No sign, advertisement or notice visible from the exterior of the Premises
or Building shall be inscribed, painted or affixed by Tenant on any part of
the Building or the Premises without the prior written consent of Landlord.
If Landlord shall have given such consent at any time, whether before or
after the execution of this Lease, such consent shall in no way operate as
a waiver or release of any of the provisions hereof or of this Lease, and
shall be deemed to relate only to the particular sign, advertisement or
notice so consented to by Landlord and shall not be construed as dispensing
with the necessity of obtaining the specific written consent of Landlord
with respect to each and every such sign, advertisement or notice other
than the particular sign, advertisement or notice, as the case may be, so
consented to by Landlord.

6. In order to maintain the outward professional appearance of the Building,
all window coverings to be installed at the Premises shall be subject to
Landlord's prior reasonable approval. If Landlord, by a notice in writing
to Tenant, shall object to any curtain, blind, shade or screen attached to,
or hung in, or used in connection with, any window or door of the Premises,
such use of such curtain, blind, shade or screen shall be forthwith
discontinued by Tenant. No awnings shall be permitted on any part of the
Premises.

7. Tenant shall not do or permit anything to be done in the Premises, or bring
or keep anything therein, which shall in any way increase the rate of fire
insurance on the Building, or on the property kept therein, or obstruct or
interfere with the rights of other tenants, or in any way injure or annoy
them; or conflict with the regulations of the Fire Department or the fire
laws, or with any insurance policy upon the Building, or any part thereof,
or with any rules and ordinances established by the Board of Health or
other governmental authority. Tenant shall not bring into, or permit or
suffer in, the Building or the Project, any weapons or firearms of any
kind.

8. No safes or other objects larger or heavier than the freight elevators of
the Building are limited to carry shall be brought into or installed in the
Premises. Landlord shall have the power to prescribe the weight, method of
installation and position of such safes or other objects. The moving of
safes shall occur only between such hours as may be designated by, and only
upon previous notice to, the manager of the Building, and the persons
employed to move safes in or out of the Building must be acceptable to
Landlord. No freight, furniture or bulky matter of any description shall be
received into the Building or carried into the elevators except during
hours and in a manner approved by Landlord.

9. Landlord shall clean the Premises as provided in the Lease, and except with
the written consent of Landlord, no person or persons other than those
approved by Landlord will be permitted to enter the Building for such
purpose, but Tenant shall not cause unnecessary labor by reason of Tenant's
carelessness and indifference in the preservation of good order and
cleanliness.

10. No tenant shall sweep or throw or permit to be swept or thrown from the
Premises any dirt or other substance into any of the corridors or halls or
elevators, or out of the doors or windows or stairways of the Building, and
Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having
business therein, nor shall any animals, firearms or birds be kept in or
about the Building. The Building is a non-smoking building. Smoking or
carrying lighted cigars or cigarettes in any buildings

EXHIBIT E,
Page 2
<PAGE>

located in the Project, including the Building and the elevators of the
Building, is prohibited.

11. Except for the use of microwave ovens and coffee makers for Tenant's
personal use, no cooking shall be done or permitted by Tenant on the
Premises or in or about the Project, nor shall the Building be used for
lodging.

12. Tenant shall not use or keep in or about the Building any kerosene,
gasoline, or inflammable fluid or any other illuminating material, or use
any method of heating other than that supplied by Landlord.

13. If Tenant desires telephone or telegraph connections, Landlord will direct
electricians as to where and how the wires are to be introduced. No boring
or cutting for wires or other otherwise shall be made without directions
from Landlord.

14. Each tenant, upon the termination of its tenancy, shall deliver to Landlord
all the keys of offices, rooms and toilet rooms, and security access
card/keys which shall have been furnished such tenant or which such tenant
shall have had made, and in the event of loss of any keys so furnished,
shall pay Landlord therefor.

15. No Tenant shall lay linoleum or other similar floor covering so that the
same shall be affixed to the floor of the Premises in any manner except by
a paste, or other material which may easily be removed with water, the use
of cement or other similar adhesive materials being expressly prohibited.
The method of affixing any such linoleum or other similar floor covering to
the floor, as well as the method of affixing carpets or rugs to the
Premises shall be subject to reasonable approval by Landlord. The expense
of repairing any damage resulting from a violation of this rule shall be
borne by Tenant by whom, or by those agents, clerks, employees or visitors,
the damage shall have been caused.

16. No furniture, packages or merchandise will be received in the Building or
carried up or down in the elevators, except between such Building hours and
in such elevators as shall be designated by Landlord.

17. On Saturdays, Sundays and legal holidays, and on other days between the
hours of 6:00 p.m. and 7:00 a.m. access to the Building or to the halls,
corridors, elevators or stairways in the Building, or to the Premises, may
be refused unless the person seeking access is known to the building
watchman, if any, in charge and has a pass or is properly identified.
Landlord shall in no case be liable for damages for the admission to or
exclusion from the Building of any person whom Landlord has the right to
exclude under Rule 3 above. In case of invasion, mob, riot, public
excitement, or other commotion, Landlord reserves the right but shall not
be obligated to prevent access to the Building during the continuance of
the same by closing the doors or otherwise, for the safety of the tenants
and protection of property in the Building.

18. Tenant shall see that the windows and doors of the Premises are closed and
securely locked before leaving the Building and Tenant shall exercise
extraordinary care and caution that all water faucets or water apparatus
are entirely shut off before Tenant or Tenant's employees leave the
Building, and that all electricity, gas or air shall likewise be carefully
shut off, so as to prevent waste or damage, and for any default or
carelessness Tenant shall make good all injuries sustained by other tenants
or occupants of the Building or Landlord.

19. Tenant shall not alter any lock or install a new or additional lock or any
bolt on any door of the Premises without prior written consent of Landlord.
If Landlord shall give its consent, Tenant shall in each case furnish
Landlord with a key for any such lock.

EXHIBIT E,
Page 3
<PAGE>

Landlord shall have the right to impose a charge for each key issued and
for rekeying any lock or bolt on any door of the Premises.

20. Tenant shall not install equipment, such as but not limited to electronic
tabulating or computer equipment, requiring electrical or air conditioning
service in excess of those to be provided by Landlord under the Lease.

21. No bicycle, or shopping cart, or other vehicle or any animal shall be
brought into the Premises or the halls, corridors, elevators or any part of
the Building by Tenant.

22. Landlord shall have the right to prohibit the use of the name of the
Building or Project or any other publicity by Tenant which in Landlord's
opinion tends to impair the reputation of the Building or Project or their
desirability for other tenants, and upon written notice from Landlord,
Tenant will refrain from or discontinue such publicity.

23. Tenant shall not erect any aerial or antenna on the roof or exterior walls
of the Premises, Building, or Project without the prior written consent of
Landlord.

EXHIBIT E,
Page 4
<PAGE>

EXHIBIT F

CONFIRMATION OF LEASE COMMENCEMENT DATE,
LETTER OF CREDIT AND MONTHLY RENTAL

In connection with that certain Office Lease dated July __, 1996 between WCB II
MORE Limited Partnership, as Landlord, and Newgen Results Corporation, as Tenant
concerning the Premises located at Suite 300, 12680 High Bluff Drive, San Diego,
California, Landlord and Tenant hereby agree as follows:

1. All initially capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned thereto in the Office Lease.

2. The Lease Commencement Date stated in Section I. of the Office Lease is
amended to be _________, 19__, and the Expiration Date stated in
Section I. is amended to be _________, 19__.

3. Landlord has satisfactorily complied with all requirements and conditions
precedent to the commencement of the Term as specified in the Office Lease.

4. The Premises covered by the Office Lease and the tenant improvements
therein have been fully completed as required, are in good condition, are
ready for occupancy and have been accepted by Tenant.

5. Tenant has or shall commence paying Monthly Rental pursuant to the Office
Lease on _________, 19__.

6. The total amount of the Tenant Allowance disbursed pursuant to EXHIBIT C to
the Office Lease is $____________, and [THERE IS NO/THE AMOUNT OF THE)
UNUSED ALLOWANCE [IS $____________]. [IF THERE IS AN UNUSED ALLOWANCE
AMOUNT: IT IS HEREBY AGREED THAT (a) THE AMOUNT OF THE LETTER OF CREDIT
DESCRIBED IN ADDENDUM SECTION XXXV.C. OF THE OFFICE LEASE MAY BE REDUCED BY
TENANT IN ACCORDANCE WITH SUCH SUBSECTION C. TO $____________, IN THE
AGGREGATE, AND (b) THE NUMBERS $452,884.00, $339,663.00, $266,442.00 AND
$113,221.00 SET FORTH IN SUCH ADDENDUM SECTION ARE AMENDED TO READ,
RESPECTIVELY, $ ____________, $ ____________, $ ____________, AND
$____________. IN ACCORDANCE WITH EXHIBIT D TO THE OFFICE LEASE, THE AMOUNT
OF THE UNUSED ALLOWANCE SHALL BE APPLIED AS A CREDIT TO MONTHLY RENTAL FOR
[SPECIFY MONTH(S)] OR THE MONTHLY RENTAL PAYABLE UNDER THE OFFICE LEASE (OR
THE MONTHLY RENTAL WAIVER, AS APPLICABLE) FOR THE FIRST THIRTY (30) MONTHS
OF THE TERM IS AGREED TO BE $ ____________, AND THE MONTHLY RENTAL FOR THE
LAST THIRTY (30) MONTHS OF THE TERM IS AGREED TO BE $ ____________.]

Dated effective this _________ day of ________ 199__

"TENANT" "LANDLORD"
NEWGEN RESULTS CORPORATION, a WCB II MORE LIMITED PARTNERSHIP,
California corporation a Delaware limited partnership

By: WCB II MORE INCORPORATED,
By: a Delaware corporation
----------------------------
Name:
--------------------------
Title:
-------------------------
By:
----------------------------
Brad E. Baker,
Senior Vice President

[SAMPLE]

EXHIBIT F

<PAGE>

EXHIBIT G

JANITORIAL SERVICES

OFFICE AREAS

Janitorial personnel will report to building management any breakage of Tenant's
or Building property regardless of its nature. It will be the responsibility of
the Janitorial Services contractor to enforce this. Landlord shall be
responsible for the cost of all cleaning materials and for the cost of supplies
for restocking, including without limitation all restroom supplies, all of which
costs shall be included in Common Operating Costs.

DAILY

1. Empty all waste containers and remove to designated disposal areas. Replace
liners as necessary.

2. Thoroughly vacuum all carpeted areas.

3. Dust and wipe clean exposed areas on desks, counter tops, filing cabinets,
office furniture, telephones, window ledges, and other horizontal surfaces
with chemically treated cloths. Light feather dusting on areas that have
items or paper work left on desk.

4. Spot clean both sides of glass doors, sidelights and all interior glass.

5. Sweep and/or spot damp mop all floors.

6. Remove spots and fingerprints on walls around doors, and by light switches.
Polish door hardware.

7. Shut and lock all doors during the cleaning operation. Secure all suite
doors and turn off lights when leaving,

8. Remove all foreign matter from the floors (e.g., gum and tar).

9. Empty all ash trays and damp wipe clean.

WEEKLY

1. Dust low ledges and up seven feet on high ledges, window sills and levelor
blinds.

MONTHLY

1. Vacuum upholstered furniture.

2. Spot clean carpets.

3. Dust levelor blinds and vertical cloth blinds.

4. Mop, clean and buff hard surface floors. Scrub and wax all tile floors.

5. Clean all baseboards.

6. Wipe down both sides of suite entrance doors.

7. Pick up chair pads, vacuum carpet thoroughly and/or wet mop and buff floor.

EXHIBIT F

<PAGE>

QUARTERLY

1. Strip and refinish tile floors. (Monthly, if needed.)

2. Window cleaning (exterior and interior).

TWICE PER YEAR

1. Clean all air supply and return grilles.

LIGHT-FIXTURES

1. Dust all light fixtures lenses, as necessary.

RESTROOMS

Daily

1. Remove all waste to disposal area.

2. Wet mop ceramic tile floor with disinfectant solution, remove all stains.

3. Clean wash basins and counter tops to remove soil, stains and soap film
with a non-abrasive cleaner.

4. Clean and dry polish faucets, soap dispensers, napkin machines, napkin
disposal units, towel and tissue dispensers and waste receptacles with a
non-abrasive cleaner.

5. Restock handsoap, towels, tissue and sanitary products. Check soap
dispensers for clogging and proper operation.

6. Wash and polish mirrors and vanity shelves.

7. Wash all surfaces of stools and urinals with disinfectant solution as well
as both surfaces of stool seats.

8. Damp wipe low ledges, sills and stall partitions.

9. Spot clean all walls, tile and vinyl.

10. Dust and spot clean both sides of doors.

11. Report any equipment malfunctions to building management.

MONTHLY

1. Wash stall partitioning with disinfectant solution.

2. Wash air supply and return grilles.

3. Machine scrub ceramic tile floors.

4. Thoroughly spot clean all tile walls and ceilings - on call, as needed.

5. Clean all light fixtures - on call - as needed.

EXHIBIT G, Page 2

<PAGE>

ENTRANCE LOBBY, CORRIDORS, AND PUBLIC AREAS

DAILY

1. Sweep and spot clean lobby floors.

2. Vacuum and spot clean carpets where applicable.

3. Vacuum entry vestibules and walk off mats.

4. Clean directory board glass as necessary and dust frame.

5. Clean and polish drinking fountains using a non-abrasive polish.

6. Empty, strain sand, replenish when required and clean cigarette urns.

7. Clean lobby door frames sidelights, frames and polish with non-abrasive
product. Spot clean both sides of all glass.

8. Clean and polish entry door thresholds.

9. Clean elevator call buttons.

10. Properly treat granite floor in lobby area.

11. Dust corridor and stairwell doors and frames, base along corridors and
remove all finger smudges from doors and door frames.

WEEKLY

1. Clean window sills.

MONTHLY

1. Clean Base, removing scuff marks.

2. Clean air supply and return grilles.

TWICE PER YEAR

1. Dust corridor and lobby walls, full height.

2. Wash exit lights.

ELEVATORS

DAILY

1. Wash and dry polish both sides of doors to remove dust, hand prints, and
stains, using non-abrasive cleaner.

2. Vacuum and spot clean carpet.

3. Dust ceiling panels and high ledges.

4. Vacuum elevator door tracks.

EXHIBIT G, Page 3

<PAGE>

5. Damp wipe and dry polish control panel.

6. Elevator door tracks cleaned and polished.

WEEKLY

1. Shampoo floor coverings, as necessary.

STAIRWELLS AND LANDINGS

DAILY

1. Sweep and vacuum stairs and landings.

2. Dust handrails and ledges.

EXHIBIT G, Page 4

<PAGE>

EXHIBIT H

FORM OF LETTER OF CREDIT

_____________ BANK

P.O. BOX ___, _________, ________, _________

CABLE ADDRESS:___________ TELEX NO.____________
SWIFT:_________

IRREVOCABLE TRANSFERRABLE STANDBY LETTER OF CREDIT NO. _____________________
Date:_______________, 19__
Place of Issue:________________
Date of Expiration:___________, 19__

Beneficiary

WCB II MORE LIMITED PARTNERSHIP
450 Newport Center Drive, Suite 304
Newport Beach, California 92660
Attention: Ronald A. Lack

Gentlemen:

We hereby establish our irrevocable Letter of Credit No. ________ in your favor
for account of ________ ("Applicant") up to an aggregate amount of ________
Dollars (US$ ________) available by your drafts on us at sight to be accompanied
by Beneficiary's signed statement that it is entitled to draw hereunder.

This letter of credit is transferrable and Beneficiary may transfer its interest
herein to any transferee of Beneficiary's interest in that certain Lease
dated________, 19__, between Beneficiary and Applicant.

Drafts must be presented to________ Bank not later than ________, 19__.

The address for presentation of drafts and accompanying documents shall be:

__________________ Bank
_______________________
_______________________
Attention:_____________

This credit is subject to the Uniform Customs and Practice for Documentary
Credits (1983 Revision), International Chamber of Commerce Publication No. 400,
We hereby agree with the drawers, endorsers and bona fide holders of the drafts
under and in compliance with the terms of this credit that these drafts will be
duly honored by the above drawee. All drafts must be marked; "Drawn under
________ Bank, Credit No. ________."

Very truly yours,

--------------------
Authorized Signature

EXHIBIT H

<PAGE>

EXHIBIT I
SUBORDINATION, NON-DISTURBANCE,
AND ATTORNMENT AGREEMENT

THIS AGREEMENT is made and entered into as of the ____ day of _________,
199__, by and between ___________________, a corporation ("Mortgagee"), and
___________________, a _______________ corporation ("Lessee").

R E C I T A L S :

A. Mortgagee has provided an acquisition and development loan ("Loan")
to ______________________, Owner/Lessor ("Borrower"), for the purpose of
financing Borrower's acquisition and development of the ________________ in
__________, ________________ and described in EXHIBIT A attached hereto and
incorporated herein by reference (said real property and improvements being
herein called the "Project"), such Loan being secured by a First Deed of
Trust and Security Agreement dated __________________ and recorded in Volume
_____, Page _____, ET SEQ., of the _____ Records of __________ County,
_____________ (the "Mortgagee"), constituting a lien or encumbrance on the
Project; and

B. Lessee is the holder of a leasehold estate in and to
_______________ of ___________ of the Project, consisting of approximately
__________ usable square feet of space (the "Demised Premises"), under that
Lease Agreement (the "Lease") dated __________________, executed by Borrower,
as Landlord (Borrower being sometimes hereinafter called "Lessor"), and
Lessee, as Tenant; and

C. Lessee and Mortgagee desire to confirm their understandings with
respect to the Lease and Mortgage.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, Lessee and Mortgagee agree and
covenant as follows:

1. NON-DISTURBANCE. Mortgagee agrees that it will not disturb the
possession of Lessee under the Lease upon any judicial or non-judicial
foreclosure of the Mortgagee or upon acquiring title to the Project by
deed-in-lieu of foreclosure, or otherwise, if the Lease is in full force and
effect and Lessee is not then in default under the Lease, and that Mortgagee
will accept the attornment of Lessee thereafter so long as Lessee is not in
default under the Lease.

2. ATTORNMENT. If the interests of Lessor in and to the Demised
Premises are owned by Mortgagee by reason of any deed-in-lieu of foreclosure,
judicial foreclosure,

EXHIBIT I,
Page 1 of 6

<PAGE>

sale pursuant to any power of sale or other proceedings brought by it or by
any other manner, including, but not limited to, Mortgagee's exercise of its
rights under any assignment of leases and rents, and Mortgagee succeeds to the
interest of Lessor under the Lease, Lessee shall be bound to Mortgagee under
all of the terms, covenants and conditions of the Lease for the balance of
the term thereof remaining and any extension thereof duly exercised by Lessee
with the same force and effect as if Mortgagee were the Lessor under the
Lease; and Lessee does hereby attorn to Mortgagee, as its lessor, said
attornment to be effective and self-operative, without the execution of any
further instruments on the part of any of the parties hereto, immediately
upon Mortgagee's succeeding to the interest of Lessor under the Lease;
provided, however, that Lessee shall be under no obligation to pay rent to
Mortgagee until Lessee receives written notice from Mortgagee that Mortgagee
has succeeded to the interest of the Lessor under the Lease or otherwise has
the right to receive such rents. The respective rights and obligations of
Lessee and Mortgagee upon such attornment, to the extent of the then
remaining balance of the term of the Lease, shall be and are the same as now
set forth therein, it being the intention of the parties hereto for this
purpose to incorporate the Lease in this Agreement by reference, with the
same force and effect as if set forth in full herein.

3. MORTGAGEE'S OBLIGATIONS. If Mortgagee shall succeed to the interest
of Lessor under the Lease, Mortgagee, subject to the last sentence of this
Paragraph 3, shall be bound to Lessee under all of the terms, covenants and
conditions of the Lease; provided, however, that Mortgagee shall not be:

(a) Liable for any act or omission of any prior lessor (including
Lessor); or

(b) Subject to the offsets or defenses which Lessee might have
against any prior lessor (including Lessor); or

(c) Bound by any rent or additional rent or advance rent which
Lessee might have paid for more than the current month to any prior
lessor (including Lessor), and all such rent shall remain due and owing,
notwithstanding such advance payment; or

(d) Bound by any security or advance rental deposit made by Lessee
which is not delivered or paid over to Mortgagee and with respect to
which Lessee shall look solely to Lessor for refund or reimbursement; or

(e) Bound by any termination, amendment or modification of the
Lease made without its consent and written approval.

Neither ____________________ nor any other party who from time to time shall
be included in the definition of Mortgagee hereunder, shall have any
liability or responsibility under or pursuant to the terms of this Agreement
after it ceases to own an interest in the Project. Nothing in this Agreement
shall be construed to require

EXHIBIT I,
Page 2 of 6

<PAGE>

Mortgagee to see to the Application of the proceeds of the Loan, and Lessee's
agreements set forth herein shall not be impaired on account of any
modification of the documents evidencing and securing the Loan. Lessee
acknowledges that Mortgagee is obligated only to Borrower to make the Loan
only upon the terms and subject to the conditions set forth in the Loan
Agreement between Mortgagee and Borrower pertaining to the Loan. Lessee
further acknowledges and agrees that neither Mortgagee nor any purchaser of
the Project at foreclosure sale or any grantee of the Project named in a
deed-in-lieu of foreclosure, nor any heir, legal representative, successor,
or assignee of Mortgagee or any such purchase or grantee, has or shall have
any personal liability for the obligations of Lessor under the Lease;
provided, however, that the Lessee may exercise any other right or remedy
provided thereby or by law in the event of any failure by Lessor to perform
any such material obligation.

4. SUBORDINATION. The Lease and all rights of Lessee thereunder are
subject and subordinate to the Mortgage and to any deeds of trust, mortgages,
ground leases or other instruments of security which do now or may hereafter
cover the Project or any interest of Lessor therein (collectively, the "Prior
Encumbrances") and to any and all advances made on the security thereof and
to any and all increases, renewals, modifications, consolidations,
replacements and extensions of the Mortgage or of any of the Prior
Encumbrances. This provision is acknowledged by Lessee to be self-operative
and no further instrument shall be required to effect such subordination of
the Lease. Lessee shall, however, upon demand at any time or times execute,
acknowledge and deliver to Mortgage any and all instruments and certificates
that in Mortgagee's judgement may be necessary or proper to confirm or
evidence such subordination. If Lessee shall fail or neglect to execute,
acknowledge and deliver any such instrument or certificate, Mortgagee may, in
addition to any other remedies Mortgagee may have, as agent and
attorney-in-fact of Lessee, execute, acknowledge and deliver the same and
Lessee hereby irrevocably appoints Mortgagee as Lessee's agent and
attorney-in-fact for such purpose. However, notwithstanding the generality of
the foregoing provisions of this paragraph, Lessee agrees that Mortgagee
shall have the right at any time to subordinate the Mortgage, and any such
other mortgagee or ground lessor shall have the right at any time to
subordinate any such Prior Encumbrances, to the Lessee on such terms and
subject to such conditions as Mortgage or any such other mortgagee or ground
lessor, may deem appropriate in its discretion.

5. NEW LEASE. Upon the written request of either Mortgagee or Lessee to
the other given at the time of any foreclosure, trustee's sale or conveyance
in lieu thereof, the parties agree to execute a lease of the Demised
Premises upon the same terms and conditions as the Lease between Lessor and
Lessee, which lease shall cover any unexpired term of the Lease existing
prior to such foreclosure, trustee's sale or conveyance in lieu of
foreclosure.

6. NOTICE. Lessee agrees to give written notice to Mortgagee of any
default by Lessor or Borrower under the Lease not less than thirty (30) days
prior to terminating the Lease or exercising any other right or remedy
thereunder or provided by law. Lessee

EXHIBIT I,
Page 3 of 6

<PAGE>

further agrees that it shall not terminate the Lease or exercise any such right
or remedy provided such default is cured within thirty (30) days; provided,
however, that if such default cannot by its nature be cured within thirty (30)
days, then Lessee shall not terminate the Lease or exercise any such right or
remedy, provided the curing of such default is commenced within such thirty (30)
days and is diligently prosecuted thereafter. Such notices shall be delivered
by certified mail, return receipt requested to:

7. MORTGAGEE. The term "Mortgagee" shall be deemed to include __________
and any of its successors and assigns, including anyone who shall have succeeded
to Lessor's interest in and to the Lease and the Project by, through or under
judicial foreclosure or sale under any power or other proceedings brought
pursuant to the Mortgage, or deed in lieu of such foreclosure or proceedings, or
otherwise.

8. ESTOPPEL. Lessee hereby certifies, represents and warrants to
Mortgagee that:

(a) That the Lease is a valid lease and in full force and effect.
that there is no existing default in any of the terms and conditions
thereof and no event has occurred which, with the passing of time or giving
of notice or both, would constitute an event of default.

(b) That the Lease has not been amended, modified, supplemented,
extended, renewed or assigned, and represents the entire agreement of the
parties;

(d) That Lessee shall not pay rental under the Lease for more than
one (1) month in advance. Lessee agrees that Lessee shall, upon written
notice by Mortgagee, pay to Mortgagee, when due, all rental under the
Lease;

(e) That all obligations and conditions under the Lease to be
performed to date have been satisfied, free of defenses and set-offs; and

(f) That Lessee has not received written notice of any claim,
litigation or proceedings, pending or threatened, against or relating to
Lessee, or with respect to the Demised Premises which would affect its
performance under the Lease. Lessee has not received written notice of any
violations of any federal, state, county or municipal statutes, laws,
codes, ordinances, rules, regulations,

EXHIBIT I,
Page 4 of 6

<PAGE>

orders, decrees or directives relating to the use or condition of the
Demised Premises or Lessee's operations thereon.

9. MODIFICATION AND SUCCESSORS. This Agreement may not be modified
orally or in any manner other than by an agreement, in writing, signed by the
parties hereto and their respective successors in interest. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, their
successors and assigns.

10. COUNTERPARTS. This Agreement may be executed in several counterparts,
and all so executed shall constitute one agreement, binding on all parties
hereto, notwithstanding that all parties are not signatories to the original or
the same counterpart.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

MORTGAGEE:
------------------------------

By:
---------------------------
Its
------------ ------------

LESSEE:
------------------------------
a
------------------------------

By:
---------------------------
Its
------------ ------------

STATE OF TEXAS )
)
COUNTY OF DALLAS )

This instrument was acknowledged before me on this _____ day of ________,
199___ by _________________________, a _______________, on behalf of said
_______________.

(SEAL)
------------------------------
Notary Public in and for
the State of
------------------

------------------------------
Print name of notary

EXHIBIT I
Page 5 of 6

<PAGE>

My Commission Expires:
--------

STATE OF TEXAS )
)
COUNTY OF DALLAS )

This instrument was acknowledged before me on this _____ day of ________,
199___ by _________________________, a _______________, on behalf of said
_______________.

(SEAL)
------------------------------
Notary Public in and for
the State of
------------------

------------------------------
Print name of notary

My Commission Expires:
--------

EXHIBIT I
Page 6 of 6

<PAGE>

OFFICE BUILDING LEASE

THIS LEASE (the "Lease"), dated April 6, 1998 for reference purposes only, is
entered into between Landlord (as defined below) and Tenant (as defined below),
and consists of the Basic Lease Provisions, the General Office Lease Provisions
and all addenda and exhibits identified at the end of the Basic Lease
Provisions.

BASIC LEASE PROVISIONS

1. LANDLORD: Plaza Holdings, Inc., a California corporation.

2. TENANT: Newgen Results Corporation, a California corporation.

3. PROJECT: That certain office building project commonly known as Plaza Del
Mar in the City of San Diego, San Diego County, California, as generally
shown on the site plan attached as Exhibit "A" but reserving the right to
make additions, deletions and modifications thereto as provided herein.
(Section 1.1)

4. PREMISES AND BUILDING: Suite No. 170 on Floor No. One (1) in the Building
having the street address 12526 High Bluff Drive, San Diego, California
92130, and as generally shown on Exhibit "B" hereto, (Section 1.1)

5. ESTIMATED COMMENCEMENT DATE: June 1, 1998. (Section 2.1)

6. TERM: Fifteen (15) months. (Section 2.1)

7. INITIAL BASIC MONTHLY RENT: Agreed to be $14,624.40 (based upon $2.10 per
square foot of Tenant's Rentable Area), plus separately metered electricity
to the Premises. (Section 3.1)

8. INCREASES TO BASIC MONTHLY RENT: Not applicable. (Section 3.2).

9. TENANT'S RENTABLE AREA: Agreed to be 6,964 square feet. (Section 1.1)

10. TENANT'S USABLE AREA: Agreed to be 6,168 square feet.

11. TENANT'S PRO RATA SHARE is 6.04%.

12. SECURITY DEPOSIT: $14,624.40 (Section 18).

13. TENANT IMPROVEMENT DEPOSIT: Not applicable.

13. PERMITTED USE: General office use. (Section 5)

14. PAYMENTS AND NOTICES shall be addressed to: (Section 21.10)

LANDLORD'S AGENT: Janez Properties, Inc.
12520 High Bluff Drive, Suite 100
San Diego, CA 92130

TENANT: Newgen Results Corporation
12680 High Bluff Drive, Suite 300
San Diego, California 92130

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE]
- -------------------- ------------------

<PAGE>

15. BROKER(S): Not applicable.

16. GUARANTOR OF LEASE (if applicable): Not applicable.

LEASE ADDENDUM AND EXHIBITS

FIRST ADDENDUM ...............Additional Lease Terms

EXHIBIT "A"...................Site Plan of Project

EXHIBIT "B"...................Floor Plan of Premises

EXHIBIT "C"...................Memorandum of Actual Commencement
and Expiration Dates

EXHIBIT "D"...................Removal of Walls Plan

EXHIBIT "E"...................Rules and Regulations

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- -------------------- ------------------

<PAGE>

TABLE OF CONTENTS

Page
----

<S> <C>
SECTION 1. PREMISES 1

1.1 Premises; Building; Project 1
1.2 Acceptance of Premises 1
1.3 Building Name and Address 1

SECTION 2. TERM 2

2.1 Term 2
2.2 Delay in Possession 2
2.3 Early Possession 2
2.4 Holding Over 2
2.5 Surrender Of Premises 3

SECTION 3. RENT AND OTHER PAYMENTS 3

3.1 Basic Monthly Rent 3
3.2 Basic Monthly Rent Increases 3
3.3 Project Expenses 3
3.4 Prorations 6
3.5 No Offsets or Conditional Payments 6
3.6 Rent 6

SECTION 4. TAXES PAYABLE BY TENANT 6

4.1 Tenant's Personal Property and Trade Fixtures 6
4.2 Above Standard Tenant Improvements 6

SECTION 5. USE OF PREMISES 7

5.1 Limitation of Use 7
5.2 Compliance with Governmental and Insurance Requirements 7
5.3 Assumption of Risk of Noncompliance 7

SECTION 6. REPAIRS, MAINTENANCE, ALTERATIONS AND ADDITIONS 7

6.1 Tenant Repairs and Maintenance 7
6.2 Landlord Repairs and Maintenance 8
6.3 Alterations and Additions 8
6.4 Mechanics' Liens 9
6.5 Signs 9
6.6 Hazardous Materials 9

SECTION 7. BUILDING SERVICES 9

7.1 Utility Services 9
7.2 Excessive Use 10
7.3 Janitorial, Refuse Removal and Lighting Services 10
7.4 Interruption of Utility Service 10
7.5 Exoneration of Landlord and Management Company
From Liability 10

SECTION 8. COMMON AREAS 11

SECTION 9. LANDLORD'S RIGHT OF ACCESS 11

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SECTION 10. INDEMNIFICATION 11

SECTION 11. INSURANCE 11

11.1 Tenant Insurance 11
11.2 Landlord Insurance 12
11.3 Waivers of Subrogation 12

SECTION 12. DAMAGE OR DESTRUCTION OF BUILDING OR PREMISES 13

12.1 Partial Damage 13
12.2 Destruction of Building 13
12.3 Effect of Lease Termination 13
12.4 Reconstruction 13
12.5 Rent Abatement 13
12.6 Damage Due to Tenant's Fault 13

SECTION 13. EMINENT DOMAIN 14

SECTION 14. ASSIGNING, SUBLETTING AND OTHER TRANSFERS 14

14.1 No Assignment Without Consent 14
14.2 Procedure for Requesting 14
14.3 Terms of Consent 14
14.4 Right of Refusal; Termination 15
14.5 Additional Events Constituting an Assignment 15
14.6 Landlord's Remedies 16
14.7 Hypothecation of Lease 16
14.8 Additional Terms Applicable to Subleases 16

SECTION 15. SUBORDINATION; ATTORNMENT AND NON-DISTURBANCE 17

15.1 Subordination 17
15.2 Attornment 17
15.3 Non-Disturbance 17
15.4 Self-Executing 17

SECTION 16. DEFAULT AND REMEDIES 17

16.1 Events of Default 17
16.2 Landlord's Remedies 18
16.3 No Effect on Indemnification 19
16.4 No Acceptance of Surrender 19
16.5 Cumulative Remedies 19
16.6 Landlord's Cure of Tenant's Default 19
16.7 Late Charges and Interest on Past Due Obligations 19
16.8 Accord and Satisfaction 20

SECTION 17. LIABILITY OF LANDLORD 20

17.1 Landlord's Inability to Perform 20
17.2 Release Upon Sale 20
17.3 Limitation on Recourse of Tenant 20

SECTION 18. SECURITY DEPOSIT 20

SECTION 19. RIGHT TO TRANSFER 21

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SECTION 20. PARKING 21

20.1 Parking Areas and Structures 21
20.2 Parking Charges, Regulation and Use 21

SECTION 21. GENERAL PROVISIONS 21

21.1 Index 21
21.2 Interpretation 22
21.3 Time of the Essence 22
21.4 Successors and Assigns 22
21.5 Waiver and Default 22
21.6 Entire Agreement; Amendments, Representations to
Tenant by Third Parties 22
21.7 Severability 23
21.8 Counterparts 23
21.9 Attorneys' Fees 23
21.10 Notices 23
21.11 Brokers 23
21.12 Examination of Lease 23
21.13 Rules and Regulations 24
21.14 Estoppel Certificate 24
21.15 Corporate Tenant 24
21.16 Recordation of Lease 24
21.17 Multiple Tenants 24
21.18 Compliance with Recorded Covenants, Conditions
and Restrictions 24

SECTION 22. SPECIAL NOTICE--READ BEFORE EXECUTING THIS AGREEMENT 24
</TABLE>

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GENERAL OFFICE LEASE PROVISIONS

SECTION 1. PREMISES.

1.1 PREMISES; BUILDING; PROJECT. Subject to all of the terms, covenants
and conditions contained in this Lease, Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, the Premises identified in the Basic Lease
Provisions. The Premises are located within the Building and the Project
identified in the Basic Lease Provisions.

Landlord makes no express or implied warranty that the Project will
remain as it presently exists or as shown on Exhibit "A", and expressly reserves
the right to (i) add or delete buildings and to modify existing buildings, and
(ii) modify the layout, configuration and composition of the parking, driveway
and landscaped areas.

Tenant acknowledges that the Premises do not include the areas
between any finished ceiling and the slab of the Building floor above such
ceiling, and Landlord reserves the use of such areas. Landlord further
reserves the right to locate or relocate (both vertically and horizontally),
install, maintain, use repair and replace pipes, utility lines, ducts,
conduits, flues, refrigerant lines, drains, sprinkler mains and valves,
access panels, wires and appurtenant meters or equipment, and structural
elements leading through, under or above the Premises in locations which will
not materially interfere with Tenant's use of the Premises.

The rentable square footage contained within the Premises and the
Project shall initially be the agreed-upon figures set forth in the Basic Lease
Provisions, provided that if alterations or additions are subsequently made to
buildings within the Project, such figures may be redetermined for purposes of
redetermining Tenant's Pro Rata Share of Project Expenses (but not Basic Monthly
Rent), by Landlord's architect using any reasonable method substantially in
accordance with applicable B.O.M.A. guidelines most recently issued.

1.2 ACCEPTANCE OF PREMISES. Tenant acknowledges that, except as
specifically set forth in this Lease, neither Landlord nor any representative
of Landlord has made any representation or warranty with respect to the
Premises or the Building or the suitability or fitness of either for any
purpose. The taking of possession or use of the Premises by Tenant for any
purpose other than installation of Tenant's telephone, computer and/or any
other communication system or construction shall conclusively establish that
the Premises and the Building were in satisfactory condition and in
conformity with the provisions of this Lease in all respects, except for
those matters which Tenant shall have brought to Landlord's attention on a
written punch list. This list shall be limited to any items required to be
accomplished by Landlord attached to this Lease, and shall be delivered to
Landlord within thirty (30) days after the term ("Term") of this Lease
commences as provided in Section 2 below. Nothing contained in this Section
shall affect the commencement of the Term or the obligation of Tenant to pay
rent. Landlord shall diligently complete all punch list items of which it is
notified as provided above.

1.3 BUILDING NAME AND ADDRESS. Tenant shall not utilize any name selected
by Landlord from time to time for the Building and/or the Project as any part
of Tenant's corporate or trade name. Landlord shall have the right to change
the name, number or designation of the Building or Project without liability to
Tenant.

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SECTION 2. TERM.

2.1 TERM. The Term shall be for the period shown in the Basic Lease
Provisions. The Term shall commence ("Commencement Date") on the earlier of (a)
subject to the provisions of Section 2.2, the Estimated Commencement Date as
set forth in the Basic Lease Provisions, or (b) the date Tenant acquires
possession or commences use of the Premises. Within ten (10) days after
possession of the Premises is tendered to Tenant, the parties shall memorialize
on a form provided by Landlord the actual Commencement Date and the expiration
date ("Expiration Date") of this Lease. Tenant's failure to execute such form
shall not affect the validity of Landlord's determination of those dates.

2.2 DELAY IN POSSESSION. Landlord shall use good faith efforts to make
the Premises ready for occupancy (as defined below) on or before the Estimated
Commencement Date. However, if Landlord, for any reason whatsoever, cannot
deliver possession of the Premises ready for occupancy to Tenant on or before
the Estimated Commencement Date, this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for any resulting loss or damage. However,
Tenant shall not be liable for any rent and the Commencement Date shall not
occur until Landlord tenders possession of the Premises ready for occupancy (as
defined below), except that if Landlord's failure to so tender possession on the
Estimated Commencement Date is attributable to any action or inaction by Tenant
(including without limitation any tenant improvement construction change orders
requested by Tenant or Tenant's failure to supply any information required from
Tenant or the furnishing by Tenant of inaccurate or erroneous estimates,
specifications, dates or other information), then the Commencement Date shall
not be advanced to the date on which possession of the Premises is tendered to
Tenant, and Landlord shall be entitled to full performance by Tenant (including
the payment of rent) from the date Landlord would have been able to deliver the
Premises to Tenant but for Tenant's delay(s).

2.3 EARLY POSSESSION. If Tenant is permitted (in Landlord's sole
discretion) to wholly or partially occupy the Premises for construction or other
purposes prior to the Commencement Date, all of the terms of this Lease shall
apply other than the obligation to pay Basic Monthly Rent or additional rent.

2.4 HOLDING OVER. This Lease shall terminate without further notice
upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, nor
give Tenant any rights under this Lease, except when in writing signed by
both parties. If Tenant holds over for any period after the expiration (or
earlier termination) of the Term, Landlord may, at its option, treat Tenant
as a tenant at sufferance only, commencing on the first (1st) day following
the termination of this Lease and subject to all of the terms of this Lease,
except that the Basic Monthly Rent shall be $17,410.00. If Tenant fails to
surrender the Premises upon the expiration of this Lease despite demand to do
so by Landlord, Tenant shall indemnify and hold Landlord

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harmless from all loss or liability, including without limitation, any claims
made by any succeeding tenant relating to such failure to surrender. Acceptance
by Landlord of rent after the termination shall not constitute a consent to a
holdover or result in a renewal of this Lease. The foregoing provisions of this
Section are in addition to and do not affect Landlord's right of re-entry or any
other rights of Landlord under this Lease or at law.

2.5 SURRENDER OF PREMISES. On the Expiration Date, Tenant shall surrender
the Premises in the same condition as it existed upon delivery of possession,
except for certain removal of walls pursuant to Exhibit "D" attached hereto and
made a part hereof, thereof under this Lease, reasonable wear and tear excepted.
Tenant shall surrender all keys for the Premises to Landlord or its designated
agent at the place then fixed for the payment of rent and shall inform Landlord
or its designated agent of all combinations on locks safes, and vaults, if any,
in the Premises. Tenant shall remove all its personal property and trade
fixtures (including vaults) from the Premises prior to surrendering the Premises
and shall repair any damage caused by such removal. Such repairs shall be
performed in a manner satisfactory to Landlord and shall include, but not be
limited to, the following: cap all plumbing, cap all electrical wiring, repair
all holes in walls, restore damaged floor and/or ceiling tiles, and clean
Premises thoroughly. Tenant's obligation to observe or perform this covenant
shall survive the expiration or other termination of the term of this Lease.

SECTION 3. RENT AND OTHER PAYMENTS.

3.1 BASIC MONTHLY RENT. Tenant agrees to pay to Landlord, or to any other
person as directed from time to time by notice from Landlord, basic monthly rent
("Basic Monthly Rent") in advance on or before the first day of each whole or
partial calendar month during the Term hereof; provided that Tenant shall pay to
Landlord upon execution of this Lease, in advance, one full month's Basic
Monthly Rent which shall be applied to the first Basic Monthly Rent owing under
this Lease.

3.2 BASIC MONTHLY RENT INCREASES. The Basic Monthly Rent shall be subject
to periodic increases as provided in the Basic Lease Provisions and/or in the
First Addendum to this Lease.

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The provisions of this Section shall survive the expiration
or earlier termination of this Lease, and when an actual cost statement is
made for the accounting year in which this Lease expires or terminates,
Tenant shall promptly pay any underpayment to Landlord, and conversely,
Landlord shall promptly refund any overpayment to Tenant.

(e) AFFILIATED SERVICE COMPANIES. Nothing herein shall be
implied to prohibit, and Tenant hereby acknowledges that Landlord may perform
the janitorial, property management, repair or other services itself or through
affiliated companies, provided the cost thereof charged to Tenant shall not
exceed the reasonable comparable cost of such services by non-affiliated
companies.

3.4 PRORATIONS. If the Commencement Date or the Expiration Date
occurs on a day other than on the first or last day, respectively, of a
calendar month, the Basic Monthly Rent and additional rent for that month
shall be prorated on the basis of the actual number of days in that month.

3.5 NO OFFSETS OR CONDITIONAL PAYMENTS. All Basic Monthly Rent,
additional rent and any other charges and payments to be made by Tenant to
Landlord under any provision of this Lease shall be payable in lawful money of
the United States without any demand, deduction or offset for any reason or of
any kind whatsoever.

No payment by Tenant or receipt by Landlord of a lesser amount
than the rent herein stipulated shall be deemed to be other than a partial
payment of the rent herein stipulated, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease.

3.6 RENT. Any and all sums payable by Tenant to Landlord pursuant
to this Lease, whether or not so designated, shall be deemed to be rent owning
under this Lease.

SECTION 4. TAXES PAYABLE BY TENANT.

4.1 TENANT'S PERSONAL PROPERTY AND TRADE FIXTURES. Tenant shall
be liable for and pay at least ten (10) days prior to delinquency all taxes
assessed or levied upon Tenant's trade fixtures, furnishings, equipment, and all
other personal property located in the Premises. If possible, Tenant shall
cause such taxes to be assessed and billed separately from the property of
Landlord, but if such taxes are assessed and billed together with the property
of Landlord, Tenant shall pay to Landlord Tenant's share of such taxes within
ten (10) days after Landlord's delivery to Tenant of a statement in writing
setting forth Landlord's reasonable determination of the amount of such taxes
applicable to Tenant's property.

4.2 ABOVE STANDARD TENANT IMPROVEMENTS. If tenant improvements in
the Premises, whether installed and/or paid for by Landlord or Tenant, and
whether or not affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than the valuation
attributable to Landlord's standard tenant improvement allowance for the
Project, then Landlord may deem the

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real property taxes and assessments levied against Landlord or the Project by
reason of such excess assessed valuation to be taxes levied against personal
property of Tenant that are governed by the provisions of Section 4.1. If the
records of the County Assessor are available and sufficiently detailed to serve
as a basis for determining the amount by which Tenant's improvements are
assessed at a higher valuation than Landlord's standard allowance, such records
shall be binding on both Landlord and Tenant. Otherwise, the amount payable to
Tenant pursuant to this Section 4.2 shall be reasonably determined by Landlord.

SECTION 5. USE OF PREMISES.

5.1 LIMITATION OF USE. Tenant shall use and occupy the Premises
solely for the purpose specified in the Basic Lease Provisions, and Tenant shall
not use or occupy the Premises or permit the same to be used or occupied for any
other purpose without the prior written consent of Landlord. Tenant agrees that
it will not do or permit anything to be done in or about the Premises which will
in any way obstruct or interfere with or infringe upon the rights of other
tenants or occupants of the Project, or injure or annoy them, or use or allow
the Premises to be used for any improper, immoral, unlawful, or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises.

5.2 COMPLIANCE WITH GOVERNMENTAL AND INSURANCE REQUIREMENTS.
Tenant shall not use or occupy the Premises in violation of the certificate of
occupancy issued for the Building or Premises or any law, ordinance or
regulation or other directive of any federal, state or local governmental
authority and shall at its sole cost and expense fully comply therewith. Tenant
shall fully comply at its expense with any and all existing or subsequently
imposed requirements of any governmental or quasi governmental entity relating
to energy conservation, traffic control, air quality, water quality or any other
environmental concern including, without limitation, any traffic management
program affecting the Building or the Project. Tenant shall not do or permit
to be done anything which will invalidate or increase the cost of any fire,
extended coverage or other insurance policy covering the Project and/or the
Building. In addition to any other remedies available to Landlord, including
but not limited to Landlord's right to declare such a use a breach of this
Lease, Tenant shall promptly upon demand reimburse Landlord for any additional
premium charges for such policy or policies caused by reason of Tenant's failure
to comply with the provisions of this Section.

5.3 ASSUMPTION OF RISK OF NONCOMPLIANCE. Tenant hereby warrants
that it has investigated whether its proposed use of the Premises and its
proposed manner of operation will comply with the requirements of this Section 5
and Tenant assumes the risk that its proposed use of the Premises and its
proposed manner of operation are, and will continue to be, in compliance with
all said requirements, including, without limitation, all zoning laws regulating
the use and enjoyment of the Premises. Tenant shall have sole responsibility
for obtaining at its expense any governmental permits or approvals, (such as,
but not limited to, a conditional use permit) required to operate its business
at the Premises.

SECTION 6. REPAIRS, MAINTENANCE, ALTERATIONS AND ADDITIONS.

6.1 TENANT REPAIRS AND MAINTENANCE. Tenant shall at its sole cost
and expense keep and maintain in good condition and repair the Premises and
every part thereof including, without limitation, floor coverings, interior
walls, ceilings, doors carpeting, painting, wall coverings, drapes and other
window treatments, and all fixtures and equipment therein and excluding only
those repair obligations assumed by Landlord in Section 6.2 below. Tenant shall
cause all of the foregoing repairs and maintenance to be done at Tenant's
expense and only by licensed contractors approved by Landlord. Tenant shall
require all such contractors to comply with Landlord's requirements regarding
any work to be done. If Tenant fails to repair and maintain the Premises,
Landlord may, on ten (10) days prior notice (except that no

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notice shall be required in case of an emergency) enter the Premises and perform
such work itself, in which event Tenant shall reimburse Landlord upon demand as
additional rent all costs so incurred, plus an administrative fee equal to ten
percent (10%) of all such costs. Tenant shall not commit or permit to be
committed any waste in or upon the Premises. As a material inducement to
Landlord entering into this Lease, Tenant hereby waives the provisions of
Section 1932(1) and 1942 of the Civil Code.

6.2 LANDLORD REPAIRS AND MAINTENANCE. Landlord shall (i) keep in
good order, condition and repair the foundations, exterior plate glass, exterior
walls and doors, downspouts, gutters and roof of the Building and all unexposed
electrical, heating, plumbing and sewage systems, (ii) repair and maintain the
mechanical systems necessary to provide those utilities and Building services to
the Premises which Landlord has specifically agreed to provide pursuant to
Section 7 below; and (iii) repair and maintain the Common Areas. The cost of
repairing any damage to the Premises, the Building or the Project caused by the
act or negligence of Tenant, its employees, contractors, agents, visitors,
invitees, permittees, licensees or anyone under Tenant's control or supervision
shall be reimbursed by Tenant to Landlord upon demand together with an
administrative fee equal to ten percent (10%) of all such costs. Landlord shall
not be required at any time to make any repairs, maintenance, improvements,
alterations, changes, additions or replacements of any nature whatsoever in or
to the Premises or the Project except as specifically provided in this Lease.

6.3 ALTERATIONS AND ADDITIONS. Any alterations, changes,
additions, modifications or improvements ("Alterations and Additions") installed
by Tenant, its contractors or agents at any time prior to or during the term of
this Lease shall be done only in compliance with each of the following
requirements: (i) no such work shall proceed without Landlord's prior written
approval which shall not be unreasonably withheld; (ii) all such work shall be
done in conformity with a valid building permit and all other applicable permits
or licenses when and where required, copies of which shall be furnished to
Landlord before the work is commenced, and all such work shall be performed so
as to be acceptable to any governmental authority or agency having or exercising
jurisdiction over the work, and so as to be reasonably satisfactory to Landlord;
provided, however, that Landlord shall have no responsibility therefor either to
Tenant or to third parties, notwithstanding any failure by Landlord to object to
any such work; (iii) Tenant shall reimburse Landlord for any extra expense
incurred by Landlord by reason of faulty work done by Tenant or its contractors,
or by reason of delays caused by such work or by reason of inadequate cleanup;
(iv) all data processing, photocopying, copying and other special electrical
equipment shall have a separate outlet, and Tenant shall pay any additional
costs on account of any increased support to the floor load necessary therefor,
or for any other equipment; provided, however, that Landlord makes no
representation or warranty as to the suitability of the Premises for such
equipment; (v) Tenant or its contractors, before commencing any Alterations and
Additions in, or around the Premises, shall give sufficient notice thereof to
Landlord for Landlord's preparation, posting and recordation of an appropriate
notice of nonresponsibility, as provided in California Civil Code Section 3094,
or any related, successor or similar provision of law. Within ten (10) days
after substantial completion of any Alterations and Additions, Tenant shall
record in the Office of the County Recorder in the county in which the Building
is located, a notice of completion as permitted by law. Notwithstanding the
foregoing, Tenant shall not affix any material to the exterior windows of the
Building, shall not permit any logo sign or other such material within the
Premises to be visible from the outside of the Building; and shall not use any
window coverings other than the Building standard coverings provided by
Landlord. In the event that any alterations or improvements to the Premises by
Tenant (and/or any change in use of the Premises by Tenant) necessitates that
the Common Areas of the Building or Project be altered in order to comply with
the requirements of the Americans With Disabilities Act or other statutes or
legal requirements, Tenant shall be responsible for the cost of such repairs to
the Common Areas.

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6.4 MECHANIC'S LIENS. Tenant hereby agrees to keep the Premises,
the Building and the Project free from any liens arising out of any work
performed, materials furnished or obligations incurred by or on behalf of
Tenant. Within twenty (20) days after the filing of any such lien, Tenant shall
either (i) cause the lien to be discharged of record, or (ii) if Tenant in good
faith determines that such lien should be contested, furnish such security as
Landlord may require (including, without limitation, a release bond under
Section 3143 of the California Civil Code or any successor statute) to release
the Premises, Building and Project from the effect of the lien. Failure by
Tenant to fulfill either of the alternatives set forth in the immediately
preceding sentence within such twenty (20) day period shall constitute a default
by Tenant hereunder and shall entitle Landlord to itself obtain the security
described above and the cost thereof shall immediately become owing to Landlord
by Tenant as additional rent. Tenant shall indemnify, defend (with counsel
approved by Landlord), protect and hold Landlord and the Premises, Building and
Project harmless from and against any and all claims, suits, judgments,
liabilities or losses (including reasonable attorneys' fees and costs of suit)
in any way arising from Tenant's failure to comply with this Section. In
addition, Tenant shall pay Landlord's attorneys' fees and costs in participating
in such action if Landlord shall decide it is in its best interests to do so.

6.5 SIGNS. Tenant may not erect, place or maintain any sign,
exterior advertising medium or other device on the Building, the Project, or any
window or door of the Premises, without the prior written consent of Landlord.
Tenant shall, at is own expense, maintain and keep in good order all signs
permitted by Landlord to be placed on the Building or the Project.

6.6 HAZARDOUS MATERIALS. As used herein, "Hazardous Materials"
means any and all substance or substances: (i) the presence of which requires
investigation or remediation under any federal state or local statute,
regulation, ordinance, order, action, policy or common law; (ii) which is or
becomes defined as a "hazardous waste", "hazardous substance", pollutant or
contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 et seq.) and/or the Resource Conservation and Recovery
Act (42 U.S.C. Section 6901 et seq.); or (iii) which contain gasoline, diesel
fuel or other petroleum hydrocarbons.

Tenant shall not (and shall not permit its officers, employees,
contractors, sublessees, agents, invitees or permitees to) store, use, discharge
or release any Hazardous Materials in, on, under or about the Premises, Building
or Project (including without limitation discharge into any drains, toilets, or
other water or waste disposal systems). Notwithstanding the above, Tenant may
store and use in the Premises small quantities of cleaning and office supplies
that are normal and customary for general office use. Tenant shall be
responsible for, and shall indemnify, defend, protect, and hold Landlord
harmless from and against, any and all claims suits, orders, judgments, clean-up
or remediation costs, liabilities or losses arising from any release of
Hazardous Materials in, on or about the Premises in violation of the covenants
in this Section.

SECTION 7. BUILDING SERVICES.

7.1 UTILITY SERVICES. So long as Tenant is not in default
hereunder, Landlord agrees, subject to the terms and conditions hereinafter set
forth, to furnish or cause to be furnished to the Premises, air conditioning and
heat during Landlord's normal operating hours, in such quantity and of such
quality as is reasonably necessary for Tenant's comfortable use and enjoyment of
the Premises for the purposes permitted hereunder. Landlord makes no
representation with respect to air quality or the adequacy or fitness of the air
conditioning or ventilating equipment in the Building to maintain temperatures
which may be required for, or because of, any equipment of Tenant other than
normal fractional horsepower office equipment, and Landlord shall have no
responsibility for loss or damage in connection therewith.

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Landlord shall provide a main electric line to the Building. Tenant shall be
responsible for (i) installing at its cost a separate electric meter for the
Premises (unless a separate meter is already installed), and (ii) contracting
and paying for electric power to the Premises directly with the local utility.
Landlord may, at its option, separately meter any other utilities to the
Premises in which event Tenant will contract and pay for such utilities directly
with the local utility.

Landlord's normal hours of operating the Building's systems (including
the HVAC system) shall be from 8:00 a.m. to 6:00 p.m., Monday through Friday,
excluding holidays.

If any governmental entity promulgates or revises any statute,
ordinance or building, fire or other code, or imposes mandatory or voluntary
controls or guidelines on Landlord or the Project or any part thereof relating
to the use or conservation of energy, water, gas, light or electricity, or the
reduction of automobile or other emissions or the provision of any other utility
or service provided with respect to this Lease, or in the event Landlord is
required or elects to make alterations to he Building or any other part of the
Project in order to comply with such mandatory or voluntary controls or
guidelines, Landlord may, in its discretion, comply with such mandatory or
voluntary controls or guidelines or make such alterations to the Building or any
other part of the Project related thereto. Such compliance and the making of
such alterations shall in no event entitle Tenant to any damages or relive
Tenant of the obligation to pay the full rent required hereunder or constitute
or be construed as a constructive or other eviction of Tenant. In addition, the
cost of such compliance and alterations shall be deemed to be a Capital
Improvement Cost as defined in Section 3.3(a)(v) of this Lease.

7.2 EXCESSIVE USE. Tenant shall pay to Landlord any excessive
or extraordinary Utility Costs or Operating Costs as Landlord may, in its
reasonable discretion, determine to be incurred as a result of Tenant's'
excessive or extraordinary use, including, but not limited to, use at times
other than Landlord's normal operating hours as defined in Section 7.1 above.
Landlord may, at Landlord's discretion, reasonably estimate the amount of
such use and costs, and bill Tenant periodically for the same.

7.3 JANITORIAL, REFUSE REMOVAL AND LIGHTING SERVICES. Landlord
shall provide reasonable janitorial and refuse removal services (not
including cleaning, maintenance or providing supplies for kitchens, eating
facilities, computer centers, special equipment areas, security vaults or
other extraordinary or special uses in the Premises) on Mondays through
Fridays, excluding holidays. Landlord shall also relamp and maintain
building standard fluorescent lighting fixtures.

7.4 INTERRUPTION OF UTILITY SERVICE. Regardless of cause,
Landlord shall not be liable for any damages (direct, indirect or
consequential), reduction of rent or termination of this Lease for a failure
or reduction in utility service unless the failure or reduction is caused by
Landlord's willful refusal to provide such utility service.

7.5 EXONERATION OF LANDLORD AND MANAGEMENT COMPANY FROM
LIABILITY. Neither Landlord nor is designated management company shall be
liable for injury to Tenant's business, for loss of income therefrom or for
damage which may be sustained by the person or property of Tenant, its
employees, invitees, customers, agents or contractors, or any other person in
or about the Premises caused by, or resulting from, fire, steam, electricity,
gas, water, or rain which may leak or flow from or into any part of the
Premises, or from the breakage, leakage, obstruction or other defects or the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of the same whether said damage or injury result from conditions
arising upon the Premises or from other sources or places, and regardless of
whether the cause of such damage or injury or the means of repairing same is
inaccessible to Tenant. Neither Landlord nor its designated management
company shall be liable for

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any damages arising from any act or neglect of any other tenant or the Building
or of the complex of which the Building is a part.

SECTION 8. COMMON AREAS.

The term "Common Areas" as used in this Lease shall mean all areas and
facilities in the Project (either within or outside of any buildings in the
Project) which are provided and designated from time to time by Landlord for the
general use and convenience of tenants of the Project and their respective
employees, invitees or other visitors. Common Areas include, without
limitation, elevators, lobbies, hallways, service quarters, restrooms (if not
part of the Premises), stairways, walls, walkways, parking structures and
landscaped areas and sidewalks.

SECTION 9. LANDLORD'S RIGHT OF ACCESS.

Landlord reserves for itself and its agents the right at any and all
times to enter the Premises upon reasonable prior notice (except in case of
emergency) for purposes of (i) providing any service to be provided by Landlord
to Tenant hereunder; (ii) examining or inspecting the Premises; (iii) serving
or posting and keeping posted thereon notices of nonresponsibility as provided
by California Civil Code Section 3094 or by any related, successor or similar
provision of law or which Landlord deems necessary for the protection of
Landlord, the Building or the Project; (iv) showing the same to prospective
tenants, purchasers, investors or lenders; (v) making such changes or repairs to
the Premises or to any other portion of the Project as Landlord may deem
necessary or desirable, including the right to install wires, cables and any
communication or utility facilities that may serve the Premises or other
portions of the Building, all without being deemed guilty of an eviction of
Tenant and without abatement of rent. Landlord shall not be liable for any
inconvenience, annoyance or injury to Tenant's business arising from the making
of any repairs, alterations, additions or improvements to the Premises, the
Building or the Project.

SECTION 10. INDEMNIFICATION.

Tenant shall indemnify, defend, protect and hold Landlord, and its
directors, officers, employees, agents, partners, shareholders and affiliates
harmless from and against any and all claims, suits, judgments, liabilities,
damages and expenses (including without limitation actual attorneys' fees of
counsel approved by Landlord and costs and expenses of suit) arising from or
related to (i) Tenant's breach or default in the performance of any obligation
of Tenant under this Lease, or (ii) Tenant's use or occupancy of the Premises or
the conduct of its business or any activity, work or thing done, permitted or
suffered by Tenant in or about the Premises or the Project.

SECTION 11. INSURANCE.

11.1 TENANT INSURANCE. At all times throughout the Term, Tenant shall
carry and maintain, at its sole expense, all of the following insurance:

(a) WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY INSURANCE.
Workers' Compensation and employer's liability insurance as required by
applicable law.

(b) PERSONAL PROPERTY CASUALTY INSURANCE. Casualty insurance
covering Tenant's leasehold improvements, trade fixtures, equipment and other
personal property from time to time situated within the Premises in an amount
equal to its full replacement cost, insuring against all perils included within
the classification of fire and extended coverage, including sprinkler damage,
vandalism and malicious mischief. All insurance proceeds received under such
policy shall be used for the repair or replacement of the property damaged or
destroyed unless the Lease is terminated in accordance with Section 12.

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(c) PUBLIC LIABILITY INSURANCE. A policy of comprehensive or
commercial general liability insurance, including coverage (by endorsement if
necessary) for death, bodily injury, broad form property damage,
premises/operations, blanket contractual liability, independent contractors,
personal injury and products/completed operations, insuring against liability
arising out of ownership, use or occupancy of the Premises, with a combined
single liability limit of not less than $1,000,000.00 per occurrence. Such
minimum liability limit will be increased from time to time if Landlord's
insurance advisor or Project lender reasonably determines that a higher limit
is customary for similar uses. Such policy shall: (i) be on an occurrence
(and not on a claims-made) basis; (ii) not have an aggregate liability limit
unless such aggregate liability limit applies only to the Premises and the
amount thereof is approved in writing by Landlord; (iii) have a maximum
deductible of $5,000.00 unless a higher deductible is approved by Landlord in
writing; (iv) be issued by an insurance company or companies licensed to do
business in California and approved by Landlord, and having a financial
rating of Class A-X or better as rated in the most current available "Best's
Key Rating Guide"; (v) be primary and noncontributing with any insurance
maintained by Landlord; (vi) name Landlord, and any person or entity
designated by Landlord, as additional insureds; (vii) have a cross-liability
or severability of interests endorsement; and (viii) provide (by endorsement
if necessary) that the insurance issued thereunder shall not be altered or
canceled until after at least thirty (30) days prior written notice to all
additional insureds.

Tenant shall provide Landlord with certificates of insurance
acceptable to Landlord issued by each of the insurance companies issuing any of
the policies required pursuant to Section 11.1, and Landlord shall have the
right to review copies of such policies to verify compliance with the
requirements of this Lease. Evidence of insurance coverage shall be furnished
to Landlord at least fifteen (15) days prior to the effective date of any new or
substituted coverage. Tenant may satisfy its insurance obligations hereunder
by carrying such insurance under a blanket policy or policies of insurance,
provided that (i) such policy meets all of the specific requirements of this
Section 11.1, including, without limitation, the aggregate liability
requirements of subsection (c) above, and (ii) Landlord approves all other terms
of such policy, which approval will not be unreasonably withheld. If Tenant
falls to maintain any insurance required under this Section, Landlord may itself
maintain such insurance and charge the cost thereof to Tenant as additional
rent. Such amount shall be due and owing within ten (10) days following written
request therefor, and shall bear interest as provided in Section 16.7.

11.2 LANDLORD INSURANCE. Landlord shall, at Landlord's expense,
procure and maintain at all times during the term of this Lease, a policy or
policies of insurance covering loss or damage to the Building in the amount of
the full replacement cost new without deduction for depreciation thereof
(exclusive of Tenant's trade fixtures, inventory, personal property and
equipment), providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage, malicious
mischief, sprinkler leakage, water damage, and such other special extended
coverage which Landlord may deem advisable. Additionally, Landlord may but shall
not be required to carry: (i) Comprehensive or Commercial General Liability
Insurance and/or Excess Liability Coverage Insurance; and (ii) Earthquake and/or
Flood Damage Insurance; and (iii) Rent Income Insurance; and (iv) such other
insurance as Landlord or its lender deems advisable, all such insurance to be
carried in such amounts and with such limits as Landlord or its lender may deem
appropriate. The costs of such insurance shall be included as an Insurance
Cost.

11.3 WAIVERS OF SUBROGATION. Each party hereby waives any and
all rights to recover against the other or against any other tenant or
occupant of the Building, or against the directors, officers, employees,
agents, representatives, customers, or business visitors of such other party
or of such other tenant or occupant of the Building, the amount of any damage
to the waiving party or loss of its property or the property of others under
its control arising from any cause insured against under such party's
insurance policy, provided such waiver is permitted by each party's

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insurance policy or by endorsement thereon without invalidation of the policy.
This waiver shall not be construed to limit or restrict any indemnity made by
Tenant under the terms of this Lease, nor shall it preclude any claim by either
party against the other under an insurance policy which insures both parties.

SECTION 12. DAMAGE OR DESTRUCTION OF BUILDING OR PREMISES.

12.1 PARTIAL DAMAGE. Except as provided in Section 12.2, if the
Premises or the Building is damaged by fire or other insured casualty and
insurance proceeds have been made available therefor by the holder(s) of any
mortgages or deeds of trust covering the Building or the Project, the damage
shall be repaired by and at the expense of Landlord to the extent such insurance
proceeds are available therefor, provided that the cost of repair is less than
twenty-five percent (25%) of the fair market value of the Building immediately
prior to the damage, and this Lease shall continue in full force and effect.

12.2 DESTRUCTION OF BUILDING. If the cost of reconstruction would
be greater than twenty-five percent (25%) of the fair market value of the
Building immediately prior to the damage, notwithstanding that the Premises may
be unaffected by such damage, or in the event of an uninsured loss, or in the
event insurance proceeds are not made available to Landlord for reconstruction,
Landlord shall have the right to terminate this Lease by giving to Tenant thirty
(30) days' prior notice thereof, which notice shall be given, if at all, within
sixty (60) days following the date on which the destruction occurs.

12.3 EFFECT OF LEASE TERMINATION. Upon any termination of this
Lease under any of the provisions of this Section 12, rent shall be prorated as
of the effective date of such termination, and Tenant and Landlord shall each be
released from any further obligations hereunder accruing after the effective
date of such termination, except that such release shall not relieve Tenant of
its obligation to pay any sums then accrued or any obligations regarding
surrender of the Premises, and Landlord shall return any portion of the Security
Deposit to which Tenant is entitled pursuant to Section 18.

12.4 RECONSTRUCTION. If Landlord is required or elects to repair
any damage to the Premises in accordance with this Section 12, Landlord shall
restore the Premises substantially to their same condition that existed
immediately prior to the damage or destruction, including any leasehold
improvements installed by Landlord, but excluding Tenant's trade fixtures and
other personal property in the Premises.

12.5 RENT ABATEMENT. In the event of any reconstruction and
restoration as herein provided, Tenant's rent shall be equally abated by the
percentage by which Tenant's use of the Premises is impaired commencing from the
date of destruction and continuing during the period of such reconstruction or
restoration; provided, however, that there shall be no rent abatement whatsoever
if either (i) the damage is due to the act, omission, fault or neglect of Tenant
or its employees, agents or visitors or (ii) if the use and enjoyment of the
Premises is not affected for more than two (2) business days of operation.
Tenant understands that Landlord will not carry insurance of any kind on
Tenant's furniture and furnishings or on any trade fixtures or equipment,
inventory or other personal items removable by Tenant under the provisions of
this Lease, that Landlord shall not be obligated to repair any damage thereto or
replace the same, and that Tenant shall not be entitled to any compensation from
Landlord for loss of the same or for loss of the use of the whole or any part of
the Premises, or any inconvenience, interruption or annoyance occasioned to
Tenant or its business by such damage, reconstruction or restoration.

12.6 DAMAGE DUE TO TENANT'S FAULT. Subject to Section 11.3, all
damage or injury to the Premises or the Project or any part thereof caused by
the negligent act or omission of Tenant, its employees, agents, invitees or
licensees, shall

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be promptly repaired by Tenant, at Tenant's sole cost and expense, to the
satisfaction of Landlord.

SECTION 13. EMINENT DOMAIN.

If the whole of the Premises or so much thereof as to render the
balance unusable by Tenant is taken under power of eminent domain, or sold,
transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date possession is required to be surrendered to the
condemning authority. No award for any partial or entire taking shall be
apportioned and Tenant hereby releases any claim to and assigns to Landlord any
and all rights of Tenant now or hereafter arising in or to the same or any part
thereof, provided, however, that nothing contained herein shall be deemed to
give Landlord any interest in, or to require Tenant to assign to Landlord any
award made to Tenant for the taking of personal property and trade fixtures
belonging to Tenant and removable by Tenant at the expiration of the Term hereof
as provided hereunder or for the interruption of, or damage to, Tenant's
business, or for any relocation expense that may be payable to Tenant. In the
event of a partial taking, or a sale, transfer or conveyance in lieu thereof,
which does not result in a termination of this Lease pursuant to the foregoing,
rent shall be abated in proportion to the percentage loss of rentable square
footage within the Premises.

SECTION 14. ASSIGNING, SUBLETTING AND OTHER TRANSFERS.

14.1 NO ASSIGNMENT WITHOUT CONSENT. Tenant shall not voluntarily,
involuntarily or by operation of law assign or otherwise transfer this Lease in
whole or in part, nor sublet or otherwise transfer or permit the occupancy by
third parties of all or any portion of the Premises (each of the foregoing are
referred to herein as an "Assignment"), except in strict compliance with this
Section 14. If Tenant desires to effect an Assignment, Tenant shall request
Landlord's consent in accordance with Section 14.2 below. Provided that
Landlord does not elect one of the options in Section 14.4 (which options may be
elected in Landlord's sole and absolute discretion), Landlord shall not
unreasonably withhold or delay its consent to a proposed Assignment. Landlord's
consent to any Assignment shall be subject to the terms and conditions contained
in Section 14.3. Any attempted Assignment without Landlord's prior written
consent shall be void so as not to confer any rights upon any third person. The
provisions of this Section 14 shall constitute the sole means for requesting
Landlord's consent. Landlord's consent to any Assignment shall not be construed
as a consent to any other Assignment, and any other Assignment shall require
Landlord's consent as provided in this Section 14. Tenant's remedy in the event
Landlord withholds its consent under this Section 14 shall be limited to an
action for specific performance or declaratory relief to obtain such consent.
Landlord may accept rent and/or performance of obligations from any proposed
assignee or other third party pending approval or disapproval of a proposed
Assignment, without waiving or being estopped from exercising its remedies for
the default by Tenant of any of the requirements of this Section 14.

14.2 PROCEDURE FOR REQUESTING. If Tenant desires at any time to
effect an Assignment, Tenant must first notify Landlord in writing of its desire
to do so and shall submit in writing to Landlord: (i) the name and address of
the proposed assignee ("Assignee"); (ii) the nature of the Assignee's business
to be carried on in the Premises; (iii) the terms and provisions of the proposed
Assignment; and (iv) such financial information as Landlord may reasonably
request concerning the Assignee including, without limitation, at least a
current financial statement, balance sheet and profit and loss statement, and
the last year's income tax return executed under penalty of perjury and prepared
in a complete, true and correct manner in reasonable compliance with generally
accepted accounting and tax principles.

14.3 TERMS OF CONSENT. Landlord's actual or deemed consent to any
Assignment shall be deemed to be subject to and to incorporate therein each of
the following terms, unless specifically waived by Landlord in its written
consent: (i) Tenant

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shall remain fully liable under this Lease during the unexpired term hereof;
(ii) Tenant shall pay to Landlord a processing fee, not to exceed Five Hundred
Dollars ($500.00); (iii) if Tenant's Assignment provides for the receipt by, on
behalf or on account of Tenant of any consideration of any kind whatsoever in
excess of the rent and other charges due Landlord under this Lease (which
comparison shall be made on a per rentable square foot basis if only a portion
of the Premises is subject to the Assignment), and after deducting from such
excess Tenant's actual direct costs of effecting such Assignment (such as broker
fees, attorney fees and tenant improvement costs paid by Tenant), Tenant shall
pay such excess amounts to Landlord as and when they are received; (iv) any
Assignment shall be effected on forms approved by Landlord as to form and
substance; (v) Tenant shall not then be in default hereunder in any respect;
(vi) the Assignee shall agree in writing to assume, be bound by and perform all
of the terms, covenants and conditions of this Lease which could reasonably be
construed as applicable to such Assignee; (vii) the Assignee's proposed use of
the Premises shall be permissible hereunder and shall be consistent and
compatible with other tenants in the Project; (viii) Landlord shall not be bound
by any provision of any agreement pertaining to Tenant's Assignment; and (ix)
Tenant shall deliver to Landlord one fully-executed original copy of any and all
written instruments evidencing or relating to the Assignment. No Assignment
shall become effective until Tenant and/or its Assignee has delivered the funds
and documents required under subsections (ii), (iv), (vi) and (ix) above.

Tenant hereby agrees and acknowledges that the above terms imposed
upon the granting of Landlord's consent are reasonable and Landlord's imposition
of such terms shall under no circumstances impair or limit Landlord's rights and
remedies under California Civil Code Section 1951.4 or any related, successor or
similar provision of law.

14.4 RIGHT OF REFUSAL; TERMINATION. Notwithstanding any other
provision thereof, in lieu of giving such consent, Landlord may, at its
election, elect to (i) construe a proposed Assignment as an offer by Tenant of
an Assignment of the Premises (or applicable portion thereof covered by the
Assignment) to Landlord, which offer may be accepted by written notice to
Tenant, whereupon the Assignment to Landlord shall automatically be deemed
consummated on all the terms and provisions set forth in such proposed
Assignment except that Landlord may further assign or otherwise transfer such
interest without Tenant's review or consent; or (ii) terminate this Lease (or in
the case of a proposed Assignment of a portion of the Premises, elect to
terminate this Lease with respect to that portion) by delivery to Tenant of
written notice of such termination, whereupon Tenant shall be deemed released
and discharged from any liability under the Lease (or from a proportionate share
of liability based upon the reduction of rentable square footage within the
Premises) accruing after the effective date of such termination.

14.5 ADDITIONAL EVENTS CONSTITUTING AN ASSIGNMENT. If Tenant is
a corporation (provided that such corporation is not publicly traded on a
recognized stock exchange), an unincorporated association, a partnership, a
limited liability company, or any other entity, then any transfer or
transfers (on a cumulative basis) of any stock or interest in such
corporation, association, partnership, company or other entity greater than
fifty percent (50%) thereof shall be deemed an Assignment within the meaning
and provisions of this Section 14 and shall be subject to the provisions
hereof. Further, the involvement of Tenant or its assets in any transaction
or series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a
formal assignment or hypothecation of this Lease or Tenant's assets occurs,
which results or will result in a reduction of the Net Worth (as defined
below) of Tenant, by an amount equal to or greater than twenty-five percent
(25%) of the Net Worth of Tenant as it was represented to Landlord at the
time of execution of this Lease, or at the time of the most recent Assignment
to which Landlord has consented, or as it exists immediately prior to such
transaction or transactions constituting such reduction, at whichever time
such Net Worth of Tenant was or is greater, shall be considered an Assignment
of this Lease by Tenant to which Landlord

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may reasonably withhold its consent. The "Net Worth" for purposes of this Lease
shall mean the net worth of tenant (excluding any guarantors) established under
generally accepted accounting principles consistently applied.

14.6 LANDLORD REMEDIES. The occurrence of an Assignment without
Landlord's consent as required herein shall, at Landlord's option, constitute
(i) a material default under this Lease after notice and the expiration of the
cure period provided in Section 16.1(c), or (ii) a material noncurable default
without the necessity of any notice and grace period, If Landlord elects to
treat such Assignment as a noncurable default, Landlord shall have the right to
either: (i) terminate this Lease; or (ii) upon thirty (30) days written notice
("Landlord's Notice") to Tenant, increase the Basic Monthly Rent to fair market
rental value or one hundred ten percent (110%) of the Basic Monthly Rent then in
effect, whichever is greater. Pending determination of the new fair market
rental value (which shall be determined in the same manner as the fair market
rent for any option period if this Lease contains an option to extend), if
disputed by Tenant, Tenant shall pay the amount set forth in Landlord's Notice
until the amount is finally determined. At such time as the amount is finally
determined, any overpayment shall be credited against the next installment(s) of
the Basic Monthly Rent coming due, and any underpayment shall be immediately due
payable by Tenant as additional rent. Further, in the event of such a market
value adjustment, (i) any index-oriented rental adjustment formula contained in
this Lease shall be adjusted to require that the base index be determined with
reference to the index applicable to the time of such market value adjustment,
and (ii) any fixed rental adjustment scheduled during the remainder of the Lease
Term shall be increased in the same ratio as the new market rent bears to the
Basic Monthly Rent in effect immediately prior to the market value adjustment.

14.7 HYPOTHECATION OF LEASE. Tenant shall not encumber,
hypothecate or otherwise grant any security interest or lien upon its interest
in this Lease or any portion thereof (each of the foregoing actions are referred
to herein as a "Hypothecation") without Landlord's prior written consent which
may be withheld in Landlord's sole and absolute discretion (notwithstanding
anything in Section 14.1 to the contrary). Any Hypothecation given without
Landlord's prior written consent shall be null and void. Any person or entity
who succeeds to Tenant's interest in this Lease pursuant to a Hypothecation
shall be subject to the provisions of Section 14.3 and 14.4, and any subsequent
Assignment shall be subject to all of the provisions of this Section 14.

14.8 ADDITIONAL TERMS APPLICABLE TO SUBLEASES. The following terms
and conditions shall apply to each sublease ("Sublease') made by Tenant of all
or any part of the Premises and shall be deemed included in each Sublease
whether or not expressly incorporated therein-.

(a) A termination of this Lease for any reason or a
voluntary surrender of this Lease shall terminate the Sublease, unless Landlord,
at its option and without any obligation to do so, elects in writing to require
the subtenant to attorn to Landlord, in which event the subtenant shall attorn
to Landlord and Landlord shall recognize the subtenant under the terms of the
Sublease from and after the time of Landlord's written notice to the expiration
of the Sublease, provided, however, (i) Landlord shall not be liable for any
prepaid rents or security deposit paid by the subtenant or for any prior
defaults of the sublessor under the Sublease, and (ii) Landlord shall not be
bound by the subtenant's payment of any rent beyond the current month's rent
owing under the Sublease.

(b) Any matter or thing requiring the consent of the
sublessor under the Sublease shall also require the consent of Landlord.

(c) No subtenant shall further assign or sublet all or any
part of the Premises without Landlord's prior consent in the manner required
herein.

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SECTION 15. SUBORDINATION; ATTORNMENT AND NON-DISTURBANCE.

15.1 SUBORDINATION. This Lease and any options granted herein
shall be subject and subordinate to any underlying ground or master lease,
mortgage, deed of trust, or other hypothecation or security device ("Security
Device" or "Security Devices") now existing or hereafter placed by Landlord upon
the real property of which the Premises are a part, to any and all advances made
on the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Landlord's interest in this Lease may be
assigned by any holder of any Security Device. Notwithstanding the above, any
holder of a Security Device may unilaterally subordinate the lien of its
Security Device to this Lease by written notice to Tenant or by recording a
written subordination in the Official Records of the County in which the
Promises are located, in which case this Lease shall be unaffected by the
foreclosure of the subordinated Security Device notwithstanding the relative
dates of the documentation or recordation thereof.

15.2 ATTORNMENT. Subject to the non-disturbance provisions of
Section 15.3, Tenant agrees to attorn to the holder of a Security Device who
acquires title to the Premises through a foreclosure of its Security Device and
that such holder shall not be (i) liable for any act or omission of any prior
lessor or with respect to the events occurring prior to its acquisition of
ownership, (ii) subject to any offsets or defenses which Tenant might have
against any prior lessor, or (iii) bound by prepayment of more than one month's
rent.

15.3 NON-DISTURBANCE. With respect to any Security Device entered
into by Landlord after the execution of this Lease, tenant's subordination of
this Lease shall be subject to receiving assurance (a "non-disturbance
agreement") from the holder thereof that Tenant's possession and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Tenant is not in default hereunder and attorns to the record owner of the
Premises.

15.4 SELF-EXECUTING. The agreements contained in this Section 15
shall be effective without the execution of any further documents; provided,
however, that upon written request from Landlord or any holder or potential
holder of a Security Device in connection with a sale, financing or refinancing
of the Premises, Tenant shall execute such further writings as may be reasonably
required to separately document any subordination or non-subordination,
attornment and/or non-disturbance agreement provided for herein.

SECTION 16. DEFAULT AND REMEDIES.

16.1 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute a material default by Tenant under this Lease:

(a) the failure by Tenant to make any regularly scheduled
payment of Basic Monthly Rent or additional rent owing under this Lease as and
when due;

(b) the failure by Tenant to pay any other sum owing under
this Lease, where such failure shall continue for a period of three (3) days
after written notice thereof from Landlord to Tenant (Landlord's giving of a
three day notice in accordance with the requirements of California Code of Civil
Procedure Section 1161, or successor statute then in effect, shall satisfy the
foregoing requirement);

(c) the failure by Tenant to render prompt and complete
performance and observance of any other express or implied covenant, agreement
or obligation of Tenant contained in this Lease and the continuation of such
failure for a period of ten (10) days after notice thereof from Landlord to
Tenant (Landlord's giving of a ten day notice in accordance with the
requirements of California Code of Civil Procedure Section 1161, or successor
statute then in effect, shall satisfy the foregoing

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requirement), provided that if the nature of Tenant's default is such that more
than ten (10) days are reasonably required for its cure, then Tenant shall not
be deemed to be in default if Tenant shall commence such cure within the ten
(10) day period and thereafter diligently prosecute such cure to completion, but
in any event such cure must be completed within ninety (90) days following the
date on which such notice is given;

(d) the discovery by Landlord of any material falsity in
any financial statement or representation of Tenant or any guarantor given to
Landlord to induce it to enter into this Lease;

(e) Tenant's vacating or abandoning the Premises; or

(f) the making by Tenant of any general assignment or
general arrangement for the benefit of creditors; the filing by or against
Tenant of a petition to have Tenant adjudged bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
[60] days); the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises, or of Tenant's
interest in this Lease, unless possession is restored to Tenant within thirty
(30) days; or the attachment, execution, or other judicial seizure of
substantially all of Tenant's assets located at the Premises, or of Tenant's
interest or estate created under this Lease, unless such seizure is discharged
within thirty (30) days.

16.2 LANDLORD'S REMEDIES. In the event of Tenant's default under
this Lease, then in addition to any other remedies then available to Landlord,
Landlord may exercise the following remedies:

(a) Terminate Tenant's right to possession of the Premises
because of such breach, and upon termination, recover from Tenant as damages (i)
the worth at the time of award of any unpaid rent which had been earned at the
time of termination, plus (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been due and payable after termination
until the time of award exceeds the amount of such rent loss that Tenant proves
could have been reasonably avoided, plus (iii) any other amounts necessary to
compensate Landlord for all of the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this Lease, or which in the
ordinary course of things would be likely to result therefrom, including,
without limitation, any costs or expenses incurred by Landlord (A) in retaking
possession of the Premises, (B) in maintaining , repairing, preserving,
restoring, replacing, cleaning, altering or rehabilitating the Premises or any
portion thereof, including such acts for reletting to a new tenant or tenants,
(C) for leasing commission, or (D) for any other costs necessary or appropriate
to relet the Premises, plus (v) at Landlord's election, such other amounts and
remedies in addition to or in lieu of the foregoing as may be permitted from
time to time by the laws of the State of California including, without
limitation, the remedies provided by California Civil Code Section 1951.2, as
amended or as superseded by any successor statute.

The "worth at the time of award" of the amounts referred to
in subsections (i) and (ii) of the immediately preceding paragraph shall be
computed by allowing interest at the lesser of twelve percent (12%) per annum or
the maximum rate permitted by law. The "worth at the time of award" of the
amount referred to in subsection (iii) of the immediately preceding paragraph
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%. Tenant hereby waives
redemption of relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present of future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder;

(b) Not terminate Tenant's right to possession because of
such breach, but continue this Lease in full force and effect, and in that event
(i) Landlord

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may enforce all rights and remedies under this Lease and under the provisions of
Section 1951.4 of the California Civil Code, as amended or as superseded by any
successor statute, including the right to recover the rent and all other charges
due hereunder as such rent and other charges become due hereunder, and (ii)
Tenant may assign its interest in this Lease with Landlord's prior written
consent, which shall not be unreasonably withheld, as provided in Section 14; or

(c) To the extent permitted by law, and in addition to the
above remedies, Landlord may, with or without terminating this Lease, re-enter
the Premises and remove all persons and property from the Premises. Such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Tenant. No re-entry or taking possession of the
Premises by Landlord pursuant to this paragraph shall be construed as an
election to terminate this Lease unless a written notice of such intention is
given to Tenant.

16.3 NO EFFECT ON INDEMNIFICATION. Nothing in Section 16.2 shall
be deemed to affect Landlord's right to indemnification against liabilities
arising from personal injuries or property damage under the indemnification
provisions of this Lease.

16.4 NO ACCEPTANCE OF SURRENDER. Landlord's re-entry to perform
acts of maintenance or preservation of, or in connection with efforts to relet
the Premises or any portion thereof, or the appointment of a receiver upon
Landlord's initiative to protect Landlord's interest under this Lease shall not
terminate Tenant's right to possession of the Premises or any portion thereof.
No act by Landlord other than giving written notice of termination to Tenant
shall terminate this Lease.

16.5 CUMULATIVE REMEDIES. All rights, powers and remedies of
Landlord hereunder and under any other agreement now or hereafter in force
between Landlord and Tenant shall be cumulative and alternative and shall be in
addition to all rights, powers and remedies given to Landlord by law, and the
exercise of one or more of such rights or remedies shall not impair Landlord's
right to exercise any other right or remedy.

16.6 LANDLORD'S CURE OF TENANT'S DEFAULT. If at any time during
the term hereof Tenant fails, refuses or neglects to do any of the things herein
provided to be done by Tenant, Landlord shall have the right but not the
obligation to do the same, but at the cost and for the account of Tenant. The
amount of any money so expended or obligations so incurred by Landlord together
with interest thereon as specified in Section 16.7 shall be repaid to Landlord
immediately upon demand therefor, and unless so paid shall be added to the next
monthly rent payment coming due hereunder and shall be payable as rent.
Landlord's performance of any obligation of Tenant shall not be deemed a waiver
of any default of Tenant hereunder.

16.7 LATE CHARGES AND INTEREST ON PAST DUE OBLIGATIONS. If any
payment of Basic Monthly Rent or additional rent has not been received by
Landlord within ten (10) days after such amount shall be due, then without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to ten percent (10%) of such overdue amount- In addition, any amount due
from Tenant to Landlord hereunder, including Basic Monthly Rent and additional
rent, which is not paid when due shall bear interest at the rate which is the
lesser of twelve percent (12%) per annum or the maximum permitted by law, from
the due date until paid. Acceptance of any late charge or interest payment by
Landlord shall not excuse or cure any default by Tenant under this Lease. The
parties further agree that the payment of late charges and the payment of
interest provided for in this Section are distinct and separate from one another
in that the payment of interest is to compensate Landlord for the use of
Landlord's money by Tenant, while the payment of late charges is to compensate
Landlord for the additional administrative expenses incurred by Landlord in
handling and processing delinquent payments.

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16.8 ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the rent herein stipulated shall be deemed to
be other than a partial payment of the rent herein stipulated, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy provided in this Lease.

SECTION 17. LIABILITY OF LANDLORD.

17.1 LANDLORD'S INABILITY TO PERFORM. Landlord shall not be in
default under this Lease as a result of its inability to fulfill any of its
obligations hereunder or its delay in doing so, if such inability or delay is
caused by reason of any act of God, war, revolt, civil arrest, strike, lockout,
labor trouble, inability to secure materials, restrictive governmental laws,
regulations or approvals, or any other similar cause including, but not limited
to, impossibility due to excessive or unreasonable costs beyond the reasonable
control of Landlord. Further, Landlord shall not be deemed to be in default in
the performance of any obligation required to be performed by it hereunder
unless and until it has failed to perform such obligation within thirty (30)
days after notice by Tenant to Landlord specifying how Landlord has failed to
perform such obligation; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it shall
commence such performance within the thirty (30) day period and thereafter
diligently prosecutes same to completion.

17.2 RELEASE UPON SALE. In the event of any transfer(s) of
Landlord's interest in the Project, the Building or the Premises, other than a
transfer for security purposes only, Landlord, or Landlord's successors, shall
be automatically relieved of any and all obligations and liabilities on the part
of Landlord accruing hereunder from and after the date of such transfer (except
that Landlord's liability with respect to the Security Deposit shall be governed
by Section 18), it being intended hereby that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject to the aforesaid
provisions, be binding on Landlord, its successors and assigns, only during and
in respect of their respective successive periods of ownership.

17.3 LIMITATION ON RECOURSE OF TENANT. Tenant's sole recourse
under this Lease against Landlord is to the interest of Landlord in and to the
Premises and any portion of the Project then owned by Landlord. Tenant shall
have no right to satisfy any judgment which it may have against Landlord from
any other assets of Landlord or from any other assets of any partner, venturer
or shareholder of Landlord. The provisions of this Section are not intended to
limit the Tenant's right to seek injunctive relief or specific performance, or
Tenant's right to claim the proceeds of insurance (if any) specifically
maintained by Landlord for Tenant's benefit. The foregoing limitations shall
also apply to any successor to Landlord's interest in the Premises.

SECTION 18. SECURITY DEPOSIT.

Upon its execution of this Lease, Tenant shall deposit with Landlord
the Security Deposit designated in the Basic Lease Provisions. The Security
Deposit shall be held by Landlord, without liability for interest, as partial
security for the full and faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be performed by Tenant, including,
without limitation, those relating to the payment of rent, repairing the
Premises (other than normal wear and tear) and cleaning the Premises upon
termination of the Term. Landlord may commingle the Security Deposit and shall
not be required to keep it separate from its general funds. In the event of the
failure of Tenant to abide by any of the terms, covenants and conditions of this
Lease, including without limitation those relating to rent, repairs and cleaning
as stated above, then Landlord at its option, may use any amount of the Security
Deposit to pay any overdue rent or to compensate Landlord for any loss or damage
sustained or suffered due to such failure by Tenant. Tenant shall, upon the
written demand of Landlord

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immediately remit to Landlord a sufficient amount in the form of a cashier's
check to restore the Security Deposit to the original sum deposited. Failure to
do so within five (5) days after such demand shall constitute a material breach
of this Lease. Provided Tenant is not then in default under this Lease, within
thirty (30) days following the later to occur of (i) the expiration of the term
of this Lease or (ii) the date on which Landlord receives possession of the
Premises, Landlord shall return to Tenant (or at Landlord's option to any
assignee of Tenant's interest under this Lease) any unused portion of the
Security Deposit. In the event of a transfer or assignment of Landlord's title
or interests in the Premises, Landlord shall deliver to the transferee or
assignee (in cash or by credit) any unused portion of the Security Deposit then
held by Landlord, and thereupon Landlord shall be relieved of any further
liability to Tenant with respect to the Security Deposit.

SECTION 19. RIGHT TO TRANSFER.

Landlord, by written notice to Tenant, may require that on the date
specified in such notice (which shall be a least ninety [90] days subsequent to
the giving of such notice) Tenant shall surrender the Premises and in lieu
thereof enter into an amended lease or new lease for other space in the Building
(as described in such notice) of substantially similar size and layout for the
balance of the Term and upon all the terms and conditions of this Lease, except
that if the new Premises contains fewer rentable square feet, the Basic Monthly
Rent and Tenant's Pro Rata Share of Project Expenses shall be proportionately
reduced. In the event of any such relocation, Landlord, at its expense, shall
prepare and decorate the space in which Tenant is to be relocated so as to be
substantially similar in layout and decoration to the Premises, including all
tenant improvements (with such changes as Tenant reasonably may request,
provided they do not increase the cost or time within which the space can be
prepared for Tenant's occupancy) and shall move Tenant's furniture, fixtures,
and equipment to such space.

SECTION 20. PARKING.

20.1 PARKING AREAS AND STRUCTURES. Landlord shall have the right
to redesign, modify, construct or change any parking areas or parking structures
within the Project at any time or times, provided that any such change does not
deprive the Project of the number of parking spaces required by the governing
local jurisdiction. At any time, upon not less than fifteen (15) days prior
written notice, Landlord may designate specific parking areas, structures or
spaces within the Project in which Tenant's automobiles must be parked,

20.2 PARKING CHARGES; REGULATION AND USE. Tenant's use of any
parking areas or parking structures shall be at such rent or other charges (if
any) and subject to such terms, rules and regulations as Landlord or Landlord"s
operator or licensee may establish from time to time. The use of any parking
structure or area may be conditioned upon monthly permits, charged validation,
or such system as Landlord deems advisable. All parking structures and areas
shall be open during Landlord's normal operating hours as set forth in this
Lease.

SECTION 21. GENERAL PROVISIONS.

21.1 INDEX. References in this Lease to the "Index" shall mean the
United States Department of Labor, Bureau of Labor Statistics, Consumer Price
Index of ALL ITEMS--ALL URBAN CONSUMERS, Los Angeles-Anaheim-Riverside average
(Base 1982-84=100). If the base year of the Index is changed, the Index shall
be converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics. If, for any reason,
there is a major change in the method of calculation or formulation of the
Index, or should the Index no longer be published, then Landlord and Tenant
shall mutually select such other commodity index that produces substantially the
same result as would be obtained if the Index had not been discontinued or
revised. If the parties shall be unable to agree

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upon a successor index, the parties shall refer the choice of the successor
index to arbitration in accordance with the rules of the American Arbitration
Association.

21.2 INTERPRETATION. This Agreement shall be interpreted under the
laws of the State of California. This Lease shall not be interpreted either for
or against either party due to another party's preparation of this Lease. As
used herein, the masculine, feminine or neuter genders and the singular or
plural numbers shall each be deemed to include the others. The captions are for
convenience only, and do not in any way limit or amplify the provisions hereof.
All of the provisions of this Lease are to be construed as covenants and
agreements, as though the words importing such covenants and agreements were
used in each separate provision hereof.

21.3 TIME OF THE ESSENCE. Time is of the essence as to each
obligation and deadline for performance thereof set forth in this Agreement,

21.4 SUCCESSORS AND ASSIGNS. All of the covenants, conditions and
provisions of this Lease shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns, subject at all times, however, to all agreements and
restrictions contained herein respecting assignment, subleasing, hypothecation
and other transfers.

21.5 WAIVER AND DEFAULT. No waiver by Landlord of any provision of
this Lease shall be deemed to be a waiver of any other provision hereof or of
any subsequent breach by Tenant of the same or any other provision. No delay on
the part of Landlord in exercising any of its rights hereunder shall operate as
a waiver of such rights, or of any other right of Landlord, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to, or a waiver of the
same or any other right on any other occasion, nor shall Landlord's receipt from
Tenant of any rent or other sum with knowledge of any breach by Tenant of any of
its covenants hereunder be deemed to be a waiver of such breach. Neither
Landlord's failure to bill Tenant for any rent or other sum payable hereunder as
it becomes due hereunder, nor its error in such billing or failure to provide
any other documentation in connection therewith, shall operate as a waiver of
Landlord's right to collect any such sum payable hereunder which may have at any
time become due hereunder in the full amount to which Landlord is entitled
pursuant to the terms and provisions hereof. Landlord's consent to or approval
of any act by Tenant requiring Landlord's consent or approval shall not be
deemed to render unnecessary the obtaining of Landlord's consent to or approval
of any subsequent act of Tenant whether or not similar to the act so consented
to or approved. No act or thing done by Landlord or Landlord's agents during
the term of this Lease shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept such surrender shall be valid unless in
writing and signed by Landlord.

21.6 ENTIRE AGREEMENT; AMENDMENTS; REPRESENTATIONS TO TENANT BY
THIRD PARTIES. This Lease constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof, and no prior oral or written
agreement or understanding pertaining to any such matter shall be effective for
any purpose. No provisions of this Lease may be amended or supplemented except
by an agreement in writing signed by the party or parties to be bound thereby.
Tenant warrants and represents that there have been no representations or
statements of fact with respect to the Premises, the Building, the Project, the
surrounding area or otherwise, whether by Landlord, its agents or
representatives, any lease broker or any other person. which representations or
statements have in any way induced Tenant to enter into this Lease or which have
served as the basis in any way for Tenant's decision to execute this Lease,
except as contained in this Lease. Tenant agrees and acknowledges that no lease
broker, agent, or other person has had or does have the authority to bind
Landlord to any statement, covenant, warranty or representation except as
contained in this Lease, and that no person purporting to hold such authority
shall bind Landlord and that it is not reasonable for Tenant to have assumed
that any person had or has such authority. Further, neither Landlord's
execution of this Lease nor any other of its acts shall be construed in any way
to indicate Landlord's ratification, consent to or

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approval of any act, statement or representation of any third person except as
specifically set forth in this Lease.

21.7 SEVERABILITY. Any provisions of this Lease which shall prove
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof and such other provisions shall remain in full force and
effect.

21.8 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute and be construed as one and the same instrument.

21.9 ATTORNEYS' FEES. If either party commences litigation against
the other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the parties agree
to and hereby waive any right to a trial by jury and, in the event of any such
commencement of litigation, the prevailing party shall be entitled to recover
from the other party such costs and reasonable attorneys' fees as may have been
incurred. Further, if for any reason Landlord consults legal counsel or
otherwise incurs any costs or expenses as a result of Tenant's default and
Landlord's rightful attempt to enforce the provisions of this Lease after
Tenant's grace or notice period has expired, even though no litigation is
commenced, or if commenced is not pursued to final judgment, Tenant shall be
obligated to pay to Landlord, in addition to all other amounts for which Tenant
is obligated hereunder, all of Landlord's reasonable costs, expenses and
reasonable attorneys' fees incurred in connection with obtaining such advice.

21.10 NOTICES. Any notice required or permitted to be given
hereunder shall be in writing and shall be (i) delivered personally, (ii) sent
via commercial messenger, courier or overnight mail service, or (iii) sent by
United States mail, registered or certified delivery, return receipt requested,
in each case addressed to the Tenant or to Landlord at the respective addresses
set forth in the Basic Lease Provisions. Personally delivered notices shall be
deemed given upon actual delivery to the appropriate address, Notices sent via
commercial messenger, courier or overnight mail service shall be deemed given
upon actual delivery to the appropriate address, as evidenced by the receipt of
the delivery service. Mailed notices shall be deemed given upon the earlier of
three (3) business days after deposit into the United States mail, registered or
certified, with postage prepaid, or the date of the actual receipt as evidenced
by the return receipt. Either party may specify a different address for notice
purposes in the manner aforesaid. A copy of all notices to be given to Landlord
hereunder shall be concurrently transmitted by Tenant to any additional party
hereafter designated by a notice from Landlord to Tenant.

21.11 BROKERS. In connection with this Lease, Tenant warrants and
represents that it has had dealings only with the broker or brokers specified in
the Basic Lease Provisions, and that it knows of no other person who is or might
be entitled to a commission, finder's fee or other like payment in connection
with this Lease, and Tenant does hereby indemnify and agree to hold Landlord
harmless from and against any and all loss, liability and expenses that Landlord
may incur should Tenant's warranty and representation prove incorrect.

21.12 EXAMINATION OF LEASE. Landlord' submission of this instrument
for examination or signature by Tenant, Tenant's agents or attorneys, does not
constitute a reservation of, or an option to lease, and this instrument shall
not be effective or binding as a lease or otherwise, until its execution and
delivery by both Landlord and Tenant,

21.13 RULES AND REGULATIONS. Tenant shall faithfully observe and
strictly comply with the Rules and Regulations as set forth in EXHIBIT "E"
hereto. The Rules and Regulations may be amended or supplemented by Landlord
from time to

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time. Landlord shall not be liable to Tenant for violation by any other tenants
in the Building or the Project of the Rules and Regulations, or for the breach
of any covenant or condition in any lease.

21.14 ESTOPPEL CERTIFICATE. Tenant shall, at any time and from time
to time, no later than ten (10) days after receipt of a written request from
Landlord, execute, acknowledge and deliver to Landlord or to any other person or
entity as Landlord may request including, but not limited to, a purchaser,
investor or lender of the Project or any part thereof, an estoppel certificate
(in -the form requested by Landlord or such purchaser, investor or lender)
certifying (i) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect), (ii) the dates to which the
rent and other charges, if any, are paid in advance and the amount of Tenant's
Security Deposit, if any, (iii) that there are not, to Tenant's best knowledge,
any uncured defaults on the part of Landlord hereunder, nor any events or
conditions then in existence which, with the passage of time or notice or both,
would constitute a default on the part of Landlord hereunder, or specifying such
defaults, events or conditions, if any are claimed, and (iv) any other
representations or certifications as may be reasonably requested, It is
expressly understood and agreed that any such estoppel certificate may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
Project. Tenant's failure to deliver such estoppel certificate within such time
shall, at the option of Landlord, constitute a default under this Lease and,
further, shall serve as a conclusive admission by Tenant that all matters stated
in such estoppel certificate delivered to Tenant are true and correct.

21.15 CORPORATE TENANT. If Tenant is a corporation, the parties
executing this Lease on behalf of Tenant hereby covenant and warrant that (i)
Tenant is a duly qualified corporation and that all steps have been taken prior
to the date hereof to qualify Tenant to do business in the State of California-,
(ii) that all franchise and corporate taxes have been paid to date; and (iii)
all future forms, reports, fees and other documents necessary to comply-with
applicable laws have been and will be filed when due.

21.16 RECORDATION OF LEASE. Neither this Lease nor any memorandum
hereof shall be recorded without the express written consent of Landlord.

21.17 MULTIPLE TENANTS. If there is more than one person, firm,
corporation, partnership or other entity comprising Tenant, then (i) the term
"Tenant", as used herein, shall include all of the undersigned; (ii) each and
every provision in this Lease shall be binding on each and every one of the
undersigned; (iii) each of the undersigned shall be jointly and severally liable
hereunder; (iv) Landlord shall have the right to join one or all of the
undersigned in any proceeding, or to proceed against them in any order; and (v)
Landlord shall have the right to release any one or more of the undersigned
without in any way prejudicing its right to proceed against the others

21.18 COMPLIANCE WITH RECORDED COVENANTS, CONDITIONS AND
RESTRICTIONS. This Lease shall be subject and subordinate to, and Landlord
reserves the right to record covenants, conditions and restrictions governing
the use, ownership and occupancy of the Project. Tenant agrees, as a material
part of this Lease, to comply with the provisions of any such recorded
covenants, conditions or restrictions, and the failure to so comply shall be
deemed a breach of this Lease.

SECTION 22. SPECIAL NOTICE: READ BEFORE EXECUTING THIS AGREEMENT.

Each party acknowledges, covenants and warrants to the other, and
agrees that the other party may rely upon in executing this Agreement, each of
the following

A. THAT I HAVE READ AND FULLY UNDERSTAND EACH AND EVERY TERM AND
CONDITION OF THIS AGREEMENT AND ANY ATTACHMENTS IN ITS ENTIRETY AND THE
CONSEQUENCES THEREOF.

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B. THAT I HAVE HAD AN OPPORTUNITY AND HAVE BEEN ADVISED TO SEEK MY
OWN INDEPENDENT LEGAL AND BUSINESS ADVICE CONCERNING THIS AGREEMENT.

IN WITNESS hereof, the parties hereto have executed this Agreement on
the day and year written below.

TENANT:

NEWGEN RESULTS CORPORATION, a California corporation

By: /s/ [ILLEGIBLE] Date:
-------------------------------------- ------------------------------

--------------------------------------
[Print Name and Title]

LANDLORD:

PLAZA HOLDINGS, INC., a California corporation

By: /s/ John I. Kocmur Date: 4/30/98
-------------------------------------- ------------------------------
John I. Kocmur, President

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<PAGE>

FIRST ADDENDUM

(ADDITIONAL LEASE TERMS)

THIS ADDENDUM is attached to and made a part of that certain Office Building
Lease dated April 6, 1998 (the "Lease") by and between PLAZA HOLDINGS, INC.,
a California corporation (the "Landlord") and NEWGEN RESULTS CORPORATION, a
California corporation (the "Tenant"), with respect to Premises (the
"Premises") located in the Project (as defined in the Lease) located in the
City of San Diego, San Diego County, California.

The following new terms or modifications to existing terms are hereby made a
part of the Lease as though fully set forth therein. In the event of any
inconsistency between the terms of the Lease and this Fist Addendum, this
First Addendum shall control.

27. PARKING. Landlord shall provide Tenant with two (2) covered, reserved
parking spaces located in the underground parking structure, and its
pro-rata share of unreserved parking spaces based on the overall 4:1
parking ratio.

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EXHIBIT "A"

PLAZA DEL MAR

12520 & 12526 HIGH BLUFF DRIVE, SAN DIEGO, CALIFORNIA 92130

[GRAPHIC]

(FLOOR PLAN OF PLAZA DEL MAR)

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EXHIBIT "B"

NEWGEN RESULTS CORPORATION

RENTABLE SQUARE FEET: 6,964/USABLE SQUARE FEET: 6,168

SUITE 170 AT 12526 HIGH BLUFF DRIVE, SAN DIEGO, CALIFORNIA 92130

(FLOOR PLAN OF BUILDING)

[GRAPHIC]

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<PAGE>

EXHIBIT "C"

MEMORANDUM OF ACTUAL COMMENCEMENT

AND EXPIRATION DATES

THIS MEMORANDUM is made and entered into as of _____________, 1998, by and
between PLAZA HOLDINGS, INC., a California corporation (the "Landlord") and
NEWGEN RESULTS CORPORATION, a California corporation (the "Tenant"), with
respect to that certain Office Building Lease between Landlord and Tenant dated
as April 6, 1998 (the "Lease").

The Term of the Lease commenced on ____________, 1998, which date is defined
in the Lease as the Commencement Date, and shall expire, unless sooner
terminated, fifteen (15) months thereafter on insert ____________, 1999,
which is defined in the Lease as the Expiration Date.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as of the
date set forth in the first paragraph above.

LANDLORD

PLAZA HOLDINGS, INC., a California corporation

By:
--------------------------------------
John I. Kocmur, President

TENANT

NEWGEN RESULTS CORPORATION, a California corporation

By: /s/ [ILLEGIBLE]
--------------------------------------

THIS IS A LEASE EXHIBIT WHICH ONLY REQUIRES LANDLORD'S AND TENANT'S INITIALS.
UPON COMMENCEMENT OF THIS LEASE LANDLORD SHALL PROVIDE TENANT WITH EXECUTION
COPIES IN ACCORDANCE WITH SECTION 2.1, TERM, OF THE LEASE.

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------- ---------------------

<PAGE>

EXHIBIT "D"

NEWGEN RESULTS CORPORATION

REMOVAL OF WALLS PLAN

SUITE 170 AT 12526 HIGH BLUFF DRIVE, SAN DIEGO, CALIFORNIA 92130

(FLOOR PLAN OF BUILDING)

[GRAPHIC]

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------- ---------------------

<PAGE>

EXHIBIT "E"

RULES AND REGULATIONS

The following Rules and Regulations shall be in effect at the
Building. Landlord reserves the right to adopt reasonable modifications and
additions at any time, to be effective upon written notice to tenants. In the
case of any conflict between these regulations and the Lease, the Lease shall be
controlling.

1. Except as otherwise provided in the Lease or any exhibits
thereto, no sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside or
inside of the Building without the prior written consent of Landlord. Unless
Landlord has provided such prior written consent, Landlord shall have the right
to remove any such sign, placard, picture, advertisement, name or notice,
without liability or prior notice to Tenant, and at the expense of Tenant.

All approved signs or lettering on doors and walls to the Premises
shall be printed, painted, affixed or inscribed at the expense of Tenant by
Landlord or by a person approved by Landlord in a manner and style acceptable to
Landlord.

Tenant shall not use any blinds, shades, awnings, or screens in
connection with any window or door of the Premises unless approved in writing by
Landlord. Tenant shall not use drape or window covering facing any exterior
glass surface other than the standard drape established by Landlord:

2. Except with the prior written consent of Landlord, no Tenant
shall sell, or permit the sale at retail, of newspapers, magazines, periodicals
or theater tickets, in or from the Premises, nor shall any Tenant carry on, or
permit or allow any employee or other person to carry on the business of
manufacturing of any kind, nor the business of a public barber shop, beauty
parlor, manicure or chiropodist or any other business not specifically permitted
in the Lease.

3. No Tenant shall allow the solicitation of its employees or
invitees by any personal goods or services vendors other than as approved or
provided by Landlord. The term "personal goods or services vendors" means
persons who periodically enter the Building for the purpose of selling goods or
services to a Tenant other than goods or services which are used by a Tenant
solely for the purpose of conducting its business on the Premises. "Personal
goods or services" include, but are not limited to, drinking water and other
beverages, food, barbering services and shoe shining services. Landlord
reserves the right to prohibit entry to the Building of any personal goods or
services vendors not approved or provided by Landlord. No vending machines or
machines of any description shall be installed, maintained or operated upon the
Premises without the prior written consent of Landlord.

4. The bulletin board or directory of the Building shall be provided
exclusively for the display of the name and location of Tenants only, and
Landlord reserves the right to exclude any other names therefrom and otherwise
limit the number of listings thereon.

5. The sidewalks, halls, passages, exits, entrances, and stairways
shall not be obstructed by any of Tenants or used by them for any purpose other
than for ingress to and egress from their respective premises. The halls,
passages, exits, entrances, stairways, balconies and roof are not for the use of
the general public and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence in the judgment of
Landlord shall be prejudicial to the safety, character, reputation and interests
of the Building and its Tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of Tenant's business unless such

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------- ---------------------

1
<PAGE>

persons are engaged in illegal activities. No Tenant and no employees or
invitees of any Tenant shall go upon the roof of the Building.

6. Each Tenant, upon the termination of the tenancy, shall deliver
to Landlord the keys of offices, rooms and toilet rooms which shall have been
furnished to Tenant or which Tenant shall have had made, and in the event of
loss of any keys so furnished, shall pay Landlord the cost of replacement.
Tenant shall not alter any lock or install any new or additional locks or any
bolts on any door of the Premises without the prior written consent of Landlord.

7. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by Tenant who, or whose employees or
invitees, shall have caused it.

8. Tenant shall not overload the floor of the Premises or mark,
drive nails, screw or drill into the partitions, woodwork or plaster or in any
way deface the Premises or any part thereof.

9. Upon initial move-in, move-out, or at any other time during
occupancy, no furniture, freight, packages, supplies, merchandise or equipment
of any kind shall be brought into the Building except during hours and in a
manner approved by Landlord in writing. All deliveries described above shall
utilize the freight elevator only. Any handtrucks permitted in the Building
must be equipped with soft rubber tires and sideguards.

10. Landlord shall have the right to prescribe the weight, size and
position of all safes, computers, sofas and other heavy objects brought into the
Premises. If considered necessary by Landlord, such heavy objects or equipment
shall be placed on a platform of such thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage
to any such property from any cause, and all damage done to the Building by
moving or maintaining any such property shall be repaired at the expense of
Tenant.

11. Landlord shall be responsible for providing janitorial services
to the Building and Premises. Any additional cleaning of the Premises required
by Tenant shall also be provided by Landlord's janitorial service at Tenant's
expense. Landlord shall have the right to prohibit access to the Building to
any janitorial or cleaning service other than Landlord's. Tenant shall not
cause any unnecessary labor by reason of Tenant's carelessness or indifference
in the preservation of good order and cleanliness. Landlord shall not be
responsible to any Tenant for any loss of property on the Premises, however,
occurring, or for any damage done to the effects of any Tenant by the janitor or
any other employee or any other person. Normal janitorial service shall not
include shampooing of carpets or rugs or moving of furniture or other special
services (such as cleaning of kitchen appliances). Window cleaning shall be
done only by Landlord,

12. Tenant shall not use, keep or permit to be used or kept any foul
or noxious gas or substance in the Premises, or permit or suffer the Premises to
be occupied or used in any manner offensive or objectionable to Landlord or
other occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other Tenants or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises or the
Building. Smoking or carrying lighted cigars or cigarettes in the Building is
prohibited.

13. No cooking shall be done or permitted by any Tenant on the
Premises, nor shall the Premises be used for the manufacture or storage of
merchandise, for washing clothes, for lodging, or for any improper,
objectionable or immoral purpose.

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------- ---------------------
2
<PAGE>

14. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable, explosive or combustible fluid or material,
or use any method of heating or air-conditioning other than that supplied by
Landlord.

15. Landlord will direct electricians as to where and how telephone
and telegraph wires are to be introduced. No boring or cutting for wires or
stringing of wires will be allowed without written consent of Landlord. The
location of telephones, call boxes and other office equipment affixed to the
Premises shall be subject to the approval of Landlord.

16. No Tenant shall lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord. The expenses of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by Tenant.

17. Landlord reserves the right to close and keep locked all entrance
and exit doors and otherwise regulate access of all persons to the halls,
corridors, and stairways in the Building on Saturdays, Sundays and legal
holidays and on other days except during normal operating hours, and at such
other times as Landlord may deem advisable for the adequate protection and
safety of the Building, its Tenants and property in the Building. Access to
the Premises may be refused unless the person seeking access is known to the
employee of the Building in charge, and has a pass or is otherwise properly
identified. Landlord shall in no case be liable for damages for any error with
regard to the admission or exclusion from the Building of any person.

18. Tenant shall see that the doors of the Premises are closed and
securely locked before leaving the Building and must observe strict care and
caution that all water apparatus are entirely shut off before Tenant or Tenant's
employees leave the Building, and that all electricity, gas or air shall
likewise be carefully shut off, so as to prevent waste or damage.

19. Any person whose presence in the Building at any time shall in
the sole judgment of Landlord, be prejudicial to the safety, character,
reputation and interests of the Building or its Tenants may be denied access to
the Building or may be ejected therefrom. Landlord may require any person
leaving the Building with any package or other object to exhibit a pass from
Tenant from whose Premises the package or object is being removed, but the
establishment and enforcement of such a requirement shall not impose any
responsibility on Landlord for the protection of any Tenant against the removal
of property from the premises of Tenant.

20. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing drapes when the sun's rays fall
directly on windows of the Premises. Tenant shall not obstruct, alter or in any
way impair the efficient operation of Landlord's heating, ventilating and
air-conditioning system and shall not place bottles, machines, parcels or any
other articles on the induction unit enclosure so as to interfere with air flow.
Tenant shall not tamper with or change the setting of any thermostats or
temperature control valves.

21. Landlord shall have the right, exercisable without notice and
without liability to Tenant, to change the name and street address of the
building of which the Premises are a part.

22. Canvassing, soliciting and peddling within the Property is
prohibited unless specifically approved by Landlord, and each Tenant shall
cooperate to prevent such activity.

23. All parking areas plus other Common Areas forming a part of the
Property shall be under the sole and absolute control of Landlord with the
exclusive right to regulate and control these areas. Tenant agrees to conform
to the rules and regulations that may be established by Landlord for these areas
from time to time.

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------- ---------------------
3
<PAGE>

24. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, may impair the reputation of the Building
or its desirability as a location for offices, and upon written notice from
Landlord, any Tenant shall refrain from or discontinue such advertising.

25. Tenant shall not do or permit anything to be done in or bring or
keep anything in the Premises, which shall in any way increase the rate of fire
insurance for the Building or its contents; or obstruct or interfere with the
rights of other Tenants or in any way injure or annoy them, or conflict with the
regulations of the fire department or the fire laws, or with any insurance
policy for the Building or any part thereof or with any rules and ordinances
established by the Board of Health or other governmental authority.

26. Tenant shall not install equipment, such as but not limited to,
electric tabulating or computer equipment, requiring electrical or air
conditioning service in excess of those to be provided by Landlord under the
Lease.

LANDLORD'S INITIALS: TENANT'S INITIALS:

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------- ---------------------

DELTA-AGI NEWGEN AGREEMENT

This Agreement is entered into as of the 1st day of December, 1995 in
San Diego, California among DELTA MAILING AND FULFILLMENT (hereinafter "Delta")
and ALUMNI GRAPHICS INCORPORATED (hereinafter "AGI"), Corporations formed under
the laws of the State of California of the first part, and NEWGEN RESULTS
CORPORATION (hereinafter "Newgen"), a corporation formed under the laws of the
State of California of the first part, and NEWGEN RESULTS CORPORATION
(hereinafter "Newgen"), a corporation formed under the laws of the State of
California of the second part. Each of Delta, AGI, and Newgen are defined as a
Party, and collectively defined as "the Parties".

1. TERM OF AGREEMENT

This Agreement shall terminate on January 15, 1997 unless, prior to
January 15, 1997, the Parties mutually agree in writing to extend the term for
an agreed upon period ("renewal period"). However, in the event that Delta or
AGI are unable to provide service which is satisfactory to Newgen, Newgen shall
have the right to terminate this agreement without penalty at any time prior to
the effective date.

Newgen shall also have the right to terminate this agreement prior to its
termination without cause. However, if Newgen terminates this agreement without
cause, then Newgen will pay Delta-AGI the sum of $[****] ([****]
dollars) for every month remaining from the date of termination until January
15, 1997. No payment under this clause will be required if Newgen ceases
operations.

2. PERFORMANCE AND SERVICE

Delta-AGI agrees to provide services for processing customized
printing and imprinting for Newgen as it applies to Newgen's existing and future
Accounts (account being automobile dealership representing 150 to date with an
anticipated growth potential to a total of 1300 additional automobile
dealerships). The above service shall include the printing and imprinting of a
customized letters and logos on stationery, letter folding, inserting the letter
into a two-window envelope, and delivering the letter in the envelope to the
Valencia Central post office. Delta-AGI warrants and represents that the mail
will be presorted to enable Newgen to receive the pre-sort rates available to
bulk sorted mail Postage will be paid by Newgen as provided for on Schedule I
attached hereto the terms of which are incorporated herein. There are presently
5,000 units (A unit being a single piece of stationary) a day produced by Newgen
which will potentially grow to [****] units a day, (A day being defined as a
twenty-four hour period with 20 working days in a month) Delta-AGI guarantees
that there will be no disruption of service except

* Confidential Treatment Requested

<PAGE>

for disruption of services caused by acts over which Delta-AGI have no
control. To the extent that Delta-AGI uses third parties to complete the
work, Delta-AGI agree that they will cause such third parties to execute a
confidentiality agreement, in a form acceptable to Newgen, prohibiting those
third parties from disclosing any confident information relating to Newgen or
its Customers if Delta-AGI utilizes the services of a third party support
vendor to assure Newgen the daily production requirements are fulfilled.
Delta-AGI will cause such support vendor to execute a confidentially
agreement. For the services provided hereunder Newgen shall send Delta/AGI
all data necessary for Delta-AGI to complete daily production on a timely
basis but in no event later than sixteen hours prior to daily post office
delivery. All data by Newgen to Delta-AGI will be sent either by modem or as
a diskette via overnight mail, subject to the agreement of the parties prior
to performance of the contract Newgen shall pay to Delta-AGI such amounts at
such times as set forth in Schedule I attached hereto terms of which are
incorporated herein.

3. UNFAIR BUSINESS PRACTICES

Newgen will not at any time during the term of this Agreement, or at
any time thereafter, divulge, publish or otherwise reveal, either directly or
through another, to any person, firm or corporation, any knowledge or
information of fact concerning Delta or AGI's prices, costs, customers, methods,
programs, inventions, discoveries, or devices, or any other information
specifically relating to the business of Delta or AGI, that is not then in the
public domain and that (i) Newgen acquired at any time prior to the date hereof
as a result of prior relationships between Delta or AGI, or (ii) Newgen may
acquire during the term of this Agreement as a result of Delta or AGI's
performance hereof, and all such knowledge, information and facts shall be
retained by each party in trust, in a fiduciary capacity for the sole benefit of
the other parties.

Delta or AGI will not at any time during the term of this Agreement, or at
any time thereafter, divulge, publish or otherwise reveal, either directly or
through another, to any person, firm or corporation, any knowledge or
information of fact concerning Newgen's prices, costs, customers, methods,
programs, inventions, discoveries, or devices, or any other information
specifically relating to the business of Newgen, that is not then in the public
domain and that (i) Delta or AGI acquired at any time prior to the date hereof
as a result of prior relationships between Newgen, or (ii) Delta or AGI may
acquire during the term of this Agreement as a result of Newgen's performance
hereof, and all such knowledge, information and facts shall be retained by each
party in trust, in a fiduciary capacity for the sole benefit of the other
parties.

<PAGE>

4. SUCCESSORS

In the event that Delta-AGI no longer engages in the providing of
services as described in Paragraph 2 of this Agreement, then Delta-AGI will
transfer to Newgen the technology and inventions utilized by Delta-AGI to
provide such services at no cost. Subject to the foregoing, this Agreement
shall not be assigned by any party. This Agreement shall be binding upon and
inure the benefit of the parties hereto, their successors and assigns.

5. ENTIRE AGREEMENT

This Agreement constitutes and contains the entire Agreement and
understanding concerning the subject matter hereof and supersedes and replaces
all prior negotiations, all proposed Agreements, and all Agreements whether
written or oral, express, or implied, between or among such parties or any of
them with respect to such subject matter. Each party acknowledges that it has
not signed this Agreement in reliance on any promise, representation, or
warranty whatsoever, express or implied, written, or oral, not contained herein
concerning the subject matters hereof. The parties hereto further agree that
any supplement to or modification of this Agreement or waiver of any provision
hereof shall be of no force or effect unless agreed to in writing by each party
hereto.

6. SEVERABILITY

If any provision or portion of this Agreement shall be held, for any
reason, to be unenforceable or illegal, that provision or portion, to the extent
that it is unenforceable or illegal, shall be severed from this Agreement and
the remainder shall be valid and enforceable among the parties just as if the
provision or portion held to be illegal or unenforceable had never been
included.

7. CHOICE OF LAW

This Agreement is executed and delivered within the State of
California and shall in all respects be interpreted, enforced, and governed by
and under the laws of the State of California applicable to instruments,
persons, and transactions which have legal contacts and relationships solely
within the State of California.
<PAGE>

8. CONSTRUCTION

The language of this Agreement shall be construed as a whole according
to its fair meaning and not strictly for or against any of the parties hereto,
each of whom has participated in its drafting.

9. RELATIONSHIP OF PARTIES

The parties hereto agree that Delta and AGI will be treated as one
party for the proposes of this agreement, and that each of Delta and AGI will be
jointly and severally liable for the obligations of each other.

10. NOTICE

Notices may be given to each of the parties as follows:

TO DELTA-AGI
Delta Mailing and Fulfillment
27460 Avenue Scott #C-2
Valencia, CA 91355-1111
Attention: Rick Barrios

TO NEWGEN:
Newgen Results Corporation
12526 High Bluff Drive, Suite 150
San Diego, CA 92130
Attention: Sam Simkin

<PAGE>

SCHEDULE I

PRICE SCHEDULE

To print 8 1/2" X 11" letterhead and letter on 20# bond. Letterhead and logos
in any color 2,3, and 4 color and letter text in black with occasional color
highlighting. Based on volume of 5,000 units a day which are reasonably
expected to exceed [****] daily over the next two years. Pricing is based on
70% 2 Color and remaining 30% to print 3 and 4 Color.

To fold to letter size and insert into #10 envelope (to be supplied at no
additional cost by Delta-AGI), including delivery to Valencia Post office.

All inclusive price - January 1 - March 31, 1996 - $[****]([****]) per sheet
April 1, 1996 until termination of agreement - $[****]
([****]) per sheet

Price increases can be implemented only on the anniversary date of this
agreement, with at least 30 days prior written notice. Any price increase
cannot exceed this increase in the adjusted Consumer Price Index for San Diego
County.

Postage shall be paid by Newgen 5 days in advance of delivery to the Valencia
post office.

One time logo scans per Automobile dealer at $[****] each.

Supplied envelope price included.

Payments shall be made by the 21st of each month.

* Confidential Treatment Requested

<PAGE>

Delta Mailing and Fulfillment
by

- ------------------------------------------ -----------------------
J. Richard Barrios, President Date

Alumni Graphics, Incorporated
by

- ------------------------------------------ -----------------------
Kenneth Hoffmann, CEO Date

Newgen Results Corporation
by
/s/ Sam Simkin Dec 26/95
- ------------------------------------------ -----------------------
Sam Simkin, Vice President and CFO Date

<PAGE>

EXHIBIT 10.21

PROMISSORY NOTE

San Diego, California

NOTE AMOUNT: $380,000 January 1, 1996

1. OBLIGATION. The undersigned, Newgen Results Corporation
("BORROWER") hereby promises to pay to the order of Sam Simkin, ("LENDER" or
"HOLDER") at the time specified in Section 2 at Lender's principal place of
business at Newgen Results Corporation, 12526 High Bluff Drive, Suite 150,
San Diego, CA 92130, or at such other place as Holder may direct, the
principal sum of Three Hundred Eighty Thousand Dollars ($380,000). Interest
shall accrue on unpaid principal and shall be computed at the then current
"Prime Rate" plus two percent per annum compounded annually, PROVIDED
HOWEVER, that the rate at which interest will accrue on unpaid principal
under this Note will not exceed the highest rate permitted by applicable law.
As used herein, the term "HOLDER" shall initially mean Lender, and shall
subsequently mean each person or entity to whom this Note is duly assigned.
As used herein, the term "PRIME RATE" shall mean the rate of interest
publicly announced from time to time by the Wells Fargo Bank in San Diego,
California as its prime commercial lending rate, which rate is not intended
to be the lowest rate of interest charged by the Bank to its customers.

2. PAYMENT OF PRINCIPAL. The principal sum of $380,000 under this
Note will be paid in a single payment within three (3) business days after
the earlier to occur of the following: (i) the closing of a public offering
by the Company that meets the criteria for automatic conversion of the Series
A Preferred Stock or Series A-1 Preferred Stock of the Borrower set forth in
Article VI, Section 5.2(a)(i) of Borrower's Articles of Incorporation, as such
may be amended from time to time: (ii) the consummation of an acquisition of
all or substantially all the assets of the Company, (iii) the consummation of
an acquisition of the Company by another corporation or entity by
consolidation, merger or other reorganization in which the holders of the
Company's outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than fifty
percent (50%) of the voting power of the surviving corporation, or (iv)
December 31, 1997; PROVIDED HOWEVER, that upon consummation of any sale of
the Company's preferred stock after the initial sale of such preferred stock
(an "ADDITIONAL CLOSING"), the Company shall promptly pay fifty percent (50%)
of the principal of this Note from the proceeds of such Second Closing.

3. PAYMENT OF INTEREST. Borrower will pay to Lender, on the first
business day of each month during which interest is accruing under this Note,
all interest accrued during the prior month at Lender's principal place of
business at Newgen Results Corporation, 12526 High Bluff Drive, Suite 150,
San Diego, CA 92130, or such other place as Holder may direct.

4. BONUS PAYMENT. Borrower shall pay to Lender on December 31 of
each year that any amounts due under this Note, an amount equal to $6,333.08
(the "INITIAL BONUS

<PAGE>

AMOUNT"). In the event of prepayment of principal under this Note during the
year prior to which any Initial Bonus Award is to be paid, the payment to be
made shall be the Initial Bonus Amount minus a number equal to the Initial Bonus
Amount multiplied by a fraction, the numerator of which is the amount of the
principal remaining due under the Note multiplied by the number of days
remaining in the year ending on December 31 since the prepayment was made,
and the denominator of which is $380,000 multiplied by three hundred and
sixty-five (365) (the "ADJUSTED BONUS AMOUNT"). Payment of the Initial Bonus
Amount or Adjusted Bonus Amount, as applicable, shall be made at Lender's
principal place of business at Newgen Results Corporation, 12526 High Bluff
Drive, Suite 150, San Diego, CA 92130, or such other place as Holder may
direct; PROVIDED HOWEVER, that no Initial or Adjusted Bonus Amount shall be
due or payable hereunder to the extent such amount, in combination with
interest paid at the rate set forth in Section 1, exceeds the highest
interest rate permitted by law. The Initial and Adjusted Bonus Amounts shall
be paid, if applicable and to the extent permitted by law, in addition to
payment of the principal and interest set forth in Sections 2 and 3.

5. SUBORDINATION. Holder agrees to execute all documents necessary
to subordinate Holder's rights under this Note to the rights of any bank or
other credit institution providing a loan, credit line, or equipment lease
line to Borrower.

6. PREPAYMENT. Prepayment of unpaid principal and/or interest due
under this Note may be made at any time without penalty. Unless otherwise
agreed in writing by Holder, all payments will be made in lawful tender of
the United States and will be applied (a) first, to any Bonus Payment then
due, (b) second, to the payment of accrued interest, and (c) third, (to the
extent that the amount of such prepayment exceeds the amount of all such
Bonus Payments and accrued interest), to the payment of principal.

7. DEFAULT; ACCELERATION OF OBLIGATION. Borrower will be deemed to
be in default under this Note and the outstanding unpaid principal balance of
this Note, together with all interest accrued thereon and all Bonus Payments
due, will immediately become due and payable in full, without the need for
any further action on the part of Holder, upon the occurrence of any of the
following events (each an "EVENT OF DEFAULT"): (a) upon Borrower's failure to
make any payment when due under this Note (but only after Holder has given
thirty (30) days written notice of nonpayment and provided that Borrower has
not made the overdue payment within such time); (b) upon the filing by or
against Borrower of any voluntary or involuntary petition in bankruptcy or
any petition for relief under the federal bankruptcy code or any other state
or federal law for the relief of debtors; PROVIDED HOWEVER, with respect to
an involuntary petition in bankruptcy, such petition has not been dismissed
within thirty (30) days after the filing of such petition; or (c) upon the
execution by Borrower of an assignment for the benefit of creditors or the
appointment of a receiver, custodian, trustee or similar party to take
possession of Borrower's assets or property.

8. REMEDIES ON DEFAULT; ACCELERATION. Upon any Event of Default,
Holder will have, in addition to its rights and remedies under this Note,
full recourse against any real, personal, tangible or intangible assets of
Borrower, and may pursue any legal or equitable remedies that are available
to Holder, and may declare the entire unpaid principal amount of this

-2-

<PAGE>

Note, all unpaid accrued interest under this Note and all Bonus Payment due,
to be immediately due and payable in full.

9. WAIVER AND AMENDMENT. Any provision of this Note may be amended
or modified only by a writing signed by both Borrower and Holder. Except as
provided below with respect to waivers by Borrower, no waiver or consent with
respect to this Note will be binding or effective unless it is set forth in
writing and signed by the party against whom such waiver is asserted. No
course of dealing between Borrower and Holder will operate as a waiver or
modification of any party's rights or obligations under this Note. No delay
or failure on the part of either party in exercising any right or remedy under
this Note will operate as a waiver of such right or any other right. A waiver
given on one occasion will not be construed as a bar to, or as a waiver of, any
right or remedy on any future occasion.

10. WAIVERS OF BORROWER. Borrower hereby waives presentment, notice
of non-payment, notice of dishonor, protest, demand and diligence. This Note
may be amended only by a writing executed by Borrower and Holder.

11. GOVERNING LAW. This Note will be governed by and construed in
accordance with the internal laws of the State of California as applied to
agreements between residents thereof to be performed entirely within such
State, without reference to that body of law relating to conflict of laws or
choice of law.

12. SEVERABILITY; HEADINGS. The invalidity or unenforceability of any
term or provision of this Note will not affect the validity or enforceability
of any other term or provision hereof. The headings in this Note are for
convenience of reference only and will not alter or otherwise affect the
meaning of this Note.

13. ATTORNEYS' FEES. If suit is brought for collection of this Note
or enforcement of the Security Agreement, Borrower agrees to pay all
reasonable expenses, including attorneys' fees, incurred by Holder in
connection therewith whether or not such suit is prosecuted to judgment.

14. ASSIGNMENT. This Note is freely transferable and assignable by
Holder, provided that such transfer is made in compliance with all applicable
state and federal securities laws. Any reference to Holder herein will be
deemed to refer to any subsequent transferee of this Note at such time as
such transferee holds this Note. This Note may not be assigned or delegated
by Borrower, whether by voluntary assignment or transfer, operation of law,
merger or otherwise.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

-3-

<PAGE>

IN WITNESS WHEREOF, Borrower and Holder have executed this Note as of
the date and year first above written.

BORROWER

Newgen Results Corporation
a California corporation

By: /s/ GERALD BENOWITZ
-------------------------------------------------------
Gerald Benowitz, President and Chief Executive Officer

HOLDER

By: /s/ SAM SIMKIN
----------------------
Sam Simkin

SIGNATURE TO PROMISSORY NOTE TO SAM SIMKIN

-4-
<PAGE>

AMENDED AND RESTATED PROMISSORY NOTE

San Diego, California

Note Amount: $380,000 August 8, 1996

1. OBLIGATION. The undersigned, Newgen Results Corporation
("Borrower") hereby promises to pay to the order of Sam Simkin ("Lender" or
"Holder") at the time specified in Section 2 at Lender's principal place of
business at Newgen Results Corporation, 12680 High Bluff Drive, Suite 300,
San Diego, CA 92130, or at such other place as Holder may direct, the
principal sum of Three Hundred Eighty Thousand Dollars ($380,000). Interest
shall accrue on unpaid principal and shall be computed at the then current
"Prime Rate" plus two percent per annum compounded annually, PROVIDED
HOWEVER, that the rate at which interest will accrue on unpaid principal
under this Note will not exceed the highest rate permitted by applicable law.
As used herein, the term "Holder" shall initially mean Lender, and shall
subsequently mean each person or entity to whom this Note is duly assigned.
As used herein, the term "Prime Rate" shall mean the rate of interest
publicly announced from time to time by the Wells Fargo Bank in San Diego,
California as its prime commercial lending rate, which rate is not intended
to be the lowest rate of interest charged by the Bank to its customers.

2. PAYMENT OF PRINCIPAL. The principal sum of $380,000 under this
Note will be paid in a single payment within three (3) business days after
the earlier to occur of the following: (i) the closing of a public offering
by the Company that meets the criteria for automatic conversion of the Series
A Preferred Stock or Series A-1 Preferred Stock of the Borrower set forth in
Article VI, Section 5.2(a)(i) of Borrower's Articles of Incorporation, as
such may be amended from time to time; (ii) the consummation of an
acquisition of all or substantially all the assets of the Company; (iii) the
consummation of an acquisition of the Company by another corporation or
entity by consolidation, merger or other reorganization in which the holders
of the Company's outstanding voting stock immediately prior to such
transaction own, immediately after such transaction, securities representing
less than fifty percent (50%) of the voting power of the surviving
corporation; or (iv) December 31, 1997; PROVIDED HOWEVER, that upon
consummation of any sale of the Company's preferred stock after the initial
sale of such preferred stock (an "Additional Closing"), the Company shall
promptly pay fifty percent (50%) of the principal of this Note from the
proceeds of such Additional Closing.

3. PAYMENT OF INTEREST. Borrower will pay to Lender, on the first
business day of each month during which interest is accruing under this Note,
all interest accrued during the prior month at Lender's principal place of
business at Newgen Results Corporation, 12680 High Bluff Drive, Suite 300,
San Diego, CA 92130, or such other place as Holder may direct.

<PAGE>

4. BONUS PAYMENT. Borrower shall pay to Lender on December 31 of each
year that any amounts remain due under this Note, an amount equal to
$6,333.08 (the "Initial Bonus Amount"). In the event of prepayment of
principal under this Note during the year prior to which any Initial Bonus
Amount is to be paid, the payment to be made shall be the Initial Bonus
Amount minus a number equal to the Initial Bonus Amount multiplied by a
fraction, the numerator of which is the amount of the principal remaining due
under this Note multiplied by the number of days remaining in the year ending
on December 31 since the prepayment was made, and the denominator of which is
$380,000 multiplied by three hundred and sixty-five (365) (the "Adjusted
Bonus Amount"). Payment of the Initial Bonus Amount or Adjusted Bonus
Amount, as applicable, shall be made at Lender's principal place of business
at Newgen Results Corporation, 12680 High Bluff Drive, Suite 300, San Diego,
CA 92130, or such other place as Holder may direct; PROVIDED HOWEVER, that no
Initial or Adjusted Bonus Amount shall be due or payable hereunder to the
extent such amount, in combination with interest paid at the rate set forth
in Section 1, exceeds the highest interest rate permitted by law. The
Initial and Adjusted Bonus Amounts shall be paid, if applicable and to the
extent permitted by law, in addition to payment of the principal and interest
set forth in Sections 2 and 3.

5. SUBORDINATION. Holder agrees to execute all documents necessary to
subordinate Holder's rights under this Note to the rights of any bank or
other credit institution providing a loan, credit line, or equipment lease
line to Borrower.

6. PREPAYMENT. Prepayment of unpaid principal and/or interest due
under this Note may be made at any time without penalty. Unless otherwise
agreed in writing by Holder, all payments will be made in lawful tender of
the United Sates and will be applied (a) first, to any Bonus Payment then
due, (b) second, to the payment of accrued interest, and (c) third, (to the
extent that the amount of such prepayment exceeds the amount of all such
Bonus Payments and accrued interest), to the payment of principal.

7. DEFAULT; ACCELERATION OF OBLIGATION. Borrower will be deemed to be
in default under this Note and the outstanding unpaid principal balance of
this Note, together with all interest accrued thereon and all Bonus Payments
due, will immediately become due and payable in full, without the need for
any further action on the part of Holder, upon the occurrence of any of the
following events (each an "Event of Default"): (a) upon Borrower's failure to
make any payment when due under this Note (but only after Holder has given
thirty (30) days written notice of nonpayment and provided that Borrower has
not made the overdue payment within such time); (b) upon the filing by or
against Borrower of any voluntary or involuntary petition in bankruptcy or
any petition for relief under the federal bankruptcy code or any other state
or federal law for the relief of debtors; PROVIDED, HOWEVER, with respect to
an involuntary petition in bankruptcy, such petition has not been dismissed
within thirty (30) days after the filing of such petition; or (c) upon the
execution by Borrower of an assignment for the benefit of creditors or the

<PAGE>

appointment of a receiver, custodian, trustee or similar party to take
possession of Borrower's assets or property.

9. WAIVER AND AMENDMENT. Any provision of this Note may be amended or
modified only by a writing signed by both Borrower and Holder. Except as
provided below with respect to waivers by Borrower, no waiver or consent with
respect to this Note will be binding or effective unless it is set forth in
writing and signed by the party against whom such waiver is asserted. No
course of dealing between Borrower and Holder will operate as a waiver or
modification of any party's rights or obligations under this Note. No delay
or failure on the part of either party in exercising any right or remedy
under this Note will operate as a waiver of such right or any other right. A
waiver given on one occasion will not be construed as a bar to, or as a
waiver of, any right or remedy on any future occasion.

10. WAIVERS OF BORROWER. Borrower hereby waives presentment, notice of
nonpayment, notice of dishonor, protest, demand and diligence. This Note may
be amended only by a writing executed by Borrower and Holder.

13. ATTORNEYS' FEES. If suit is brought for collection of this Note or
enforcement of the Security Agreement, Borrower agrees to pay all reasonable
expenses, including attorneys' fees, incurred by Holder in connection
therewith whether or not such suit is prosecuted to judgment.

<PAGE>

transferee of this Note at such time as such transferee holds this Note.
This Note may not be assigned or delegated by Borrower, whether by voluntary
assignment or transfer, operation of law, merger or otherwise.

[THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, Borrower and Holder have executed this Note as of
the date and year first above written.

BORROWER: NEWGEN RESULTS CORPORATION,
a California corporation

By: /s/ GERALD BENOWITZ
-------------------------------------
Gerald Benowitz,
President and Chief Executive Officer

HOLDER:

By: /s/ SAM SIMKIN
-------------------------------------
Sam Simkin

PROMISSORY NOTE

<PAGE>

NEWGEN RESULTS CORPORATION

AMENDMENT NO. 1 TO AMENDED AND RESTATED PROMISSORY NOTE

This Amendment No. 1 to Amended and Restated Promissory Note (the
"Amendment") is entered into as of December 31, 1997 by and between Newgen
Results Corporation, a California corporation (the "Company"), and Samuel
Simkin ("Noteholder").

RECITALS

WHEREAS, the Company has issued to Noteholder an Amended and Restated
Promissory Note dated August 8, 1996 having a principal amount of $380,000,
the form of which is attached hereto as Exhibit A (the "Note"); and

WHEREAS, the Company and Noteholder would like to extend the maturity
date of the Note to June 30, 1998.

NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

AGREEMENT

1. The date "December 31, 1997" contained in the first paragraph of the
Note is hereby amended to read "June 30, 1998."

2. The Note as modified herein shall remain in full force and effect as so
modified.

[THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

EXHIBIT A

NOTE

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of December 31, 1997.

COMPANY: NEWGEN RESULTS CORPORATION

By: /s/ SAM SIMKIN
-------------------------------------
Sam Simkin, Vice President

NOTEHOLDER:

/s/ SAM SIMKIN
-------------------------------------
Sam Simkin

AMENDMENT NO. 1 TO AMENDED AND RESTATED PROMISSORY NOTE

<PAGE>

NEWGEN RESULTS CORPORATION

AMENDMENT NO. 2 TO AMENDED AND RESTATED PROMISSORY NOTE

This Amendment No. 2 to Amended and Restated Promissory Note (the
"Amendment") is entered into as of June 30, 1998 by and between Newgen Results
Corporation, a California corporation (the "Company"), and Samuel Simkin and
Carol Joy Simkin and Carol Joy Simkin as co-trustees of the Samuel Simkin
Family Trust dated January 10, 1997 ("Noteholder").

RECITALS

WHEREAS, the Company and Noteholder previously amended the Note to
extend the maturity date of the Note to June 30, 1998 (the "Amendment"); and

WHEREAS, the Company and Noteholder would like to extend the maturity
date of the Note to December 31, 1998.

AGREEMENT

1. The date "June 30, 1998" contained in paragraph number 1 of the Amendment
is hereby amended to read "December 31, 1998."

2. The Note as modified herein shall remain in full force and effect as so
modified.

[THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of June 30, 1998.

COMPANY: NEWGEN RESULTS CORPORATION

By: /s/ Sam Simkin
--------------------------------------
Sam Simkin, Vice President

NOTEHOLDER: SAMUEL SIMKIN AND CAROL JOY SIMKIN, CO-
TRUSTEES OF THE SAMUEL SIMKIN FAMILY
TRUST

/s/ Sam Simkin
--------------------------------------
Samuel Simkin, Co-Trustee

/s/ Carol Simkin
--------------------------------------
Carol Joy Simkin, Co-Trustee

<PAGE>

EXHIBIT A

NOTE
<PAGE>

ASSIGNMENT
OF
AMENDED AND RESTATED PROMISSORY NOTE

Sam Simkin ("Assignor") hereby assigns and transfers unto Samuel Simkin
and Carol Joy Simkin as co-trustees of the Samuel Simkin Family Trust dated
January 10, 1997 ("Assignee") that certain Amended and Restated Promissory
Note issued by Newgen Results Corporation (the "Company"), dated August 9,
1996, as amended, a copy of which is attached hereto as Exhibit A (the
"Note"). In connection herewith, the original executed copy of the Note has
been delivered to Assignee. This assignment and transfer is being made in
connection with the undersigned's estate planning and is not a "sale" of the
Assignor's interest in the Note, as defined under applicable securities laws.

Assignor hereby appoints the Company's Secretary as its attorney to
transfer the Note on the books of the Company with full power of substitution
in the premises.

Dated: December 31, 1997

/s/ SAM SIMKIN
------------------------------
Sam Simkin

ACCEPTED AND AGREED, THIS 31ST DAY OF DECEMBER, 1997:

SAMUEL SIMKIN AND CAROL JOY SIMKIN
AS CO-TRUSTEES OF THE SAMUEL SIMKIN
FAMILY TRUST DATED JANUARY 10, 1997

By: /s/ SAMUEL SIMKIN
-------------------------------
Samuel Simkin, Co-Trustee

By: /s/ CAROL SIMKIN
-------------------------------
Carol Joy Simkin, Co-Trustee

<PAGE>

EXHIBIT A

AMENDED AND RESTATED PROMISSORY NOTE

<PAGE>
EXHIBIT 10.22

PROMISSORY NOTE

San Diego, California

NOTE AMOUNT: $220,000 January 1, 1996

1. OBLIGATION. The undersigned, Newgen Results Corporation ("BORROWER")
hereby promises to pay to the order of Jack Simkin as Trustee for Simkin
Children Irrevocable Trust, ("LENDER" or "HOLDER") at the time specified in
Section 2 at Lender's principal place of business at Shared Network Services,
Inc., 12526 High Bluff Drive, Suite 210, San Diego, CA 92130, or at such
other place as Holder may direct, the principal sum of Two Hundred and Twenty
Thousand Dollars ($220,000). Interest shall accrue on unpaid principal and
shall be computed at the then current "Prime Rate" plus two percent per annum
compounded annually, PROVIDED HOWEVER, that the rate at which interest will
accrue on unpaid principal under this Note will not exceed the highest rate
permitted by applicable law. As used herein, the term "HOLDER" shall
initially mean Lender, and shall subsequently mean each person or entity to
whom this Note is duly assigned. As used herein, the term "PRIME RATE" shall
mean the rate of interest publicly announced from time to time by the Wells
Fargo Bank in San Diego, California as its prime commercial lending rate,
which rate is not intended to be the lowest rate of interest charged by the
Bank to its customers.

2. PAYMENT OF PRINCIPAL. The principal sum of $220,000 under this Note
will be paid in a single payment within three (3) business days after the
earlier to occur of the following: (i) the closing of a public offering by
the Company that meets the criteria for automatic conversion of the Series A
Preferred Stock or Series A-1 Preferred Stock of the Borrower set forth in
Article VI, Section 5.2(a)(i) of Borrower's Articles of Incorporation, as
such may be amended from time to time; (ii) the consummation of an
acquisition of all or substantially all the assets of the Company, (iii) the
consummation of an acquisition of the Company by another corporation or
entity by consolidation, merger or other reorganization in which the holders
of the Company's outstanding voting stock immediately prior to such
transaction own, immediately after such transaction, securities representing
less than fifty percent (50%) of the voting power of the surviving
corporation, or (iv) December 31, 1997; PROVIDED HOWEVER, that upon
consummation of any sale of the Company's preferred stock after the initial
sale of such preferred stock (an "ADDITIONAL CLOSING"), the Company shall
promptly pay fifty percent (50%) of the principal of this Note from the
proceeds of such Second Closing.

3. PAYMENT OF INTEREST. Borrower will pay to Lender, on the first
business day of each month during which interest is accruing under this Note,
all interest accrued during the prior month at Lender's principal place of
business at Shared Network Services, Inc., 12526 High Bluff Drive, Suite 210,
San Diego, CA 92130, or such other place as Holder may direct.

<PAGE>

4. BONUS PAYMENT. Borrower shall pay to Lender on December 31 of each
year that any amounts remain due under this Note, an amount equal to
$3,666.52 (the "INITIAL BONUS AMOUNT"). In the event of prepayment of
principal under this Note during the year prior to which any Initial Bonus
Amount is to be paid, the payment to be made shall be the Initial Bonus
Amount minus a number equal to the Initial Bonus Amount multiplied by a
fraction, the numerator of which is the amount of the principal remaining due
under the Note multiplied by the number of days remaining in the year ending
on December 31 since the prepayment was made, and the denominator of which is
$220,000 multiplied by three hundred and sixty-five (365) (the "ADJUSTED
BONUS AMOUNT"). Payment of the Initial Bonus Amount or Adjusted Bonus Amount,
as applicable, shall be made at Lender's principal place of business at
Shared Network Services, Inc., 12526 High Bluff Drive, Suite 210, San Diego,
CA 92130, or such other place as Holder may direct; PROVIDED HOWEVER, that no
Initial or Adjusted Bonus Amount shall be due or payable hereunder to the
extent such amount, in combination with interest paid at the rate set forth
in Section 1, exceeds the highest interest rate permitted by law. The Initial
and Adjusted Bonus Amounts shall be paid, if applicable and to the extent
permitted by law, in addition to payment of the principal and interest set
forth in Sections 2 and 3.

5. SUBORDINATION. Holder agrees to execute all documents necessary to
subordinate Holder's rights under this Note to the rights of any bank or
other credit institution providing a loan, credit line, or equipment lease
line to Borrower.

6. PREPAYMENT. Prepayment of unpaid principal and/or interest due under
this Note may be made at any time without penalty. Unless otherwise agreed in
writing by Holder, all payments will be made in lawful tender of the United
States and will be applied (a) first, to any Bonus Payment then due, (b)
second, to the payment of accrued interest, and (c) third, (to the extent that
the amount of such prepayment exceeds the amount of all such Bonus Payments
and accrued interest), to the payment of principal.

7. DEFAULT; ACCELERATION OF OBLIGATION. Borrower will be deemed to be
in default under this Note and the outstanding unpaid principal balance of
this Note, together with all interest accrued thereon and all Bonus Payments
due, will immediately become due and payable in full, without the need for
any further action on the part of Holder, upon the occurrence of any of the
following events (each an "EVENT OF DEFAULT"): (a) upon Borrower's failure to
make any payment when due under this Note (but only after Holder has given
thirty (30) days written notice of nonpayment and provided that Borrower has
not made the overdue payment within such time); (b) upon the filing by or
against Borrower of any voluntary or involuntary petition in bankruptcy or
any petition for relief under the federal bankruptcy code or any other state
or federal law for the relief of debtors; PROVIDED HOWEVER, with respect to
an involuntary petition in bankruptcy, such petition has not been dismissed
within thirty (30) days after the filing of such petition; or (c) upon the
execution by Borrower of an assignment for the benefit of creditors or the
appointment of a receiver, custodian, trustee or similar party to take
possession of Borrower's assets or property.

-2-

<PAGE>

remedies that are available to Holder, and may declare the entire unpaid
principal amount of this Note, all unpaid accrued interest under this Note
and all Bonus Payment due, to be immediately due and payable in full.

9. WAIVER AND AMENDMENT. Any provision of this Note may be amended or
modified only by a writing signed by both Borrower and Holder. Except as
provided below with respect to waivers by Borrower, no waiver or consent with
respect to this Note will be binding or effective unless it is set forth in
writing and signed by the party against whom such waiver is asserted. No
course of dealing between Borrower and Holder will operate as a waiver or
modification of any party's rights or obligations under this Note. No delay
or failure on the part of either party in exercising any right or remedy
under this Note will operate as a waiver of such right or any other right. A
waiver given on one occasion will not be construed as a bar to, or as a
waiver of, any right or remedy on any future occasion.

10. WAIVERS OF BORROWER. Borrower hereby waives presentment, notice of
non-payment, notice of dishonor, protest, demand and diligence. This Note may
be amended only by a writing executed by Borrower and Holder.

13. ATTORNEYS' FEES. If suit is brought for collection of this Note or
enforcement of the Security Agreement, Borrower agrees to pay all reasonable
expenses, including attorneys' fees, incurred by Holder in connection
therewith whether or not such suit is prosecuted to judgment.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

-3-

<PAGE>

IN WITNESS WHEREOF, Borrower and Holder have executed this Note as of
the date and year first above written.

BORROWER

Newgen Results Corporation
a California corporation

By: /s/ GERALD BENOWITZ
------------------------------------------------------
Gerald Benowitz, President and Chief Executive Officer

HOLDER

By: /s/ JACK SIMKIN
-----------------------------------------------
Jack Simkin as Trustee for Simkin Children
Irrevocable Trust

SIGNATURE TO PROMISSORY NOTE TO JACK SIMKIN AS TRUSTEE FOR
SIMKIN CHILDREN IRREVOCABLE TRUST

-4-

<PAGE>

AMENDED AND RESTATED PROMISSORY NOTE

San Diego, California

Note Amount: $220,000 August 8, 1996

1. OBLIGATION. The undersigned, Newgen Results Corporation ("Borrower")
hereby promises to pay to the order of Jack Simkin as Trustee for Simkin
Children Irrevocable Trust, ("Lender" or "Holder") at the time specified in
Section 2 at Lender's principal place of business at Shared Network Services,
Inc., 12526 High Bluff Drive, Suite 210, San Diego, CA 92130, or at such other
place as Holder may direct, the principal sum of Two Hundred Twenty Thousand
Dollars ($220,000). Interest shall accrue on unpaid principal and shall be
computed at the then current "Prime Rate" plus two percent per annum compounded
annually, PROVIDED HOWEVER, that the rate at which interest will accrue on
unpaid principal under this Note will not exceed the highest rate permitted by
applicable law. As used herein, the term "Holder" shall initially mean Lender,
and shall subsequently mean each person or entity to whom this Note is duly
assigned. As used herein, the term "Prime Rate" shall mean the rate of interest
publicly announced from time to time by the Wells Fargo Bank in San Diego,
California as its prime commercial lending rate, which rate is not intended to
be the lowest rate of interest charged by the Bank to its customers.

2. PAYMENT OF PRINCIPAL. The principal sum of $220,000 under this Note
will be paid in a single payment within three (3) business days after the
earlier to occur of the following: (i) the closing of a public offering by the
Company that meets the criteria for automatic conversion of the Series A
Preferred Stock or Series A-1 Preferred Stock of the Borrower set forth in
Article VI, Section 5.2(a)(i) of Borrower's Articles of Incorporation, as such
may be amended from time to time; (ii) the consummation of an acquisition of all
or substantially all the assets of the Company; (iii) the consummation of an
acquisition of the Company by another corporation or entity by consolidation,
merger or other reorganization in which the holders of the Company's outstanding
voting stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) of the voting
power of the surviving corporation; or (iv) December 31, 1997; PROVIDED HOWEVER,
that upon consummation of any sale of the Company's preferred stock after the
initial sale of such preferred stock (an "Additional Closing"), the Company
shall promptly pay fifty percent (50%) of the principal of this Note from the
proceeds of such Additional Closing.

<PAGE>

Services, Inc., 12526 High Bluff Drive, Suite 210, San Diego, CA 92130, or
such other place as Holder may direct.

4. BONUS PAYMENT. Borrower shall pay to Lender on December 31 of each
year that any amounts remain due under this Note, an amount equal to
$6,666.52 (the "Initial Bonus Amount"). In the event of prepayment of
principal under this Note during the year prior to which any Initial Bonus
Amount is to be paid, the payment to be made shall be the Initial Bonus
Amount minus a number equal to the Initial Bonus Amount multiplied by a
fraction, the numerator of which is the amount of the principal remaining due
under this Note multiplied by the number of days remaining in the year ending
on December 31 since the prepayment was made, and the denominator of which is
$220,000 multiplied by three hundred and sixty-five (365) (the "Adjusted
Bonus Amount"). Payment of the Initial Bonus Amount or Adjusted Bonus
Amount, as applicable, shall be made at Lender's principal place of business
at Shared Network Services, Inc., 12526 High Bluff Drive, Suite 210, San
Diego, CA 92130, or such other place as Holder may direct; PROVIDED HOWEVER,
that no Initial or Adjusted Bonus Amount shall be due or payable hereunder to
the extent such amount, in combination with interest paid at the rate set
forth in Section 1, exceeds the highest interest rate permitted by law. The
Initial and Adjusted Bonus Amounts shall be paid, if applicable and to the
extent permitted by law, in addition to payment of the principal and interest
set forth in Sections 2 and 3.

5. SUBORDINATION. Holder agrees to execute all documents necessary to
subordinate Holder's rights under this Note to the rights of any bank or
other credit institution providing a loan, credit line, or equipment lease
line to Borrower.

6. PREPAYMENT. Prepayment of unpaid principal and/or interest due
under this Note may be made at any time without penalty. Unless otherwise
agreed in writing by Holder, all payments will be made in lawful tender of
the United Sates and will be applied (a) first, to any Bonus Payment then
due, (b) second, to the payment of accrued interest, and (c) third, (to the
extent that the amount of such prepayment exceeds the amount of all such
Bonus Payments and accrued interest), to the payment of principal.

<PAGE>

debtors; PROVIDED, HOWEVER, with respect to an involuntary petition in
bankruptcy, such petition has not been dismissed within thirty (30) days
after the filing of such petition; or (c) upon the execution by Borrower of
an assignment for the benefit of creditors or the appointment of a receiver,
custodian, trustee or similar party to take possession of Borrower's assets
or property.

9. WAIVER AND AMENDMENT. Any provision of this Note may be amended or
modified only by a writing signed by both Borrower and Holder. Except as
provided below with respect to waivers by Borrower, no waiver or consent with
respect to this Note will be binding or effective unless it is set forth in
writing and signed by the party against whom such waiver is asserted. No
course of dealing between Borrower and Holder will operate as a waiver or
modification of any party's rights or obligations under this Note. No delay
or failure on the part of either party in exercising any right or remedy
under this Note will operate as a waiver of such right or any other right. A
waiver given on one occasion will not be construed as a bar to, or as a
waiver of, any right or remedy on any future occasion.

13. ATTORNEYS' FEES. If suit is brought for collection of this Note or
enforcement of the Security Agreement, Borrower agrees to pay all reasonable
expenses, including attorneys' fees, incurred by Holder in connection
therewith whether or not such suit is prosecuted to judgment.

<PAGE>

[THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, Borrower and Holder have executed this Note as of the
date and year first above written.

BORROWER: NEWGEN RESULTS CORPORATION,
a California corporation

By: /s/ GERALD BENOWITZ
----------------------------
Gerald Benowitz,
President and Chief Executive Officer

HOLDER: SIMKIN CHILDREN IRREVOCABLE TRUST

By: /s/ JACK SIMKIN
----------------------------
Jack Simkin, Trustee

PROMISSORY NOTE

<PAGE>

NEWGEN RESULTS CORPORATION

AMENDMENT NO. 1 TO AMENDED AND RESTATED PROMISSORY NOTE

RECITALS

WHEREAS, the Company has issued to Noteholder an Amended and Restated
Promissory Note dated August 8, 1996 having a principal amount of $220,000, the
form of which is attached hereto as Exhibit A (the "Note"); and

WHEREAS, the Company and Noteholder would like to extend the maturity date
of the Note to June 30, 1998.

AGREEMENT

1. The date "December 31, 1997" contained in the first paragraph of the Note
is hereby amended to read "June 30, 1998."

2. The Note as modified herein shall remain in full force and effect as so
modified.

[THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of June 30, 1998.

COMPANY: NEWGEN RESULTS CORPORATION

By: /s/ Sam Simkin
--------------------------------------
Sam Simkin, Vice President

NOTEHOLDER: JACK SIMKIN AS TRUSTEE FOR SIMKIN
CHILDREN IRREVOCABLE TRUST

By: /s/ Jack Simkin
------------------------------------
Jack Simkin, Trustee

<PAGE>

EXHIBIT A

NOTE

<PAGE>

NEWGEN RESULTS CORPORATION

AMENDMENT NO. 2 TO AMENDED AND RESTATED PROMISSORY NOTE

This Amendment No. 2 to Amended and Restated Promissory Note (the
"Amendment") is entered into as of June 30, 1998 by and between Newgen
Results Corporation, a California corporation (the "Company"), and Jack
Simkin as Trustee for Simkin Children Irrevocable Trust ("Noteholder").

RECITALS

WHEREAS, the Company has issued to Noteholder an Amended and Restated
Promissory Note dated August 8, 1996 having a principal amount of $220,000,
the form of which is attached hereto as Exhibit A (the "Note");

WHEREAS, the Company and Noteholder previously amended the Note to
extend the maturity date of the Note to June 30, 1998 (the "Amendment"); and

WHEREAS, the Company and Noteholder would like to extend the maturity date
of the Note to December 31, 1998.

AGREEMENT

1. The date "June 30, 1998" contained in paragraph number 1 of the Amendment
is hereby amended to read "December 31, 1998."

2. The Note as modified herein shall remain in full force and effect as so
modified.

[THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of June 30, 1998.

COMPANY: NEWGEN RESULTS CORPORATION

By: /s/ Sam Simkin
----------------------------
Sam Simkin, Vice President

NOTEHOLDER: JACK SIMKIN AS TRUSTEE FOR SIMKIN CHILDREN
IRREVOCABLE TRUST

By: /s/ Jack Simkin
----------------------------
Jack Simkin, Trustee

<PAGE>
EXHIBIT A

NOTE

<PAGE>

BOLDER HEURISTICS, INC.
GENERAL SERVICES AGREEMENT

This Agreement is effective as of this 25th day of December, 1996, and
is made by and between Bolder Heuristics, Inc. ("Company") of 5777 Central
Ave. #200, Boulder, Colorado 80301, and Newgen Results Corporation
("Customer") of 12680 High Bluff Drive. Suite 300, San Diego, California 92130
for the purpose of the provision of computer consulting and software
development services by the Company to the Customer.

1.0 GENERAL SERVICES

1.1 The Company shall, from time to time, as provided in Section 1.2,
provide Customer with professional computer consulting and software
development services ("Services").

1.2 Services shall be provided in accordance with a Statement of Work
("SOW") or in accordance with a Work Assignment ("Assignment"), or a Purchase
Order ("PO"), from the Customer and accepted by the Company in writing in
accordance with Article 2.0.

1.3 Any SOW, Assignment or PO shall be considered made a part of and
integrated with this General Services Agreement such that they shall be
considered one entire Agreement between the parties.

1.4 Unless stated otherwise in any SOW, Assignment or PO, the Company
shall be responsible for the supervision, management, and control of any
Services provided to the Customer under this General Services Agreement.

1.5 The Company shall not be responsible for any delay in the
performance of Services due to causes beyond the reasonable control of the
Company, including but not limited to natural disasters, acts of God,
strikes, declared war, and the like (force majeure).

1.6 The Services specified in any SOW, Assignment or P0 shall constitute
the complete and exclusive definition and description of Services to be
provided by the Company hereunder.

1.7 In the event that the Company determines that any information
provided by the Customer is inaccurate or incomplete, subsequent to the
commencement of the provision of Services, or in the event that the Customer
requests a modification to an SOW, Assignment or PO, the Company reserves the
right to suspend performance of Services until such time as accurate and
complete information has been provided by the Customer to the Company and any
modification of Services that has been proposed by Customer and/or Company in
accordance with Article 2.0 or this Agreement has been amended, as
appropriate, and accepted by both parties.

2.0 MODIFICATIONS

2.1 If Customer wishes to modify the Services specified in an attached
SOW, any Assignment or PO, or wishes to obtain additional Services not
covered by this Agreement, the Customer shall so advise the Company, in
writing, and

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the Company will respond in writing with its' understanding of the additional
services or modification requested and its' acceptance or rejection thereof.

2.2 Customer's proposal for modification or addition of Services shall
specify the Services to be performed together with the following information:

- Nature of work to be performed;
- Number of individuals required;
- Level of experience of each individual;
- Date on which Assignment is to begin;
- Length of Assignment;
- Contact individual or Customer if different from individual
listed above.

2.3 Within five (5) days after receipt of a Customer proposal, the
Company shall provide the Customer with a written cost estimate for
performing the modified or additional Services. If the Customer accepts the
Company's written cost estimate, in writing, then such written specifications
and cost estimate shall constitute an additional or modified SOW, Assignment,
or PO, and shall be governed by the terms and conditions of this Agreement
and the SOW, Assignment or PO, which shall be read together as one integrated
Agreement.

2.4 In the event of a conflict between the terms and conditions of this
Agreement and the terms and conditions of any SOW, Assignment or PO, the
terms and conditions of the SOW, Assignment or P0 shall govern.

2.5 If the Customer wishes to modify an attached SOW, any Assignment or
P0 by oral request, the Company may perform ouch modified Services at its
discretion. If Services are performed in response to Customer's oral request,
Customer agrees that the time expended by the Company to perform modified
Services shall be reasonable and necessary and that the charges for and
performance of such Services shall be governed by this Agreement.
Confirmation of requesting or ordering by Customer of orally requested
Services agreed to be performed by the Company, shall be made in writing
within 10 days after the Company has orally agreed to perform such Services.
Company will confirm in writing, within 10 days, acceptance of Customer's
request or order.

3.0 RESOURCES

3.1 Customer shall be responsible for providing the Company with any
technical information, data, design, or documentation reasonably requested by
the Company to perform the Services.

3.2 Customer shall ensure that it has competent personnel available to
provide information and other support to the Company while providing Services
under this Agreement.

3.3 If Services are to be performed at the Customer's premises,
Customer shall provide the Company with the following:

a) a work space with telephone;
b) access to the Customer's computer system;
c) software and related equipment if necessary to perform the
Services;
d) operating supplies and stationery;

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<PAGE>

e) adequate storage space for work materials; and
f) any specific training that is necessary for the Company to
perform the required Services for the Customer.

3.4 The Company shall provide competent, qualified personnel to perform
the Services.

3.5 Neither the Company nor any of the Company's employees shall be
deemed to be employees of Customer by virtue of this Agreement, nor shall the
Company be deemed a partner working in a partnership organization with the
Customer.

3.6 Neither party shall solicit nor offer employment to any of the other
party's employees during the term of this Agreement or for a period of twelve
(12) months following termination of this Agreement unless mutually agreed to
by the Company and Customer in writing.

4.0 PAYMENT

4.1 Customer shall reimburse the Company for its reasonable,
out-of-pocket expenses incurred in connection with the provision of Services
which shall include, but not be limited to, long-distance telephone calls and
computer time. Customer shall also reimburse the Company for any travel or
living expenses of Company personnel incurred by the Company personnel while
performing Services outside the Denver Metro area. The Company shall obtain
written approval from Customer prior to incurring any such expenses.

4.2 The Customer shall be invoiced for the Services performed and any
expenses, including itemized details, incurred as set forth above. Such
invoices shall be due and payable by Customer in accordance with the
Company's existing credit policy or specific agreements set forth in any SOW,
Assignment or PO. All invoices not paid in accordance with the credit terms
agreed to in this Agreement or any attached SOW, Assignment, or PO shall be
subject to a late payment charge of 1.75% per month commencing on the day
the: invoice becomes overdue.

4.3 Any and all taxes, except income taxes, imposed or assessed by
reason of this Agreement or the performance of Services hereunder, including
but not limited to sales or use taxes, shall be paid by the Customer.

5.0 CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY

5.1 The Company agrees to protect the confidentiality of data or
information that relate to Customer's business and which are clearly
designated in writing as confidential by Customer, or which would be
reasonably considered confidential to Customer, with the same degree of care
that the Company utilizes in protecting its own confidential information.

5.2 Unless stated otherwise in any attached SOW, Assignment or PO, any
copyrightable material created under this Agreement for use by Customer (Work
for Hire) shall be the proprietary property of Customer upon Customer's
performance of its contractual obligations set forth herein, inclusive of
payment of all amounts due the Company. Cooperation with copyrighting and
assignments of copyrights are, available upon Customer request.

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<PAGE>

5.3 If proprietary intellectual property owned by the Company, its
contractors, or third parties is enhanced by the Company hereunder, provided
the enhanced intellectual property does not include proprietary intellectual
property otherwise owned by the Customer, the parties agree the enhanced
intellectual property shall be jointly owned and usable by Customer and the
Company without any obligation of contribution of one party to the other
party for use of the same.

5.4 Notwithstanding this Section 5.0, it shall be the agreement of the
parties that the Company shall retain all generic software tools, designs,
and tool evaluations used or developed in conjunction with any SOW,
Assignment or PO referred to herein, that are not specifically identified to
and with a Customer application. These generic tools shall be defined to
include but not be limited to graphics, expert system, object oriented or
data base functionality not specifically related to the Customer application.
All other intellectual property conceived, created, discovered, developed, or
reduced to practice by the Company under this Agreement inclusive of any
integrated SOW, Assignment or PO, for the benefit of Customer and which in
any way results or arises out of the Company's work hereunder for Customer,
shall be transferred to Customer promptly upon Customer's performance of its
contractual obligations set forth herein, inclusive of payment of all amounts
due the Company.

5.5 Company shall have the right to demonstrate the materials, products,
or services provided or developed under this Agreement to its' current or
prospective clients for the sole purpose of demonstrating the Company's
technical capabilities. Company agrees to protect any copies of said
materials, products, or services used for demonstration purposes. Company
agrees to obtain prior written consent from Customer, which consent shall not
be unreasonably withheld, before demonstrating said materials, products, or
services to any entity that could be construed as a competitor of the
Customer.

5.6 Company shall have the right to publicize and use the materials,
products, or services provided or developed under this Agreement for printed
advertisement and promotion with written consent from Customer which consent
shall not be unreasonably withheld.

6.0 WARRANTY

6.1 Ownership Rights: The Company warrants that to the best of its'
knowledge, all materials and services provided according to an attached SOW,
Assignment or P0 do not and will not infringe any patents, copyrights,
trademarks, or other intellectual property rights (including trade secrets),
privacy or similar rights of any third party.

6.2 Compliance: The Company warrants that:

a) all materials and services provided under an attached SOW, Assignment
or PO shall be consistent with generally accepted software development
standards;

b) that such materials will function on the machines and with the
operating systems for which they are designed;

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<PAGE>

c) that all materials will conform to the specifications and functions
set forth in an attached SOW, Assignment or PO.

6.3 Indemnity: Company will indemnify Customer against all claims,
suits, damages, and liabilities arising out of third party claims for acts or
omissions by the Company made in connection with the materials and services
provided under this agreement.

COMPANY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
WITH REGARD TO THE SERVICES AND MATERIALS PROVIDED HEREUNDER, INCLUDING ALL
WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE,
ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF SERVICES UNDER THIS
AGREEMENT. COMPANY DOES NOT WARRANT THAT THE MATERIALS OR PRODUCTS PROVIDED
UNDER THIS AGREEMENT SHALL OPERATE ERROR FREE.

7.0 LIMITATION OF LIABILITY

7.1 COMPANY'S TOTAL LIABILITY FOR DAMAGES UNDER THIS AGREEMENT,
REGARDLESS OF THE FORM OR TYPE OF ACTION IN WHICH SUCH DAMAGES ARE SOUGHT,
SHALL BE LIMITED TO THE AMOUNTS ACTUALLY PAID BY THE CUSTOMER TO THE COMPANY
UNDER THIS AGREEMENT.

7.2 IN NO EVENT SHALL THE COMPANY BE LIABLE FOR ANY SPECULATIVE, REMOTE,
INDIRECT, INCIDENTAL, CONSEQUENTIAL, FORESEEABLE OR EXEMPLARY DAMAGES, NOR
LOSS OF PROFITS, INCLUDING, BUT NOT LIMITED TO LOSS OF DATA, ANTICIPATED
PROFITS, OR BUSINESS REPUTATION, EVEN IF THE COMPANY IS ADVISED IN ADVANCE OF
THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.

8.0 DISPUTE ARBITRATION

8.1 Any disputes that arise between the parties to this Agreement with
respect to the performance of Services or otherwise under this Agreement or
an SOW, Assignment or PO, that cannot be resolved by negotiation (or, if the
parties so choose, mediation) within fifteen (15) days after written notice
given by one party to the other of such a dispute, shall be submitted to
binding arbitration to be held in San Diego, California in accordance with
the then current rules of the American Arbitration Association.

8.2 The parties agree that the party losing any arbitration shall pay
the identified costs, including reasonable attorney's fees and expenses, of
any such arbitration and abide by any final arbitration decision, which
decision shall bet enforceable through and by the courts of the State
California or the United States of America.

9.0 TERMINATION

9.1 The term of this Agreement shall commence on the date first above
written and shall continue until the latest date specified for performance of
Services. Termination dates in any SOW, Assignment, or PO integrated with
such Agreement shall not terminate this General Services Agreement.
Termination of this Agreement must follow the procedure set forth below.

9.2 This Agreement shall automatically be renewed for successive
one-year periods ("Renewal Years") unless terminated under one of the
following provisions:

Page 5
<PAGE>

A. The party seeking to terminate this Agreement, with or without cause,
gives written notice to the other party of its intention to terminate this
Agreement at least thirty (30) days prior to the end of the current Contract
Year or Renewal Year, or

B . Subject to the further terms of this Section 9.2, either party may
terminate this Agreement for any material breach of this Agreement by the
other party (see Paragraph D. below), or

C. Either party may terminate this Agreement if the other party becomes
insolvent or shall be adjudicated a bankrupt, or if the other party's
business shall come into the possession or control, even temporarily, of any
trustee in bankruptcy, or if a receiver shall be appointed for it or if the
party makes a general assignment for the benefit of creditors.

Termination under 9.2-A. above shall not be effective as to SOW'S,
Assignments, or PO's entered into by the parties during the life of this
General Services Agreement. Obligations of any SOW, Assignment, or PO shall
continue with respect to each SOW, Assignment, or PO regardless of when this
Agreement shall terminate unless otherwise mutually agreed to by the parties.

Termination under B. or C. above will result in immediate cessation of
this Agreement on the effective date of termination of the Agreement,
provided however, that the Company may choose, with Customer's prior written
approval, to complete a SOW, Assignment, or PO for Customer commenced prior
to the effective date of a termination and receive reimbursement for such
services in accordance with the terms of this Agreement.

D. In the event of a material breach of this Agreement by either party,
the non-breaching party may give notice to the breaching party that it is in
default hereof, at which time the breaching party shall have thirty (30) days
to cure said default, or for defaults, other than failure to pay claims, if
such default cannot be cured within such period, the breaching party shall
have commenced such cure within thirty (30) days of the notice and shall
diligently pursue and complete such cure within a reasonable period of time.
In the event the breaching party fails to cure the same, the nonbreaching
party shall have the exclusive option to terminate this Agreement at the end
of such thirty (30) day period without further liability hereunder by giving
written notice of termination to the breaching party.

9.3 In addition to any other rights or remedies available to it at law
or in equity, the Company shall have the right to immediately suspend
performance of Services hereunder should Customer fail to make timely
payments in accordance with Article 4.0 above.

9.4 In the event of termination for any reason, each party shall
promptly, return all materials, information and data provided to it by the
other party during the term of this Agreement, provided each party furnishes
the other with a total and complete release of any obligations under this
Agreement.

9.5 Notwithstanding termination of this Agreement for any reason,
Customer shall remain liable for the payment to the Company for any costs,
charges and reasonable expenses incurred in connection with the provision of
the Services theretofore performed by the Company, and shall make payment for
the same in accordance with the provisions of Article 4.0.

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<PAGE>

9.6 The provisions of Section 3.6 and of Articles 5.0, 6.0 7. 0 and
8.0, shall survive termination of this Agreement for any reason.

10.0 GENERAL PROVISIONS

10.1 Should any provision of this Agreement be held by a court of
competent jurisdiction to be illegal, invalid, or unenforceable, the
remaining provisions of this Agreement shall not be affected or impaired
thereby and shall continue in full force and effect.

10.2 The failure of either party to enforce any term or condition of
this Agreement shall not be considered to constitute a waiver of either
party's right to enforce each and every term and provision of this Agreement.

10.3 This Agreement shall not be assignable by either party without
first obtaining the prior written consent of the other party. Any attempt to
assign the Agreement or any part of this Agreement without such consent shall
be void and of no effect.

10.4 This Agreement shall be binding upon and inure to the benefit of
the parties' respective successors, legal representatives, and/or authorized
assigns.

10.5 This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Colorado.

10.6 Notices permitted or required to be given under this Agreement
shall be deemed given when delivered personally or mailed by first-class
registered or certified mail, postage prepaid, to the attention of the
respective signatories, or Contact Persons of this Agreement at the addresses
stated above. Deliveries by commercial carrier shall also be considered as
notice given.

10.7 This Agreement states the entire Agreement of and between the
parties with respect to its subject matter and supersedes all prior written
or oral agreements and representations of the parties.

FOR THE COMPANY: FOR THE CUSTOMER:

/s/ CFO /s/ Sam Simkin VP & CFO
- ------------------------------ ------------------------------
Signature and Title Signature and Title

DATE 12/25/97 DATE 12/25/97
--------------------------- ------------------------

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<PAGE>

EXHIBIT 21

LIST OF SUBSIDIARIES
--------------------

Newgen Dealer Pricing
Center, Inc.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report, and to all references to our Firm, included in or made a part of
this registration statement.

/s/ Arthur Andersen LLP

Arthur Andersen LLP

September 1, 1998
San Diego, California

<PAGE>
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