VISION SOLUTIONS INC, S-1, 1997-03-14

VISION SOLUTIONS INC
S-1, 1997-03-14

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

VISION SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7372 33-0601147
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

2600 MICHELSON DRIVE,
IRVINE, CALIFORNIA 92612
(714) 724-5455
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

ROBERT J. ZWERLING
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VISION SOLUTIONS, INC.
2600 MICHELSON DRIVE
IRVINE, CALIFORNIA 92612
(714) 724-5455
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

COPIES TO:

<TABLE>
<S> <C>
NICK E. YOCCA, ESQ. ROBERT H. WERBEL, ESQ.
K.C. SCHAAF, ESQ. GUY N. MOLINARI, ESQ.
DOUGLAS P. FEICK, ESQ. WERBEL & CARNELUTTI,
STRADLING, YOCCA, CARLSON & RAUTH, A PROFESSIONAL CORPORATION
A PROFESSIONAL CORPORATION 711 FIFTH AVENUE, 5TH FLOOR
660 NEWPORT CENTER DRIVE, SUITE 1600 NEW YORK, NEW YORK 10022
NEWPORT BEACH, CALIFORNIA 92660 (212) 832-8300
(714) 725-4000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this 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, check the following box and list the Securities Act
registration statement 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>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Common Stock ($0.001 par value)................................ $31,740,000 $9,619
================================================================================================================
</TABLE>

(1) Includes shares of Common Stock (aggregate offering price of $4,140,000)
which may be purchased by the Underwriters to cover over-allotments, if any.
(2) Estimated pursuant to Rule 457(o) solely for the purpose of calculating the
registration fee.
------------------------

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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

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.

SUBJECT TO COMPLETION MARCH 14, 1997
PROSPECTUS

2,300,000 SHARES

[VISION SOLUTIONS, INC. LOGO]

VISION SOLUTIONS, INC.
COMMON STOCK

All the 2,300,000 shares of common stock, $0.001 par value per share (the
"Common Stock"), offered hereby (the "Offering") are being sold by Vision
Solutions, Inc. ("Vision" or the "Company"). Prior to the Offering, there has
been no public market for the Common Stock of the Company. It is currently
estimated that the initial public offering price of the Common Stock will be
between $10.00 and $12.00 per share. See "Underwriting" for the factors to be
considered in determining the initial public offering price.

Application has been made for the quotation of the Company's Common Stock
on the Nasdaq National Market under the symbol "VISI", subject to official
notice of issuance.
------------------------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS"
COMMENCING ON PAGE 5 HEREOF.

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

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>
=================================================================================================
UNDERWRITING
PRICE TO DISCOUNT AND PROCEEDS TO
PUBLIC COMMISSION(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
- -------------------------------------------------------------------------------------------------
Total(3)........................ $ $ $
=================================================================================================
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting offering expenses payable by the Company estimated at
$850,000.

(3) Certain selling stockholders (the "Selling Stockholders") have granted the
Underwriters a 30-day option to purchase up to 345,000 additional shares of
Common Stock on the same terms and conditions set forth above, solely to
cover over-allotments, if any. See "Underwriting." If all such shares are
purchased, the total Price to Public, Underwriting Discount and Commission,
Proceeds to Company and proceeds to Selling Stockholders will be
$ , $ , $ and $ , respectively.

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

The shares of Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if delivered to and accepted by them,
and subject to the right of the Underwriters to reject any order in whole or
in part. It is expected that delivery of the certificates for the Common
Stock will be made at the offices of Allen & Company Incorporated, 711 Fifth
Avenue, New York, New York 10022, on or about , 1997.

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

ALLEN & COMPANY COWEN & COMPANY
INCORPORATED

THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3

[TEXT OF INSIDE FRONT COVER.]

PREPARE TO GROW. The dependence on computers for the operation and
management of businesses has placed increasing demands on the performance,
availability and reliability of information systems. The fact is, if computers
go down, so do businesses.

Vision Solutions develops, implements and supports replication and data
transportation technology that keeps IBM AS/400 users on line, all the time. By
simultaneously protecting and distributing data, Vision Solutions enables
continuous information systems availability, performance and scalability.

DATA AVAILABILITY IS A NECESSITY. Keeping data accessible and secure is
the key to a successful enterprise. The phrase "High Systems Availability," or
HSA, describes the combined characteristics of fault tolerance, disaster
recovery, data protection, system and data management, workload distribution and
scalability. The need for HSA has grown tremendously now that 24-hour
operations, international distribution and up-to-the-minute information are the
standard for business.

Vision Solutions' replication software offers the highest level of
availability in a multi-system environment. Further, we've expanded our
technology to provide Tiered Network Technology architecture, which combines HSA
with virtually unlimited system scalability.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

The Company intends to furnish to its stockholders annual reports
containing financial statements audited by an independent public accounting firm
and quarterly reports for the first three quarters of each fiscal year
containing unaudited financial information.

2
<PAGE> 4

[TEXT OF INSIDE FOLD OUT]

OTHER ADVANTAGES OF VISION SOLUTIONS TECHNOLOGY

- Files can be mirrored in multiple directions to multiple systems

- Data replication direction may be reversed

- Selectable automatic or manual source/target system role swapping

- Validity checking ensures data integrity

- Validity checking ensures data. Electronic Customer Support provides
on-line assistance

- Network control

- Recovery control

- Scalability

- Large transaction volume throughput

[Artwork consists of an illustration of a typical TNT network of AS/400
computers.]

SAM/400 SYSTEM AVAILABILITY MONITOR

[Artwork consists of an illustration of the operation of the Company's
SAM/400 product.]

EXTENDING THE POWER OF THE AS/400. Vision Solutions extends the power and
functionality of the AS/400. The constant flow of information is achieved by
mirroring objects in near real-time from a "source" AS/400 to a "target" AS/400.
Updates are constantly tracked and verified on the "source." The result is
greater system efficiency, data integrity, high systems availability and, with
our Tiered Network Technology, virtually unlimited network scalability.

VISIONSUITE. Our VisionSuite software replicates data to multiple sites in
near real time to ensure operation 24 hours per day, seven days per week. The
suite comprises three software modules:

VISION OMS/400 OBJECT MIRRORING SYSTEM

- Maintains duplicate databases through near real-time data mirroring

- Mirrors database files, data areas and data queues

- Supports IBM's Opti-Connect/400 high-speed fiber optic connection
and all other AS/400 protocols.

VISION ODS/400 OBJECT DISTRIBUTION SYSTEM

- Automated near real-time distribution and backup of software
configurations/changes, programs and documents.

- Supports IBM's OptiConnect/400 high-speed fiber optic connection and
all other AS/400 protocols.

SAM/400 SYSTEM AVAILABILITY MONITOR

- Monitors for primary system failures

- Automatically switches to secondary system for continuous
availability

[Artwork is an illustration of the Company's products operating on AS/400
systems.]
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements (the
"Financial Statements") included elsewhere in this Prospectus. Prospective
investors should consider carefully the information discussed under "Risk
Factors."

THE COMPANY

The Company develops, markets, implements and supports software that
enables the continuous availability of mission critical applications and data on
midrange computer platforms. Continuous availability or High Systems
Availability ("HSA") software substantially eliminates business interruptions
caused by unscheduled downtime due to system failures, natural disasters and
human error and scheduled downtime including systems maintenance and upgrades.
HSA applications also substantially eliminate computer system unavailability and
performance degradation caused by capacity constraints. The data protection and
systems availability provided by HSA solutions are required to operate mission
critical applications which manage core functions such as manufacturing,
distribution, order processing, sales automation, customer satisfaction,
reservations and finance. These mission critical applications require the
availability of real-time data and systems 24 hours per day, seven days per
week. This need is exacerbated by the increased use of the Internet to access
mission critical applications.

The consequences of business interruptions and system unavailability can be
devastating and include lost transactions, data corruption, customer
dissatisfaction and lost productivity from idled employees and production
equipment. If business interruptions are long or frequent, they may result in
significant losses and ultimately in business failure. For example, IBM's AS/400
Dynamics magazine estimates the average time to restore operations after a
disaster is three to five days and that a typical retail brokerage would lose
approximately $6 million per hour of system downtime. Because all computer
systems eventually fail, and the timing and duration of such failures are
unpredictable, effective HSA solutions must address all causes of system
downtime and unavailability and require fault tolerance, disaster recovery, data
protection, systems and data management, work-load distribution and scalability.

The Company's comprehensive HSA solution, Vision Suite, which is currently
available for IBM AS/400 computers, utilizes the Company's proprietary
replication and data transportation technology to provide all of the required
components of an effective HSA solution. Vision Suite enables continuous
availability of midrange computer systems and protection of all data 24 hours
per day, seven days per week. The Company's Vision Suite also serves as the
foundation to the Company's Tiered Network Technology architecture which enables
the clustering of AS/400s to deliver the scalability, availability and
reliability of mainframe computers at a fraction of the cost. The Company has
extended the utility of its core replication and data transportation technology
to include Internet isolation and data protection, data transportation for data
warehouses and single system data protection. In addition, the Company is
currently developing its HSA software to accommodate the Windows NT and UNIX
platforms.

The Company was founded in December 1991 as a partnership and incorporated
in California in December 1993 under the name Midrange Information Systems, Inc.
The Company changed its name to Vision Solutions, Inc. in August 1996. The
Company's headquarters and principal place of business is located at 2600
Michelson Drive, 11th Floor, Irvine, California 92612, and its telephone number
is (714) 724-5455.

3
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered............................. 2,300,000 shares
Common Stock to be outstanding after the
Offering....................................... 8,853,710 shares(1)
Use of proceeds.................................. The Company intends to use the net proceeds of the
Offering to expand sales and marketing activities,
to fund product development, to repay the
outstanding amount under its bank line of credit and
for general corporate purposes, including working
capital. See "Use of Proceeds."
Proposed Nasdaq National Market symbol........... VISI
</TABLE>

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PREDECESSOR(2) COMPANY
--------------- -----------------------------
YEAR ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------- -----------------------------
1992 1993 1994 1995 1996
---- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue............................................ $535 $1,015 $2,061 $4,480 $10,180
Gross profit............................................. 317 640 1,100 3,267 8,804
Income (loss) from operations............................ 157 169 (42) 125 426
Net income (loss)........................................ 157 170 (46) 130 142
Pro forma net income(3).................................. 243
Pro forma net income per share(3)........................ $ 0.04
Weighted average common shares(3)........................ 6,303
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------
ACTUAL AS ADJUSTED(4)
------ --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and short term investments.......................... $1,697 $ 23,760
Working capital............................................................... 1,205 23,884
Total assets.................................................................. 7,443 29,506
Line of credit................................................................ 616 --
Capital lease obligations, net of current portion............................. 154 154
Total stockholders' equity.................................................... 2,725 25,404
</TABLE>

- ---------------
(1) Excludes 267,840 shares of Common Stock issuable pursuant to the exercise of
stock options outstanding as of March 12, 1997, at a weighted average
exercise price of $7.84 per share, none of which is exercisable. See
"Management -- Employee Benefit Plans" and Note 9 of Notes to Financial
Statements.

(2) During the years ended December 31, 1992 and 1993, the Company's predecessor
was a partnership and the selected Statement of Operations Data and Balance
Sheet Data for the years ended December 31, 1992 and 1993 were accounted for
on a cash basis.

(3) During fiscal year 1996, the Company terminated its Subchapter S corporation
status. Pro forma net income and pro forma net income per share have been
determined as if the Company had been taxed as a C corporation assuming that
the effective tax rate was in effect for the entire year. See Note 1 of
Notes to Financial Statements for information regarding the calculation of
Pro forma net income per share.

(4) Adjusted to reflect the sale by the Company of 2,300,000 shares of Common
Stock at an assumed initial public offering price of $11.00 per share and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

Unless otherwise indicated, all information contained in this Prospectus (i)
assumes the Underwriters' over-allotment option has not been exercised, (ii)
assumes any outstanding options to purchase shares of Common Stock have not been
exercised, and (iii) assumes the reincorporation of the Company from California
to Delaware and the associated changes in the Company's charter documents and
related matters to be approved by the Company's stockholders in connection with
the reincorporation, which will occur prior to the closing of this Offering and
pursuant to which 465 shares of Common Stock of the Company will be exchanged
for each outstanding share of Common Stock of the predecessor California
corporation.

Object Mirroring System/400(TM), Object Distribution System/400(TM), System
Availability Monitor/400(TM), Internet Proxy/400(TM), Vision (Data) Warehouse
Interface/400(TM), Vision SOLO/400(TM), Tiered Network Technology(TM),
Electronic Customer Support(TM), OMS/400(TM), ODS/400(TM), SAM/400(TM),
IP/400(TM), VWI/400(TM), SOLO/400(TM), TNT(TM), ECS/400(TM) and the Company's
logo are trademarks of the Company. This Prospectus also includes trademarks and
logos of companies other than the Company.

4
<PAGE> 7

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this Prospectus. In addition
to the other information in this Prospectus, the following factors should be
considered carefully in evaluating the Company and its business before
purchasing shares of Common Stock.

History of Losses; Future Operating Results Uncertain. The Company has
incurred net losses in all but two of the last eight quarters. Although the
Company operated on a profitable basis for the quarter and the fiscal year ended
December 31, 1996, there can be no assurance that the Company will be profitable
on a quarterly or annual basis in the future. Many factors, including the
Company's limited operating history and the relative immaturity of its market,
together with the factors described under "-- Significant Fluctuations in
Quarterly Results; Seasonality," make the prediction of future operating results
impossible. The Company's past financial performance should not be considered
indicative of future results. Although the Company has experienced revenue
growth in recent periods, there can be no assurance that the Company's revenue
will continue to increase or will not decrease. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Significant Fluctuations in Quarterly Results; Seasonality. The Company
has experienced and expects to continue to experience significant fluctuations
in its quarterly operating results. Such fluctuations may be caused by many
factors, including, but not limited to: the size and timing of individual
orders; seasonality of revenue; lengthy sales cycles; delays in introduction of
products or product enhancements by the Company or other third party providers
of hardware; the need for additional hardware and components to enhance the
benefits received from certain of the Company's products; competition and
pricing in the software industry; market acceptance of new products; reduction
in demand for existing products and shortening of product life cycles as a
result of new product introductions by competitors; foreign currency exchange
rate fluctuations; mix of products and services sold; and general economic
conditions. The Company does not typically maintain a significant backlog of
orders, and therefore, revenue for each quarter depends substantially on orders
received and delivered in that quarter.

The Company's sales cycle is typically three to six months, making timing
of the Company's license fees difficult to predict and the Company's quarterly
results difficult to forecast. The Company's expense levels are based in part on
its forecasts of future revenue. Accordingly, since the majority of the
Company's expenses are fixed in nature, the Company would not be able to quickly
curtail expenses in response to a decline in revenue, and operating results for
a given quarter would be adversely affected. Revenue for a given quarter is
subject to significant variations, and the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
There can be no assurance that the Company will be profitable in the future or
that future revenue and operating results will not be below the expectations of
public market analysts and investors. In either case, the price of the Company's
Common Stock could be materially adversely affected.

The Company's business has experienced and is expected to continue to
experience significant seasonal fluctuations in revenue, largely due to customer
buying patterns. In recent years, the Company generally has experienced higher
revenue in the second and fourth quarters, with the largest portion of revenue
typically being recognized in the fourth quarter of each year. Consequently, the
Company has historically realized lower revenue in the first and third quarters
of each year than in the preceding fourth quarter, and the first and third
quarters typically result in an operating loss. The Company believes this
pattern will continue. The Company also expects to realize a loss in the second
quarter of 1997 as a result of planned increases in operating expenses during
this period in accordance with its annual operating plan and in anticipation of
increased revenues. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Uncertainty of Market Acceptance. Currently, the Company believes that
only a few thousand of the approximately 400,000 AS/400 platforms that have been
shipped are using some form of an HSA solution, and the general market
acceptance of HSA solutions is uncertain. Market acceptance may depend upon a

5
<PAGE> 8

number of factors, including the effect on system performance, functionality,
reliability, ease-of-use, customer support and price. In addition, market
acceptance may depend upon the Company's ability to educate the market on the
need for HSA solutions in general and the Company's products and services in
particular. Because the market for the Company's products and services is
relatively new and unproven, it is difficult to assess or predict with any
assurance the growth rate and size of this market. If the market fails to
develop or develops more slowly than expected, or if the Company's products and
services do not achieve market acceptance, the Company's business, operating
results and financial condition would be materially adversely affected. See
"Business -- Industry Background."

Management of Growth. The Company has recently experienced significant
growth as total revenue has increased from approximately $2.1 million in 1994 to
$10.2 million in 1996. This growth has placed, and is expected to continue to
place, a significant strain on the Company's management, information systems and
operations. The Company's ability to compete effectively and to manage future
expansion of its operations will require the Company to continue to increase the
sophistication of its financial, operating and management controls, accounting
and reporting systems and procedures on a timely basis and effectively expand,
train and manage its work force. The Company intends to recruit and hire
additional management, sales and technical personnel. There can be no assurance
that the Company will be able to continue to recruit sufficient managerial,
sales and technical personnel, manage its growth and assimilate its new
employees successfully. If the Company's management is unable to manage growth
effectively and new employees are unable to achieve desired performance levels,
the Company's business, operating results and financial condition could be
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Dependence on Principal Products. Substantially all of the Company's HSA
products and services are designed for the AS/400 platform. The Company
currently expects that revenue attributable to its AS/400 HSA software products,
including maintenance and support services, will continue to account for a
substantial portion of the Company's revenue in 1997 and the foreseeable future.
The Company's future operating results depend upon the continued acceptance and
usage of the AS/400 platform and the continued market acceptance of the
Company's AS/400 HSA products and product enhancements. In the event the demand
for and usage of the AS/400 platform decline or the Company's current or future
competitors release new or enhanced products that have more advanced features,
offer better performance or are more price competitive than the Company's
products, demand for the Company's products could decline. A decline in the
demand for, or market acceptance of, the AS/400 platform or the Company's AS/400
HSA products as a result of competition, technological advances or other factors
would have a material adverse effect on the Company's business, operating
results and financial condition. See "Business -- Products and Services."

Dependence Upon Principal Customer. Revenue attributable to IBM for the
fiscal year ended December 31, 1996 accounted for approximately 19.5% of the
Company's total revenue. This revenue was received from seven divisions of IBM,
none of which accounted for more than 5.7% of the Company's total revenue. The
majority of the Company's revenue from IBM was attributable to purchases of the
Company's products for resale under distribution agreements. While the Company
believes that the IBM divisions operate independently, the loss of revenue from
one or more of these divisions would have a material adverse effect on the
Company's business, operating results and financial conditions. Should IBM
incorporate one or more independently developed elements of HSA in the operating
system for the AS/400, or otherwise develop products which are competitive with
the Company's products, it is likely that revenue from IBM would decrease which
would have a material adverse effect on the Company's business, operating
results and financial condition. See "Business -- Customers and
"-- Competition."

New Products and Rapid Technological Advances. The market for the Company's
products are characterized by rapid technological advances, evolving standards
and changes in end-user requirements. The introduction of products embodying new
technologies and the emergence of new standards could render the Company's
existing products and products currently under development obsolete and
unmarketable. The Company's future success will depend in part upon its ability
to enhance its current products. In addition, the Company will be required to
develop and sell new products that keep pace with technological advancements,
respond to evolving end-user requirements and achieve market acceptance. There
can be no assurance that the

6
<PAGE> 9

Company will be successful in developing and marketing product enhancements or
new products on a timely basis, if at all. Any failure to successfully develop
and market product enhancements and new products would have a material adverse
effect on the Company's business, operating results and financial condition. See
"Business -- Product Development."

Dependence on Resellers and Expansion of Indirect Channels. In addition to
its direct sales force, the Company relies on third party distributors and
business partners for the marketing and distribution of its products, especially
in the Company's international markets. There can be no assurance that the
Company's distributors and business partners will give a high priority to the
marketing of the Company's products or that they will continue to carry the
Company's products, which could have a material adverse effect on the Company's
business, operating results and financial condition. Further, there can be no
assurance that the Company will retain any of its current distributors and
business partners, nor can there be any assurance that, in such event, the
Company will be successful in recruiting replacement organizations. An integral
part of the Company's strategy is to develop further its channel of distributors
and business partners and to increase the percentage of customers licensed
through these indirect channels. There can be no assurance that the Company will
be able to attract new distributors and business partners to expand its indirect
channels who will be able to market the Company's products effectively and will
be qualified to provide timely and cost effective customer support and service.
Any changes in the Company's distribution channels or the inability to recruit
new distributors and business partners could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Business -- Sales and Marketing."

Lengthy Sales Cycle. The decision to license the Company's products
generally requires the Company to provide a significant level of education to
prospective customers regarding the uses and benefits of the Company's products,
and the Company must frequently commit substantial pre-sales technical support
to these prospective customers. In addition, the cost to the customer of the
Company's software is often only a portion of the overall hardware, software,
integration and training costs of implementing an HSA solution. The total cost
of an HSA solution typically involves a significant commitment of capital and
other resources, which may result in delays frequently associated with
customers' internal procedures to approve large capital expenditures. For these
and other reasons, the Company's sales cycle is lengthy, typically three to six
months, making timing of the Company's license fees difficult to predict, and
subject to a number of significant risks, including customers' budgetary
constraints and internal acceptance reviews, that are beyond the Company's
control. See "Business -- Sales and Marketing."

Dependence on Key Employees; Ability to Attract and Retain Personnel. Due
to the specialized nature of the Company's business, the Company is highly
dependent upon the continued services of, and upon its ability to attract and
retain, qualified and experienced technical, marketing, sales and managerial
personnel. In particular, the Company's success is dependent upon the services
of key employees including Robert J. Zwerling, Christian F. Turner and David B.
McLelland. The loss of their services, individually or in the aggregate, could
have a material adverse effect on the Company's business, operating results and
financial condition. The Company does not have in place "key person" life
insurance policies on any of its employees. In addition, the Company's ability
to install, maintain and enhance its HSA products and to develop new products
for use with platforms other than the AS/400 is substantially dependent upon its
ability to locate, hire and train additional qualified software engineers. There
can be no assurance that the Company will be able to recruit such personnel. The
software industry is characterized by a high level of employee mobility and
aggressive recruiting of skilled personnel. The inability to recruit
successfully or the loss of a significant part of its product development, sales
or technical staffs would have a material adverse effect on the Company's
business, operating results and financial condition. There can be no assurance
that the Company will be able to retain its current personnel or that it will be
able to attract, assimilate or retain other highly qualified technical,
marketing, sales and managerial personnel in the future. See
"Business -- Employees" and "Management -- Directors and Executive Officers."

Risks of Doing Business in International Markets. For 1994, 1995 and 1996,
international revenue accounted for approximately 5.4%, 18.6% and 22.8%,
respectively, of the Company's total revenue. The Company expects that
international revenue will continue to account for an increasing percentage of
the Company's total revenue for the foreseeable future. As a result, the Company
is subject to various risks, including a greater difficulty administering
business globally, compliance with multiple and potentially

7
<PAGE> 10

conflicting regulatory requirements such as export restrictions, differing tax
structures, tariffs and other trade barriers, differences in intellectual
property protection, longer accounts receivable cycles, greater difficulty in
accounts receivable collection, seasonality due to the slow-down in European
business activity during the Company's third quarter, currency exchange rate
fluctuations, cultural differences in the conduct of business, repatriation of
earnings and political and economic instability. If any of these risks
materialize, they could have a material adverse effect on the Company's
business, operating results and financial condition.

The Company's foreign sales are generally invoiced in United States
dollars, and accordingly, the Company does not currently engage in foreign
currency hedging transactions. However, as the Company continues to expand its
international operations, the Company may be paid in foreign currencies and
exposure to losses due to foreign currency exchange rate fluctuations may
increase. The Company may choose to limit such exposure by the purchase of
forward foreign exchange contracts or similar hedging strategies. There can be
no assurance that any currency hedging strategy would be successful in avoiding
exchange-related losses. In addition, if the relative value of the United States
dollar in comparison to local currency of the Company's foreign customers should
increase, the resulting effective price increase of the Company's products to
such foreign customers could result in decreased sales which could have a
material adverse effect on the Company's business, operating results and
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Dependence on Third Party Software and Hardware. The Company's products
use software products and computer hardware and equipment developed by other
entities. Certain of the software development tools that are utilized by the
Company and the operating system on which substantially all of the Company's
current products function have been developed by IBM. There can be no assurance
that IBM will continue to offer or support the AS/400 platform, including its
software development tools and operating system, that the AS/400 platform will
remain viable or that IBM will not significantly alter the pricing of its
products and services in a manner adverse to the Company, any of which could
have a material adverse effect on the Company's business, operating results and
financial condition. Some of the Company's products under development are
intended to operate on the Windows NT and UNIX platforms. There can be no
assurance that developers of Windows NT and UNIX platforms will continue to
offer or support such platforms. If developers of Windows NT and UNIX platforms
discontinue production of or fail to support such platforms, certain of the
Company's products under development may not be commercially launched, or if
launched, gain market acceptance. This could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Business -- Products and Services."

Competition. The information systems industry is highly competitive and
rapidly changing. While the Company believes that it currently has only a
limited number of primary competitors which offer products that are directly
competitive to the Company's HSA products for the AS/400 market, the Company has
numerous potential competitors, including IBM, with technical and other
resources capable of developing competitive products. In particular, there can
be no assurance that IBM will not incorporate one or more independently
developed elements of HSA in its operating system for the AS/400. Further, there
can be no assurance that competitors will not develop products that are
competitive with the Company's products or that these products will achieve
greater market acceptance due to more significant sales, marketing or product
development resources. There can also be no assurance that suppliers of
operating systems or information systems will not develop products that compete
effectively in the Company's targeted markets. The Company's future success will
depend, in part, upon its ability to increase sales in its targeted markets and
continue to develop new products and product enhancements. The principal
elements of competition in the Company's market include the effect on system
performance, functionality, reliability, ease-of-use, customer support and
price. While the Company believes that it competes favorably with respect to the
foregoing elements, there can be no assurance that it will continue to do so.

8
<PAGE> 11

Systems, Inc., Octopus and Tandem Computers Incorporated. In addition, Microsoft
Corporation is a potential competitor, especially in clustering, through its
Wolfpack initiative. The Company believes that it may also face competition in
the AS/400, Windows NT and UNIX markets from mainframe storage and system
management vendors such as EMC Corporation, BMC Software, Inc. and Computer
Associates International, Inc. Additionally, database vendors such as Oracle
Corporation, Sybase, Inc. and Informix Corporation incorporate certain HSA and
data transportation components with their products. The Company also believes
that the use of cross-platform technologies (i.e., replicating or propagating
data between AS/400 and non-AS/400 platforms) will become an important
competitive element and that the number of competitors offering cross-platform
technologies will grow over the next several years. The Company anticipates that
a potential source of such future competition may be from larger software,
operating system and relational database software suppliers. Within the AS/400
cross-platform data propagation market, the Company believes that its primary
competitor is DataMirror Corporation. See "Business -- Competition."

Risk of Software Defects. Software products as complex as the Company's,
especially when first introduced or when new versions or enhancements are
released, frequently contain errors or defects. Despite product testing by the
Company, the Company has occasionally discovered errors or defects in its
products after their commercial shipment. Although to date such defects and
errors have not been significant, there can be no assurance that significant
defects and errors will not be discovered in new products, existing products or
in new versions or enhancements of existing products, or if discovered,
successfully and timely corrected. Discovery of errors or defects in the
Company's products after commercial shipment could result in adverse customer
reaction, negative publicity regarding the Company or its products, a delay in
or failure to achieve market acceptance or a diversion of management and product
development resources, any of which could have a material adverse effect on the
Company's business, operating results and financial condition. See
"Business -- Product Development."

Risk of Product and Professional Liability. Because the Company markets
and sells products on a basis that includes the rendering of professional
technical and system installation and maintenance services, the Company incurs
risks of professional and other liability. Although the Company currently
maintains errors and omissions and general liability insurance, there can be no
assurance that such insurance coverage would apply or be adequate. Further,
there can be no assurance that the limitation of liability set forth in the
Company's license agreements or other contracts would be enforceable or would
otherwise protect the Company from liability for damages to a customer resulting
from a defect in one of the Company's products or arising as a result of
professional services rendered by the Company. Such a claim, if successful and
of significant magnitude, could have a material adverse effect on the Company's
business, operating results and financial condition.

Future Capital Requirements. The Company's future capital requirements
will depend upon many factors, including the development of new products, the
expansion of the Company's sales and marketing efforts and the status of
competitive products. The Company believes that the net proceeds from the
Offering, together with existing cash balances and funds expected to be
generated from operations and available lines of credit, will be adequate to
fund its operations for at least the next 12 months following the Offering.
There can be no assurance, however, that the Company will not require additional
external capital funding to support its future capital requirements or for other
purposes, and if required, the Company may seek to raise such additional funds
through public or private equity or debt financings or from other sources during
such time. Further, there can be no assurance that any additional financing will
be available to the Company on acceptable terms, if at all. If additional funds
are raised by issuing equity securities, further dilution to stockholders could
result. If adequate funds are not available, the Company may be required to
delay or scale back its sales and marketing efforts or product development
efforts or obtain funds through arrangements with partners or others that may
require the Company to relinquish rights to certain of its technologies,
potential products or other assets. Accordingly, the inability to obtain or
difficulty in obtaining such financing could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

Possible Volatility of Stock Price; No Prior Public Trading Market. The
stock market has from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of

9
<PAGE> 12

particular companies, and the market prices for securities of technology
companies have been especially volatile. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock. Factors such as
fluctuations in the Company's operating results, failure of such operating
results to meet the expectations of stock market analysts and investors, change
in stock market analyst recommendations regarding the Company, timing and
announcements of technological innovations or new products by the Company or its
competitors, developments with respect to proprietary rights, timing and
announcements of developments related to the Company's customers and general
market conditions may have a significant adverse effect on the market price of
the Common Stock. Prior to the Offering, there has been no public market for the
Common Stock, and there can be no assurance that an active trading market will
develop or, if one does develop, that it will be maintained. The initial public
offering price, which will be established by negotiations between the Company
and the representatives of the Underwriters, may not be indicative of prices
that will prevail in the trading market. See "Underwriting."

Proprietary Technology; Risk of Third-Party Claims of Infringement. The
Company's ability to compete successfully and achieve future revenue growth will
depend, in part, upon its ability to protect its proprietary technology and
operate without infringing upon the rights of others. There can be no assurance
that these measures will successfully protect the Company's intellectual
property or that the Company's intellectual property or proprietary technology
will not otherwise become known or be independently developed by competitors. In
addition, the laws of certain countries in which the Company's products are or
may be sold may not protect the Company's products and intellectual property
rights to the same extent as the laws of the United States. The inability of the
Company to protect its intellectual property and proprietary technology could
have a material adverse effect on its business, operating results and financial
condition.

As the number of patents, copyrights and other intellectual property rights
in the Company's industry increases, and as the coverage of these rights and the
functionality of the products in the market further overlap, the Company
believes that its products may increasingly become the subject of infringement
claims. The Company may in the future be notified that it is infringing upon
certain intellectual property rights of others. Although the Company has not
received any such notification to date and there are no pending or threatened
intellectual property lawsuits against the Company, there can be no assurance
that such litigation or infringement claims will not occur in the future. Such
litigation or claims could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
operating results and financial condition. A third party claiming infringement
may also be able to obtain an injunction or other equitable relief, which could
effectively block the ability of the Company or its customers to distribute or
sell allegedly infringing products. If it appears necessary or desirable, the
Company may seek licenses under patents or other rights from third parties
covering intellectual property that the Company is allegedly infringing. No
assurance can be given, however, that any such licenses could be obtained on
terms acceptable to the Company, if at all. The failure to obtain the necessary
licenses or other rights could have a material adverse effect on the Company's
business, operating results and financial condition. See "Business --
Intellectual Property and Proprietary Rights."

Control by Directors and Officers. The Company's directors and officers
will, in the aggregate, beneficially own 67.7% of the Company's outstanding
Common Stock following the completion of the Offering. These stockholders, if
acting together, would be able to control substantially all matters requiring
approval by the stockholders of the Company, including the election of directors
and the approval of mergers or other business combination transactions. Such
concentration of ownership could discourage or prevent a change in control of
the Company. See "Principal Stockholders."

Effect of Certain Charter and Bylaw Provisions. Certain provisions of the
Company's Certificate of Incorporation and Bylaws may have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of the Company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of the Company's Common Stock. The Company's Certificate of Incorporation
allows the Company, without any vote or future action by the stockholders, to
issue up to 5,000,000 shares of currently undesignated Preferred Stock, to
determine the powers, preferences and rights and the qualifications, limitations
or restrictions granted to or imposed on any unissued series of that Preferred
Stock and to fix the number of shares constituting any such series and the
designation of any such series. The Preferred Stock could be issued with voting,
liquidation, dividend and other rights superior to the rights of the Common
Stock. The Certificate of Incorporation also eliminates the ability of
stockholders to call special meetings and act by written consent. The Company's
Bylaws require

10
<PAGE> 13

advance notice to nominate a director or take certain other actions. Such
provisions may make it more difficult for stockholders to take certain corporate
actions and could have the effect of delaying or preventing a change in control
of the Company. In addition, the Company has not elected to be excluded from the
provisions of Section 203 of the Delaware General Corporation Law, which imposes
certain limitations on transactions between a corporation and "interested"
stockholders, as defined in such provisions. See "Description of Capital Stock."

Shares Eligible for Future Sale. Sales of Common Stock, including Common
Stock issued upon the exercise of outstanding options, in the public market
after the Offering could materially adversely affect the market price of the
Common Stock. Such sales also might make it more difficult for the Company to
sell equity or equity-related securities in the future at a time and price that
the Company deems acceptable, if at all. Upon the completion of the Offering,
the Company will have 8,853,710 shares of Common Stock outstanding. Of these
shares, the 2,300,000 shares sold in the Offering will be freely tradeable
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), unless purchased by "affiliates" of the Company, as that term
is defined in Rule 144 under the Securities Act. 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 and were issued and sold by the
Company in reliance on exemptions from the registration requirements of the
Securities Act. These restricted shares may be sold in the public market only if
registered or pursuant to an exemption from registration, such as Rule 144 under
the Securities Act. All holders of Common Stock have agreed, pursuant to certain
lock-up agreements with the Representatives, that they will not offer, sell,
contract to sell, grant any option to sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock owned by them or that could be purchased
by them through the exercise of options to purchase Common Stock of the Company
for a period of 180 days after the date of this Prospectus without the prior
written consent of Allen & Company Incorporated. Upon expiration of the lock-up
agreements, approximately 6,553,710 shares held by existing stockholders will be
eligible for sale subject to the volume and other restrictions of Rule 144. As
of March 12, 1997, 267,840 shares were subject to outstanding options to
purchase Common Stock, of which 102,300 shares are subject to the lock-up
agreements described above. Following completion of the Offering, 545,910 shares
will be entitled to certain piggyback registration rights upon termination of
lock-up agreements. Any exercise of these registration rights could impair the
Company's ability to raise capital through the sale of its equity securities
and, if such registered shares are sold, could have an adverse effect on the
market price of the Common Stock. See "Description of Capital
Stock -- Registration Rights" and "Shares Eligible for Future Sale."

Broad Discretion of Management to Allocate Offering Proceeds. The Company
expects to utilize the net proceeds from the Offering to expand sales and
marketing activities, to fund product development repay the outstanding portion
of its line of credit, and for general corporate purposes, including working
capital. The Company may use a portion of the net proceeds for acquisitions of
complementary products, technologies or businesses. However, no commitments or
agreements with respect to any acquisition currently exist. The Company
currently is not able to estimate precisely the allocation of the proceeds among
such uses, and the timing and amount of expenditures will vary depending upon
numerous factors. The Company's management will have broad discretion to
allocate the proceeds of the Offering and to determine the timing of
expenditures, and there can be no assurance that the net proceeds can or will be
invested to yield a significant return. See "Use of Proceeds."

Dilution. The initial public offering price is substantially higher than
the net tangible book value per share of Common Stock. Investors purchasing
shares of Common Stock in the Offering will incur immediate and substantial net
tangible book value dilution of $8.21 per share, assuming an initial public
offering price of $11.00 per share. To the extent that options to purchase the
Company's Common Stock are exercised, there will be further dilution. See
"Dilution."

Absence of Dividends. The Company does not anticipate paying cash
dividends in the foreseeable future. The Company's bank credit agreement
currently restricts the Company from paying cash dividends without the prior
written consent of the bank. See "Dividend Policy."

11
<PAGE> 14

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,300,000 shares of
Common Stock offered by the Company hereby at an assumed offering price of
$11.00 per share are estimated to be $22,679,000.

The primary purposes for the Offering are to fund the expansion of sales
and marketing activities and product development, to increase the Company's
equity capital, to create a public market for its Common Stock and to facilitate
future access to public markets. The Company expects to use approximately $6
million of the net proceeds of the Offering to expand sales and marketing
activities approximately $3 million to fund product development and
approximately $1 million to repay the outstanding amount under the Company's
bank line of credit. The outstanding balance on the line of credit bears
interest at the bank's prime rate plus 0.75%, matures on December 9, 1997 and
was incurred for working capital purposes. The balance of the net proceeds of
this Offering will be used for general corporate purposes, including working
capital. The Company may use a portion of the net proceeds for acquisitions of
complementary products, technologies or businesses. However, no commitments or
agreements with respect to any acquisition currently exist. The amounts actually
expended for each purpose and the timing of such expenditures may vary
significantly depending upon numerous factors, including the progress of the
Company's sales and marketing efforts, the status of competitive products and
the extent to which the Company's products gain market acceptance. Pending such
uses, the Company intends to invest the net proceeds from the Offering in short
and medium term, investment grade instruments.

DIVIDEND POLICY

The Company anticipates that all future earnings will be retained to
finance future growth, and the Company does not anticipate paying any dividends
on its Common Stock in the foreseeable future. The Company's line of credit
agreement currently restricts the Company from paying cash dividends without the
prior written consent of the bank.

12
<PAGE> 15

CAPITALIZATION

The following table sets forth as of December 31, 1996 the actual
capitalization of the Company (i) after giving effect to the reincorporation of
the Company in Delaware, the associated changes in the Company's charter
documents and the stock exchange previously described and (ii) as adjusted to
give effect to the receipt of net proceeds from the sale of 2,300,000 shares of
Common Stock offered hereby at an assumed initial public offering price of
$11.00 per share. See "Use of Proceeds."

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------
ACTUAL AS ADJUSTED
------ --------------
(IN THOUSANDS)
<S> <C> <C>
Capital lease obligations, net of current portion.................... $ 154 $ 154
====== =======
Stockholders' equity:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized,
none issued and outstanding..................................... $ -- $ --
Common Stock, $0.001 par value, 30,000,000 shares authorized,
actual and as adjusted; 6,553,710 shares issued and outstanding,
actual; 8,853,710 shares issued and outstanding, as
adjusted(1)..................................................... 7 9
Additional paid-in capital...................................... 2,723 25,400
Retained earnings............................................... 223 223
Notes receivable from sale of common stock...................... (228) (228)
------ -------
Total stockholders' equity.................................... 2,725 25,404
------ -------
Total capitalization....................................... $2,879 $25,558
====== =======
</TABLE>

13
<PAGE> 16

DILUTION

The net tangible book value of the Company, as of December 31, 1996, was
approximately $1,995,400, or $0.30 per share. Net tangible book value per share
represents the amount of the Company's stockholders' equity, less intangible
assets (capitalized software), divided by the number of shares of Common Stock
outstanding after giving effect to the exchange of 465 shares of Common Stock of
the Company for each outstanding share of Common Stock of the predecessor
California corporation in connection with the reincorporation of the Company in
the State of Delaware to be effected prior to the closing of this Offering.

Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of Common Stock in the
Offering and the net tangible book value per share of Common Stock immediately
after completion of the Offering. After giving effect to the sale of the
2,300,000 shares of Common Stock in the Offering at an assumed initial public
offering price of $11.00 per share and deducting the underwriting discount and
commission and estimated offering expenses payable by the Company, the Company's
net tangible book value at December 31, 1996 would have been $24,674,400, or
$2.79 per share. This represents an immediate increase in net tangible book
value of $2.49 per share to existing stockholders and an immediate dilution in
net tangible book value of $8.21 per share to new investors purchasing Common
Stock in the Offering, as illustrated in the following table:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $11.00
Net tangible book value per share as of December 31, 1996......... $0.30
Increase per share attributable to new investors.................. 2.49
-----
Net tangible book value per share after the Offering................ 2.79
------
Dilution per share to new investors................................. $ 8.21
======
</TABLE>

The following table sets forth, as of December 31, 1996, the difference
between the existing stockholders and the purchasers of shares in the Offering
(at an assumed price of $11.00 per share) with respect to the number of shares
purchased from the Company, the total consideration paid and the average price
per share paid.

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION(2)
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders............... 6,553,710 74.0% $ 2,730,800 9.7% $ 0.42
New Investors....................... 2,300,000 26.0 25,300,000 90.3 11.00
--------- ----- ----------- -----
Total.......................... 8,853,710 100.0% $28,030,800 100.0%
========= ===== =========== =====
</TABLE>

(2) Does not reflect any deductions for commissions or expenses paid or incurred
in connection with the issuance of such shares or the notes receivable from
prior sales of Common Stock.

14
<PAGE> 17

SELECTED FINANCIAL DATA

The Selected Statement of Operations Data set forth below for each of the
years ended December 31, 1994, 1995 and 1996 and the Balance Sheet Data as of
December 31, 1995 and 1996 are derived from the Financial Statements of the
Company audited by Deloitte & Touche LLP, independent auditors, which are
included elsewhere in this Prospectus. The selected financial data with respect
to the Company's statement of operations for the years ended December 31, 1992
and 1993 and the balance sheet as of December 31, 1992, 1993 and 1994 are
derived from the Company's and its predecessor's financial statements, which are
not included herein. The data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and related notes included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
------------------- -----------------------------
YEAR ENDED DECEMBER
31, YEAR ENDED DECEMBER 31,
------------------- -----------------------------
1992 1993 1994 1995 1996
------- ------- ------ ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
License fees.................................................... $ 46 $ 336 $ 962 $3,058 $ 7,842
Service and support revenue..................................... -- 18 123 355 1,405
IBM partner revenue............................................. -- -- -- 273 624
Consulting and other revenue.................................... 489 661 976 794 309
----- ------ ------ ------ -------
Total revenue............................................ 535 1,015 2,061 4,480 10,180
Cost of revenue................................................... 218 375 961 1,213 1,376
----- ------ ------ ------ -------
Gross profit...................................................... 317 640 1,100 3,267 8,804
Operating expenses:
Sales and marketing............................................. 50 278 468 1,478 4,736
Research and development........................................ 15 39 109 137 587
General and administrative...................................... 95 154 565 1,527 3,055
----- ------ ------ ------ -------
Total operating expenses................................. 160 471 1,142 3,142 8,378
----- ------ ------ ------ -------
Income (loss) from operations..................................... 157 169 (42) 125 426
Other income (expense), net....................................... -- 1 (3) 7 29
----- ------ ------ ------ -------
Income (loss) before income taxes................................. 157 170 (45) 132 455
Provision for income taxes........................................ -- -- 1 2 313
----- ------ ------ ------ -------
Net income (loss)................................................. $ 157 $ 170 $ (46) $ 130 $ 142
===== ====== ====== ====== =======
Pro forma (unaudited):
Historical income before income taxes........................... $ 455
Pro forma income taxes.......................................... (212)
-------
Pro forma net income(2)........................................... $ 243
=======
Pro forma net income per share(2)................................. $ 0.04
=======
Weighted average common shares.................................... 6,303
=======
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
------------- -----------------------------
DECEMBER 31, DECEMBER 31,
------------- -----------------------------
1992 1993 1994 1995 1996
---- ---- ------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and short term investments................. $20 $41 $ 32 $ 88 $1,697
Working capital...................................................... 6 34 (109) (342) 1,205
Total assets......................................................... 25 42 472 2,335 7,443
Line of credit....................................................... -- -- -- 247 616
Capital lease obligations, net of current portion.................... -- -- -- 130 154
Total stockholders' equity........................................... 12 36 (48) 82 2,725
</TABLE>

- ---------------
(1) During the years ended December 31, 1992 and 1993, the Company's predecessor
was a partnership and the selected Statement of Operations Data and Balance
Sheet Data for the years ended December 31, 1992 and 1993 were accounted for
on a cash basis.

(2) During fiscal year 1996, the Company terminated its Subchapter S corporation
status. Pro forma net income and pro forma net income per share have been
determined as if the Company had been taxed as a C corporation assuming that
the effective tax rate was in effect for the entire year. See Note 1 of
Notes to Financial Statements.

15
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company was founded in December 1991 as a partnership and incorporated
in December 1993. The Company develops, markets, implements and supports
software that enables continuous availability of mission critical applications
and data on midrange computer platforms. The Company's comprehensive HSA
solution, Vision Suite, which is currently available for IBM AS/400 computers,
utilizes the Company's proprietary replication and data transportation
technology to provide all of the required components of an effective HSA
solution. Vision Suite enables continuous availability of midrange computer
systems and protection of all data 24 hours per day, seven days per week. The
Company's Vision Suite also serves as the foundation to the Company's Tiered
Network Technology architecture which enables the clustering of AS/400s to
deliver the scalability, availability and reliability of mainframe computers at
a fraction of the cost. The Company has extended the utility of its core
replication and data transportation technology to include Internet isolation and
data protection, data transportation for data warehouses and single system data
protection. In addition, the Company is currently developing its HSA software to
accommodate the Windows NT and UNIX platforms. The Company commenced commercial
shipments of its Vision Suite software in February 1992. Revenue for the
Company's Vision Suite software and related services and support increased from
76% of total revenue in 1995 to 91% of total revenue in 1996.

Revenue from software license fees is recognized upon execution of a
license agreement and delivery of the product, provided that all significant
contingencies have been removed and collection of the related receivable is
deemed probable. Revenue from hardware sales is recognized upon shipment of the
product. Software support services revenue is recognized in the period in which
the services are performed. Revenue from maintenance contracts is recognized
ratably over the maintenance term.

In order to fund early stages of its HSA product development, the Company
sold custom application development and network integration products and
services. The Company initially achieved rapid growth in consulting and other
revenue attributable to custom application development and network integration
products and services. However, these sales yielded lower margins than the
Company's HSA software products. In 1995, in accordance with the Company's
strategic operating plan, the Company began to phase out its custom application
development and network integration business. Revenue from these operations
decreased from 18% of total revenue in 1995 to 3% of total revenue in 1996.

IBM partner revenue is derived from the Company's relationship with IBM
whereby the Company earned commission revenue from the provision of services in
connection with the sale of AS/400 systems to the Company's customers. IBM
partner revenue remained constant at 6% of total revenue in both 1995 and 1996;
however, the Company expects such revenue will decrease substantially in the
future as a result of changes to the business partner compensation policy of IBM
implemented in January 1997. The Company also derives revenue from IBM through
software sales to various IBM divisions and through distribution arrangements.

The Company primarily sells, licenses and implements its software through
its direct sales staff and through indirect business partners. Business partners
accounted for approximately 5% of total revenue in 1995 and 21% of total revenue
in 1996.

The Company does not believe that inflation has had or will have in the
future a significant impact on the Company's operating results. Although the
Company has experienced revenue increases in recent periods, there can be no
assurance that the Company will continue to experience revenue increases or
achieve profitability on a quarterly or annual basis or that its revenue will be
consistent with past years. See "Risk Factors -- History of Losses; Future
Operating Results Uncertain." Many factors, including the Company's limited
operating history and the relative immaturity of its market, together with the
factors described under "Risk Factors -- Significant Fluctuations in Quarterly
Results; Seasonality," make the prediction of future operating results
impossible.

16
<PAGE> 19

RESULTS OF OPERATIONS

The following table summarizes certain of the Company's statement of
operations data as a percentage of revenue for the periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
License fees...................................................... 46.7% 68.3% 77.1%
Service and support revenue....................................... 5.9 7.9 13.8
IBM partner revenue............................................... -- 6.1 6.1
Consulting and other revenue...................................... 47.4 17.7 3.0
----- ----- -----
Total revenue............................................. 100.0 100.0 100.0
Cost of revenue..................................................... 46.6 27.1 13.5
----- ----- -----
Gross profit........................................................ 53.4 72.9 86.5
Operating expenses:
Sales and marketing............................................... 22.7 33.0 46.5
Research and development.......................................... 5.3 3.1 5.8
General and administrative........................................ 27.4 34.1 30.0
----- ----- -----
Total operating expenses.................................. 55.4 70.2 82.3
----- ----- -----
Income (loss) from operations....................................... (2.0) 2.7 4.2
Other income (expense), net......................................... (0.1) 0.2 0.3
----- ----- -----
Income (loss) before income taxes................................... (2.1) 2.9 4.5
Provision for income taxes.......................................... -- 0.1 3.1
----- ----- -----
Net income (loss)................................................... (2.1)% 2.8% 1.4%
===== ===== =====
</TABLE>

COMPARISON OF YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

Revenue. Total revenue increased 117.4% from $2.1 million in 1994 to $4.5
million in 1995 and 127.2% to $10.2 million in 1996. The Company's total revenue
is derived from license fees for its Vision Suite software, as well as customer
support, training and installation service revenue from Vision Suite licenses,
and from IBM business partner programs and certain consulting and sales of third
party products. License fees increased 217.9% from $962,000 in 1994 to $3.1
million in 1995 and 156.4% in 1996 to $7.8 million. The increase in license fees
was primarily a result of an increase in the number of licenses sold and the
average transaction size, reflecting increased acceptance of the Company's
Vision Suite software and expansion of the Company's direct sales staff and
indirect industry partner channels. The Company's software products are licensed
on a packaged or individual module basis, and the license fee is determined by
the relative performance level of the CPUs on which the products are installed.
License fees as a percentage of total revenue increased from 46.7% in 1994 to
68.3% in 1995 and 77.1% in 1996 as a direct result of increases in the number of
licenses sold and the average transaction size and the phasing out of business
operations not related to the Company's Vision Suite software and services.

Service and support revenue increased 188.6% from $123,000 in 1994 to
$355,000 in 1995 and 295.8% in 1996 to $1.4 million, primarily as a result of an
increase in the number of licenses sold and a larger installed customer base in
each year. Service and support revenue as a percentage of total revenue
increased from 5.9% in 1994 to 7.9% in 1995 and 13.8% in 1996.

IBM partner revenue increased 128.6% from $273,000 in 1995 to $624,000 in
1996, primarily as a result of the growing number of customers acquiring IBM
system hardware as a result of their purchase of licenses of the Company's
software products. The Company earned no IBM partner revenue prior to 1995. IBM
partner revenue as a percentage of total revenue remained constant at 6% in 1995
and 1996; however, the Company

17
<PAGE> 20

expects such revenue will substantially decrease in the future as a result of
changes to IBM's business partner compensation policy implemented in January
1997.

Consulting and other revenue decreased 18.6% from $976,000 in 1994 to
$794,000 in 1995 and decreased 61.1% in 1996 to $309,000. The decreases in both
years were attributable to the Company's decision in 1995 to, in accordance with
the Company's strategic operating plan, phase out its operations that generate
consulting and other revenue not related to the Company's core products and
services. As a percentage of total revenue, consulting and other revenue
decreased from 47.4% in 1994 to 17.7% in 1995 and 3.0% in 1996.

The Company derived approximately 5.4%, 18.6% and 22.8% of its total
revenue from operations outside of the United States in 1994, 1995 and 1996,
respectively. These increases were primarily attributable to the expansion of
the Company's international sales channels and network of industry partners. The
Company's international business is not subject currently to currency
fluctuations as all transactions are conducted in United States dollars.
However, as the Company expands its international operations, the Company may be
paid in foreign currencies and exposure to losses in foreign currency
transactions may result. See "Risk Factors -- Risks of Doing Business in
International Markets."

Cost of Revenue. Cost of revenue decreased as a percentage of total
revenue from 46.6% in 1994 to 27.1% in 1995 and 13.5% in 1996. These decreases
were primarily the result of a change in the Company's sales mix as a result of
the phase out of sales of third party software products and consulting services
not related to the Company's core business as well as increased revenue
generated from sales of licenses for the Company's Vision Suite software, offset
partially by increased costs of service and support revenue. Cost of license
fees consists primarily of product packaging, documentation, production costs
and amortization of capitalized research and development costs and has remained
constant at less than 1% as a percentage of license fees in 1994, 1995 and 1996.
Such percentage may increase in the future as previously capitalized research
and development costs are amortized. Cost of service and support revenue
consists mainly of customer support costs, including telephone support 24 hours
per day, seven days per week, newsletters and on-site visits, and direct costs
associated with providing training and installation services. Cost of service
and support revenue as a percentage of services and support revenue increased
from 102.8% in 1994 to 147.1% in 1995, primarily due to increased staffing in
anticipation of greater demand for training and software installation services,
and decreased to 72.9% in 1996 primarily as a result of increased support
revenue, which has a lower cost structure than service revenue, on a larger
installed customer base and increased demand for training and software
installation services. Cost of consulting and other revenue consists mainly of
the cost of computer hardware and related peripheral equipment purchased by the
Company from various suppliers for resale and the labor component of related
consulting services. Cost of consulting and other revenue as a percentage of
consulting and other revenue increased from 85.4% in 1994 to 86.9% in 1995 and
92.4% in 1996, primarily due to the added costs of phasing out this line of
business.

Sales and Marketing. Sales and marketing expense consists primarily of
personnel costs, including sales commissions, and costs of advertising, public
relations, seminar sponsorship and trade show attendance. Sales and marketing
expense increased from $468,000 in 1994 to $1.5 million in 1995 and $4.7 million
in 1996. The increases reflected the hiring of additional sales and marketing
personnel in connection with the establishment and expansion of the Company's
direct sales force, higher sales commissions associated with increased sales
volume and an increase in promotional and advertising expenditures. Sales and
marketing expense as a percentage of total revenue were approximately 22.7%,
33.0% and 46.5% in 1994, 1995 and 1996, respectively. The Company expects such
expenses to increase in 1997, both in the aggregate and as a percentage of total
revenue, as the Company continues to expand its sales and marketing staff and
increases promotional and advertising expenditures.

Research and Development. Research and development expense consists
primarily of salaries and other personnel related expenses, depreciation of
development equipment and supplies. Research and development expense increased
from $109,000 in 1994 to $137,000 in 1995 and $587,000 in 1996. The increases in
expenditures were primarily due to the hiring of research and development
personnel. In addition, the Company capitalized research and development costs
of $22,000 in 1994, $173,000 in 1995 and $574,000 in 1996 in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86. Such costs will be

18
<PAGE> 21

amortized over the estimated useful life of such products upon their release.
The Company's aggregate expenditures on research and development were 6.3%, 6.9%
and 11.4% of total revenue in 1994, 1995 and 1996, respectively. The Company
significantly increased investments in research and development in 1996 and
anticipates that it will continue to devote significant resources to product
development and that research and development expense will increase in 1997 in
absolute dollars and as a percentage of total revenue.

General and Administrative. General and administrative expense consists
primarily of personnel costs for finance, information systems, human resources
and general management, as well as insurance, facilities and professional
expenses. General and administrative expense increased from $565,000 in 1994 to
$1.5 million in 1995 and $3.1 million in 1997. The expenses increased in each
period primarily due to increased staffing and facility expenses necessary to
manage and support the Company's growth in revenue. General and administrative
expense as a percentage of total revenue was approximately 27.4%, 34.1% and
30.0% in 1994, 1995 and 1996, respectively. The increase as a percentage of
total revenue in 1995 was due to increased facility costs as a result of the
need for expanded office facilities and increased expenditures for the
enhancement and support of the Company's internal information system. The
decrease in general and administrative expense as a percentage of total revenue
in 1996 was primarily due to the rapid growth of revenue.

Provision for Income Taxes. During the year ended December 31, 1996, the
Company terminated its Subchapter S corporation status and became a C
corporation. As a result of such change, the Company recorded tax expense of
$197,100 to record deferred tax liabilities. Had the Company been a C
corporation for all of 1996, its effective tax rate would have been
approximately 47%. The Company expects that its effective tax rate will decrease
in the future.

Recent Accounting Pronouncements. In February 1997, the Financial
Accounting Standards Board issued Statement No. 128. "Earnings per Share," which
is effective for financial statements issued for periods ending after December
15, 1997. The Company has not yet determined the impact of this statement on its
Financial Statements.

19
<PAGE> 22

Quarterly Results of Operations

The following tables present unaudited quarterly financial information for
each quarter of 1995 and 1996. The information has been prepared by the Company
on a basis consistent with the Company's audited Financial Statements appearing
elsewhere in this Prospectus and includes all necessary adjustments, consisting
only of normal recurring adjustments, that management considers necessary for a
fair presentation of the unaudited quarterly results when read in conjunction
with the audited Financial Statements of the Company and the notes thereto
appearing elsewhere in this Prospectus. These operating results are not
necessarily indicative of results that may be expected for any subsequent
periods. See "Risk Factors -- Significant Fluctuations in Quarterly Results;
Seasonality."

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1995 1995 1995 1995 1996 1996 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
License fees................. $ 363 $ 492 $ 579 $1,624 $ 810 $1,988 $ 675 $4,369
Service and support
revenue.................... 45 57 138 115 335 267 386 417
IBM partner revenue.......... -- 6 37 230 129 45 73 377
Consulting and other
revenue.................... 190 268 115 221 138 58 69 44
----- ----- ---- ------ ------ ------ ------ ------
Total revenue......... 598 823 869 2,190 1,412 2,358 1,203 5,207
Cost of revenue................ 246 294 231 442 310 257 373 436
----- ----- ---- ------ ------ ------ ------ ------
Gross profit................... 352 529 638 1,748 1,102 2,101 830 4,771
Operating expenses:
Sales and marketing.......... 261 299 265 653 540 1,191 860 2,145
Research and development..... 20 37 50 30 74 180 161 172
General and administrative... 241 359 394 533 538 798 592 1,127
----- ----- ---- ------ ------ ------ ------ ------
Total operating
expenses............ 522 695 709 1,216 1,152 2,169 1,613 3,444
----- ----- ---- ------ ------ ------ ------ ------
Income (loss) from
operations................... (170) (166) (71) 532 (50) (68) (783) 1,327
Other income (expense), net.... (1) (3) (6) 17 5 (2) 22 4
----- ----- ---- ------ ------ ------ ------ ------
Income (loss) before income
taxes........................ (171) (169) (77) 549 (45) (70) (761) 1,331
Provision (benefit) for income
taxes........................ (3) (3) (1) 9 (35) 144 (272) 476
----- ----- ---- ------ ------ ------ ------ ------
Net income (loss).............. $(168) $ (166) $ (76) $ 540 $ (10) $ (214) $ (489) $ 855
===== ===== ==== ====== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
AS A PERCENTAGE OF TOTAL REVENUE
-----------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1995 1995 1995 1995 1996 1996 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
License fees................. 60.7% 59.8% 66.6% 74.2% 57.4% 84.3% 56.1% 83.9%
Service and support
revenue.................... 7.5 6.9 15.9 5.2 23.7 11.3 32.1 8.1
IBM partner revenue.......... -- 0.7 4.3 10.5 9.1 1.9 6.1 7.2
Consulting and other
revenue.................... 31.8 32.6 13.2 10.1 9.8 2.5 5.7 0.8
----- ----- ----- ----- ----- ----- ----- -----
Total revenue......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenue................ 41.1 35.7 26.6 20.2 22.0 10.9 31.0 8.4
----- ----- ----- ----- ----- ----- ----- -----
Gross profit................... 58.9 64.3 73.4 79.8 78.0 89.1 69.0 91.6
----- ----- ----- ----- ----- ----- ----- -----
Operating expenses:
Sales and marketing.......... 43.6 36.3 30.5 29.8 38.2 50.5 71.5 41.2
Research and development..... 3.3 4.5 5.8 1.4 5.2 7.6 13.4 3.3
General and administrative... 40.3 43.6 45.3 24.3 38.1 33.8 49.2 21.6
----- ----- ----- ----- ----- ----- ----- -----
Total operating
expenses............ 87.2 84.4 81.6 55.5 81.5 91.9 134.1 66.1
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from
operations................... (28.3) (20.1) (8.2) 24.3 (3.5) (2.8) (65.1) 25.5
Other income (expense), net.... (0.2) (0.4) (0.7) 0.8 0.4 (0.1) 1.8 0.1
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before income
taxes........................ (28.5) (20.5) (8.9) 25.1 (3.1) (2.9) (63.3) 25.6
Provision (benefit) for income
taxes........................ (0.5) (0.4) (0.1) 0.4 (2.5) 6.1 (22.6) 9.1
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss).............. (28.0)% (20.1)% (8.8)% 24.7% (0.6)% (9.0)% (40.7)% 16.5%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

20
<PAGE> 23

The Company has experienced and expects to continue to experience
significant fluctuations in its quarterly operating results. Such fluctuations
may be caused by many factors, including, but not limited to: the size and
timing of individual orders; seasonality of revenue; lengthy sales cycles;
delays in introduction of products or product enhancements by the Company or
other providers of hardware; the need for software and components to enhance the
benefits received from the Company's products; competition and pricing in the
software industry; market acceptance of new products; reduction in demand for
existing products and shortening of product life cycles as a result of new
product introductions by competitors; foreign currency exchange rate
fluctuations; mix of products and services sold and general economic conditions.
The Company does not typically maintain a significant backlog of orders and,
therefore, revenue for each quarter depends substantially on orders received and
delivered in that quarter.

The Company's revenue varies from quarter to quarter, largely due to
customer buying patterns. The procurement process of the Company's customers
involves competing capital budget decisions. As a result of such buying
patterns, the Company's prospective customers are more likely to order the
Company's products near the end of each year. In recent years, the Company has
generally experienced higher revenue in the second and fourth quarters with the
largest portion of revenue typically being recognized in the fourth quarter of
each year. Consequently, the Company has historically realized lower revenue in
the first and third quarters of each year than in the preceding fourth quarter,
and the first and third quarters typically result in an operating loss. The
Company also expects to realize a loss in the second quarter of 1997 as a result
of planned increases in operating expenses during this period in accordance with
its annual operating plan and in anticipation of increased revenues.

The Company's sales cycle is typically three to six months from the date
the initial sales contact is made with a qualified prospect, making timing of
the Company's license fees difficult to predict and the Company's quarterly
results difficult to forecast. The Company's expense levels are based in part on
its forecasts of future revenue. Accordingly, since the majority of the
Company's expenses are fixed in nature, the Company would not be able to quickly
curtail expenses in response to a decline in revenue, and operating results for
a given quarter would be adversely affected. As a result, revenue for a given
quarter is subject to significant variations and the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
There can be no assurance that the Company will be profitable in the future or
that future revenue and operating results will not be below the expectations of
public market analysts and investors. In either case, the price of the Company's
Common Stock could be materially adversely affected.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operations primarily through a
combination of cash on hand, cash provided from operations, available borrowings
under its bank line of credit and a private equity offering. As of December 31,
1996, the Company had working capital of $1.2 million, $705,000 in cash and cash
equivalents and $992,000 in short term investments. The Company invests its
excess cash in short and medium term investment grade instruments.

Cash provided by operations was approximately $25,000, $166,000 and
$249,000 in 1994, 1995, and 1996, respectively, primarily due to net income and
increases in accounts payable and accrued liabilities, offset by increases in
accounts receivable. During 1996, the Company used net cash of $2.5 million in
investing activities, primarily for the purchase of property and equipment,
capitalized research and development costs and the purchase of short term
investments. During the same period, financing activities generated $2.8 million
in cash, primarily from short term line of credit borrowings and the sale of
Common Stock.

In December, 1996, the Company entered into a $1.5 million line of credit
agreement with a maturity date of December 9, 1997 secured by substantially all
of the assets of the Company. The agreement allows the Company to borrow at the
bank's prime rate plus 0.75%, payable monthly. Under the terms of the agreement,
there are several affirmative and negative covenants, including, without
limitation, maintaining certain minimum working capital, net worth and financial
ratios. As of December 31, 1996, $616,000 was outstanding under this line, and
the Company was in compliance with all covenants. The Company expects to use $1
million of the net proceeds from this Offering to repay the current amount
outstanding under its bank line of credit. See "Capitalization."

21
<PAGE> 24

The Company believes that the net proceeds from the Offering, together with
existing cash balances, funds expected to be generated from operations and
future borrowings under its bank line of credit, will provide sufficient funds
to finance its operations for at least the next 12 months. The Company may
require additional funds to support its working capital requirements or for
other purposes and may seek to raise such additional funds through public or
private equity or debt financings or from other sources. The Company anticipates
it will incur capital expenditures of $1.8 million in 1997. While the Company
has no current commitment or agreements. The Company may use a portion of the
net proceeds from the Offering for acquisitions of complementary products,
technologies or businesses. However, no commitments or agreements with respect
to any acquisition currently exist. See "Use of Proceeds." No assurance can be
given that additional financing will be available or that, if available, such
financing will be obtainable on terms favorable to the Company or its
stockholders. If adequate funds are not available, the Company may be required
to delay or scale back its sales and marketing efforts, capital expenditures or
product development efforts. See "Risk Factors -- Future Capital Requirements."

22
<PAGE> 25

BUSINESS

The Company develops, markets, implements and supports software that
enables the continuous availability of mission critical applications and data on
midrange computer platforms. The Company's comprehensive HSA solution, Vision
Suite, which is currently available for IBM AS/400 computers, utilizes the
Company's proprietary replication and data transportation technology to provide
all of the required components of an effective HSA solution. Vision Suite
enables continuous availability of midrange computer systems and protection of
all data 24 hours per day, seven days per week ("24 by 7 operation"). The
Company's Vision Suite also serves as the foundation to the Company's Tiered
Network Technology architecture which enables the clustering of AS/400s to
deliver the scalability, availability and reliability of mainframe computers at
a fraction of the cost. The Company has extended the utility of its core data
replication and transportation technology to include Internet isolation and data
protection, data transportation for data warehouses and single system data
protection. In addition, the Company is currently developing its HSA software to
accommodate the Windows NT and UNIX platforms.

INDUSTRY BACKGROUND

Computer systems are inextricably required by businesses for all facets of
operations and management. These computer systems operate mission critical
applications which manage core functions such as manufacturing, distribution,
order processing, sales automation, customer satisfaction, reservations and
finance. Mission critical applications require the continuous availability of
data and systems 24 hours per day, seven days per week. Such mission critical
applications are predominantly operated on midrange computer systems, such as
AS/400, Windows NT and UNIX. According to a 1996 IDC survey, midrange computer
systems account for approximately two-thirds of corporate computing
expenditures.

The consequences of business interruptions and unavailability can be
devastating and include lost transactions, data corruption, customer
dissatisfaction and lost productivity from idled employees and production
equipment. If business interruptions are long or frequent, they may result in
significant losses and ultimately business failure. For example, IBM's AS/400
Dynamics magazine estimates the average time to restore operations after a
disaster is three to five days and that a typical retail brokerage would lose
approximately $6 million per hour of system downtime. Because all computer
systems eventually fail and the timing and duration of such failures are
unpredictable, effective solutions must address all causes of system downtime
and unavailability.

Business interruptions are caused by a wide variety of planned and
unplanned factors, ranging from scheduled downtime, including system maintenance
and upgrades, to unscheduled downtime due to system failures, natural disasters
and human error. The frequency and impact of both unscheduled and scheduled
downtime are increasingly recognized, especially as companies automate more
tasks and increase their dependence on electronic commerce and the Internet. A
1996 report by Computer Economics reported that 87% of organizations experienced
system downtime in 1995 and that approximately 40% of such events lasted at
least two hours. In addition, up to 50% of the respondents in the Computer
Economics report indicated that they experienced up to five system failures
annually.

While many organizations recognize the significant effect of business
interruptions that result from unscheduled failures, the Company believes that a
substantial percentage of organizations underestimate the significant costs of
scheduled downtime. Normal scheduled maintenance such as hardware or software
upgrades and standard tape backups typically require either the shutdown of
effected systems for substantial periods of time or result in significant
performance degradation. As a result, scheduled downtime is unacceptable for
mission critical applications requiring 24 by 7 operation.

23
<PAGE> 26

To date, protection for unscheduled downtime has been primarily limited to
disk-based storage. However, disk-based solutions do not address the majority of
unscheduled failures.

[Artwork illustrates causes of unscheduled system failures.]

Storage and hardware based solutions such as RAID (Redundant Array of
Inexpensive Disks), hardware fault tolerance and disk mirroring, only offer
limited protection. Use of RAID and disk mirroring only protect in the event of
disk failures, and hardware fault tolerance, which is often based on expensive
and proprietary technology, does not assure data protection or disaster
recovery. The most common form of data protection, tape backup, provides only an
unverified copy of the data at a particular point in time and result in
significant system downtime during the backup and restoration process. For
example, backing up and restoring 80 gigabytes of data can require up to four
and one-half hours to save and eight hours to restore, respectively. None of
these techniques resolves unavailability and performance degradation caused by
lack of system capacity during periods of peak usage.

HIGH SYSTEMS AVAILABILITY

The Company believes most organizations consider business interruptions
unavoidable despite their potentially debilitating cost. To date, exposure to
system failure has been resolved mostly through improvements in the reliability
of hardware and software and the use of limited measures such as tape backup and
disk mirroring. More comprehensive solutions such as fault tolerant computer
platforms have been available but they fail to provide complete protection and
are not cost effective for most applications.

The Company believes most organizations remain relatively unaware of
recently developed HSA solutions, which have been designed to eliminate all
scheduled and unscheduled system downtime. HSA solutions utilize replication
technology to ensure the authenticity of data and system information and provide
improved system performance and scalability. Replication is distinct from
copying or propagation of data as follows:

- Copying. Copying is the unverified duplication of data or programs.
Copying does not ensure 100% data integrity because there is no mechanism
to validate the completeness and accuracy of the data transferred. Copying
is often used as an inexpensive means to back up data.

- Propagation. Propagation is the manipulation of data in conjunction with
the copying of data. Like copying, propagation has no mechanism to assure
the completeness or accuracy of the data transferred. Propagation
solutions are often used to extract subsets of data from one platform or
application for transfer to another platform or application.

- Replication. Replication is the verified duplication of data or programs
on another system. Replication ensures 100% data integrity and is used to
create an exact image of an entire computer system's programs and data on
a remotely located computer for data protection, fault tolerance and
disaster recovery.

Replication technology provides the basis for HSA solutions. HSA solutions
require fault tolerance, disaster recovery, data protection, systems and data
management, workload distribution and scalability as follows:

- Fault Tolerance. Fault tolerance is the ability of a computer system to
withstand the failure of any of its hardware components. Historically,
fault tolerance has been focused on components such as RAID storage, disk
mirroring and multiple processors, none of which ensures data integrity.
The introduction of replication technology adds the component of software
fault tolerance with data and full system protection.

24
<PAGE> 27

- Disaster Recovery. Disaster recovery is the ability to continue normal
business operations from a replicated remote system in the event of
primary system failure due to any unplanned disruptive events, such as
system failures, natural disasters and human error.

- Data Protection. Data protection is the near real-time replication of
data to a remote computer system such that the remote system's data is
synchronous with the primary system.

- Systems and Data Management. Systems and data management enables routine
maintenance and hardware and software upgrades on a primary computer
system to occur without business interruption by routing users to a
secondary system.

- Workload Distribution. Workload distribution reroutes units of work from
a primary to a secondary computer system. Such applications increase
system performance by routing tasks on highly utilized primary systems to
backup systems with available capacity during periods of peak system
utilization to increase system performance.

- Scalability. Scalability is the ability to cluster a group of computer
systems to produce an increase in their combined processing and storage
capacity.

THE COMPANY SOLUTION

The Company's solution is based upon its proprietary replication and data
transportation technology and provides the following benefits:

- Comprehensive HSA Solution. The Company's products deliver all of the
required components of HSA for the AS/400 platform. The Company's products
substantially eliminate business interruptions caused by scheduled
downtime, unscheduled downtime, as well as system unavailability, thereby
ensuring the continued operation of mission critical applications.

- Superior Performance with Minimal System Overhead. The Company's
proprietary replication and data transportation technology enables the
protection afforded by the Company's software with negligible effects on
system performance. The Company believes the efficiency and capacity of
the Company's products distinguishes it from competitors and ensures the
maximum availability and processing power required for mission critical
applications.

- Near Real-Time Replication Technology. The Company's HSA products
provide near real-time replication of data and programs. The Company's
products offer the highest throughput to assure that primary and secondary
systems have synchronous data and programs thereby enabling 100%
availability of the secondary system to continue mission critical
transactions. This near real-time replication also allows for seamless
workload distribution.

- Tiered Network Technology. The Company's software can be utilized in
conjunction with IBM's OptiConnect communications protocol to create
clusters of servers which can be tiered to create layers optimized for
various processes, specifically client presentation, transaction
processing, data base management and batch processing. The Company's
tiered network solution delivers the scalability, reliability, and the
availability of mainframe systems at a fraction of the cost.

- Technology Leverageable Into Related System and Data Management
Solutions. The Company's core HSA technology has been applied to develop
products for Internet isolation and data protection, data transportation
for data warehouses and single system data protection.

BUSINESS STRATEGY

The Company's objective is to be the leading global provider of HSA and
related software products for the midrange systems market. Initially, the
Company seeks to become the industry leader for HSA solutions for the
underpenetrated AS/400 market. The key elements of the Company's strategy
include:

Increase AS/400 Market Penetration. According to Datamation magazine, only
a few thousand AS/400 computers out of an installed base of 400,000 run data
replication software. Since AS/400 computers

25
<PAGE> 28

are generally utilized for mission critical applications, the Company believes
the combination of the Company's Vision Suite and its single system product,
SOLO/400, offers comprehensive solutions for the entire installed AS/400 base.

Leverage HSA Expertise Across Platforms. The Company plans to leverage its
HSA technology developed for the AS/400 platform to develop HSA solutions for
Windows NT and UNIX systems. The Company initially plans to introduce
cross-platform propagation tools for the Windows NT operating system.

Heighten Awareness of HSA Solutions. The Company believes that the
increasing awareness of the debilitating and costly impact on business
operations from computing system failures and data unavailability, the low
penetration of HSA solutions and the perceived lack of HSA solutions for
midrange computer systems creates a marketing opportunity for the Company. As a
result, the Company will utilize extensive advertising and marketing programs to
educate the market on the existence and benefits of the Company's comprehensive
HSA solutions to gain visibility and mindshare.

Expand Domestic and International Distribution Channels. The Company's
distribution strategy encompasses a combination of direct sales and
distributors. In North America, the Company intends to continue to rapidly
increase its direct sales force which will be supplemented by distributors with
specific vertical industry or midrange systems expertise. In order to accelerate
the penetration of the approximately 60% of the AS/400s installed
internationally, the Company will primarily rely on country specific
distributors and will support such distributors with a sales support
organization.

Develop Strategic Alliances. The Company will continue to develop
strategic alliances with independent software vendors, systems integrators and
hardware and software manufacturers to enhance distribution channels and to
bundle certain Company products with third party products.

Expand Product Offerings. The Company plans to leverage its core HSA
technology to develop related products such as its products for Internet
isolation and data protection, data transportation for data warehouses and
single system data protection.

26
<PAGE> 29

PRODUCTS AND SERVICES

Software Products

The Company's products, which are based on proprietary replication and data
transportation technology, provide all of the required HSA components including
data protection, fault tolerance, disaster recovery, data protection, systems
and data management, workload distribution and scalability. The Company's HSA
software is designed to eliminate business interruptions caused by unscheduled
downtime due to system failures, natural disasters and human error and scheduled
downtime, including systems maintenance and upgrades.

The Company's products are currently available for the AS/400 midrange
platform. The Company is also developing HSA solutions for Windows NT and UNIX
platforms based upon its core replication and data transportation technology. In
addition, the Company has used, and will continue to use, its core replication
and data transportation technology to develop new products and product
enhancements.

The following table sets forth the Company's product offerings:

<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
PRODUCT SOLUTION FEATURES LICENSE FEES
- -------------------------------------------------------------------------------------------------
Vision Suite High systems
availability
OMS/400 Data replication $8,000 - $62,500
ODS/400 Non-data replication 4,000 - 26,500
SAM/400 Continuous systems 3,500 - 15,000
monitoring and roll swap
- -------------------------------------------------------------------------------------------------
IP/400* Internet isolation and Firewall isolation of 3,500 - 12,000
data protection primary business server
from the Internet
- -------------------------------------------------------------------------------------------------
VWI/400* Data warehouse Transactional data 6,000 - 36,000
transportation transportation
- -------------------------------------------------------------------------------------------------
SOLO/400* Single system Continuous transactional TBD
availability tape back-up
- -------------------------------------------------------------------------------------------------
</TABLE>

* Currently in beta testing; commercial release expected in 1997

Vision Suite

The Company's Vision Suite family of software products consists of the
Company's Object Mirroring System/400 ("OMS/400"), Object Distribution
System/400 ("ODS/400") and System Availability Monitor/400 ("SAM/400"). Vision
Suite components may be purchased together or separately. Vision Suite enables
continuous availability of midrange computer systems, and protection of all
data, programs and system information 24 hours per day, seven days per week.
Vision Suite products offer: data accuracy, with automatic "self healing"
capabilities, synchronization, verification and error alarms to ensure
validation of replicated objects; efficient throughput; and usability, including
easy installation and operation and automatic restore procedures. The Company
believes that the combination of these characteristics is unique to its Vision
Suite products.

OMS/400 provides an automated means of maintaining duplicate and verifiably
accurate databases on a near real-time basis across two or more AS/400 systems.
The Company believes OMS/400 is the most advanced data replication technology
available in the AS/400 market. OMS/400 supports both local and geographically
dispersed AS/400 systems. OMS/400 also provides a mechanism to effect work-load
distribution, which improves processing efficiency and ensures the timely
response of critical applications even during periods of peak system load by
routing stand-alone functions and applications to additional AS/400 computers.

27
<PAGE> 30

The effects of unscheduled business interruptions can be minimized by
routing users to a secondary system without loss of data. In addition, scheduled
downtime caused by system back-ups, software upgrades, preventive maintenance
and hardware upgrades can be avoided. Since both primary and secondary systems
have identical data, tape backups, which either require downtime or result in
data degradation, can be performed on the secondary system without business
interruption. Also, inquiry programs and non-update reporting can be run on
secondary systems thereby reducing the primary system's workload.

A recent enhancement to OMS/400 enables data to be transmitted to multiple
destinations simultaneously via a single process ("simulcasting"). For example,
a retail establishment could utilize simulcasting to distribute inventory and
pricing changes to all of its individual locations at the same time.
Enhancements under development for OMS/400 will enable data propogation between
AS/400s and Windows NT or UNIX platforms.

ODS/400 provides an automated means of distributing software changes,
system configurations and user profiles throughout a network of AS/400s. When
users are routed to a secondary system, up-to-date profiles and system
configurations are available for immediate sign-on and software is identical to
the software on the primary system. ODS/400 also enables programmers to
automatically distribute program updates and new releases. By utilizing ODS/400
in conjunction with OMS/400, users can effectively achieve full system
redundancy.

SAM/400 complements OMS/400 and ODS/400 installations by constantly
monitoring the primary system. When a system failure is detected, SAM/400 routes
users to the back-up or secondary system automatically through the use of
communication links and optional electronic switching hardware.

The following illustration sets forth the relationship between source and
target systems utilizing the Company's Vision Suite.

[Artwork consists of an illustration of the Company's products operating on
AS/400 systems.]

Vision Suite serves as the foundation to the Company's Tiered Network
Technology or TNT. TNT utilizes the Company's core replication and data
transportation technology to increase computing power by enabling the clustering
of AS/400s. TNT enhances scalability on an as needed basis without any
application software re-engineering, in order to maximize system capacity,
provide greater system resiliency, increase processor efficiency, improve data
security and reduce cost of operations. By utilizing TNT, AS/400s can achieve
the scalability, reliability and availability of mainframes at a fraction of the
cost.

The benefits of TNT are achieved by separating business processes across
tiers of connected AS/400s, each of which is optimized on its own dedicated
server or cluster of dedicated computers. Unlike traditional clustering, which
generally requires computers to be located at the same site, the Company's TNT
architecture allows for geographic dispersion of the various tiers. The
components used to build a TNT environment include AS/400s, IBM's OptiConnect
communications protocol and the Company's OMS/400 product. As the Company
incorporates cross-platform capabilities into its products, organizations may
utilize heterogeneous platforms within the tiered environment. The following
illustrates a TNT environment:

[Artwork illustrates a typical TNT network of AS/400 computers.]

Internet, Data Warehousing and Single System Products

The Company is currently developing solutions which are expected to be
released in 1997 for Internet isolation and data protection, data transportation
for data warehousing and single system data protection

28
<PAGE> 31

through its Vision Internet Proxy/400 ("IP/400"), Vision Data Warehousing
Interface/400 ("VWI/400") and Vision SOLO/400 software products, respectively.
Each of the Company's Internet, data warehouse transportation and single system
products utilize the core technology of the Company's Vision Suite products.

IP/400 replicates data and objects from a primary AS/400 to one or more
AS/400 proxy servers. These proxy servers are the sole connection to the
Internet and prevent direct Internet access to the primary server by creating
"firewall" isolation between the organization's primary server and the proxy
servers. The firewall protects the primary server against unauthorized entry or
corruption of data and provides a means of restricting access to sensitive or
proprietary data by enabling the primary server operator to choose which
information will be available on a proxy server. In the event data becomes
corrupted on a proxy server, the Company's IP/400 product isolates and
"refreshes" the data by restoring and updating it. The corrupted data on the
proxy server is not transported back to the primary server and is not accessible
by subsequent Internet users that interact with the proxy server. The Company
believes that IBM's recent release of an Internet server AS/400 package will
increase demand for and awareness of its IP/400 product.

VWI/400 when used in connection with OMS/400 enables users to transport
data in near real-time or at user-defined intervals to a data warehouse. When
used in conjunction with third party data warehousing software, VWI/400 provides
an efficient method of building a data warehouse by updating all stored
information on a transactional basis, eliminating the need for the lengthy and
resource-intensive full database refreshes currently utilized.

SOLO/400 enables single AS/400 users to copy data on a near real-time to a
dedicated tape or optical device. In the event of system failure, SOLO/400
copies all transactions to the point of failure, thereby protecting the data and
enabling quick data recovery once the AS/400 is back on-line. SOLO/400 offers
single AS/400 users the benefits of near real-time data protection previously
available only to companies with multiple AS/400s.

Services

The Company is dedicated to delivering superior product installation,
implementation, training, maintenance and customer support to enable customers
to maximize the benefits of the Company's software products. The Company has
adopted a complete customer satisfaction program and conducts surveys regularly
to monitor customer satisfaction in all areas of service provided by the
Company.

To ensure that a product installation accomplishes a customer's desired
goals, the Company conducts site specific pre-installation evaluations, develops
implementation plans and assists the customer with actual installations.
Customers are also offered a variety of project management and user training
services, both on-site and at the Company's training center, to assist in
effectively implementing all phases of the Company's business solutions.

The Company provides customers with product enhancements and 24 by 7
hotline telephone support for its software products through annual technical
support agreements. The Company also bundles its Electronic Customer Support
software "ECS/400" with each of its software products. ECS/400, which is not
separately marketed by the Company, enables customers and business partners to
electronically access the Company's systems for enhancements. For the year ended
December 31, 1996, approximately 95% of the Company's customers who licensed
products in 1996 also subscribed for technical services for terms following the
expiration of their initial warranty period.

29
<PAGE> 32

CUSTOMERS

The Company markets its software products to organizations utilizing
AS/400s. To date, sales have primarily been generated from large organizations
in the banking and finance, manufacturing, telecommunications, healthcare,
hospitality and gaming, transportation and communications industries. The
following is a representative list of the Company's customers:

<TABLE>
<S> <C> <C>
American Express Europe Ltd. Buena Vista Home Video PaineWebber, Inc.
Bally's Las Vegas Casino Resort Duracell, Inc. Pharmavite
Cargill EMI Records Group, North America SKF, Inc.
The Chase Manhattan Bank, N.A. Enterprise Rent-A-Car The Royal Bank of Scotland
Circus Circus Enterprises, Inc. New Mexico Lottery Toshiba America
Cirrus Logic IBM Corporation Toyota Motor Sales, U.S.A.
Citibank Privatkunden GMBH Kraft Canada, Inc United Parcel Service
Countrywide Funding Corp. Kingston Technology Corporation The Upjohn Company
Cox Cable Communications, Inc.
</TABLE>

Revenue attributable to IBM in 1996, which in the aggregate accounted for
approximately 19.5% of the Company's total revenue, was received from seven
divisions of IBM, none of which accounted for more than 5.7% of the Company's
total revenue. The majority of the Company's revenue from IBM was attributable
to purchases of the Company's products for resale under country specific
distribution agreements. No other customer accounted for more than 10% of the
Company's total revenue in 1996.

SALES AND MARKETING

The Company's products and services are marketed and sold in the United
States and internationally through the Company's direct sales force and a
network of distributors and business partners. The Company's distribution
strategy is both to utilize sales staff for direct sales efforts and to build
relationships with distributors, strategic partners (such as IBM), independent
software vendors ("ISVs") and system integrators. The Company intends to expand
both its domestic and international sales staffs in 1997. In 1996, approximately
97% of domestic revenue and 14% of international revenue were made directly by
the Company's sales force.

In addition to the Company's direct sales force, the Company has developed
and continues to develop relationships with independent distributors. The
Company seeks distributors who have technical proficiency with the AS/400 and
who are able to provide support to the Company's customers. As of March 1, 1997,
the Company had three distributors in the United States and 14 internationally.
Distributors currently cover territories in Australia, Belgium, Canada, Denmark,
France, Indonesia, Israel, New Zealand, Norway, Portugal, South Africa,
Southeast Asia, Spain, Sweden, Thailand, Turkey and the United Kingdom. During
the fiscal years ended December 31, 1994, 1995 and 1996, international sales
represented 5.4%, 18.6% and 22.8%, respectively, of the Company's total revenue.
The Company anticipates international sales will represent an increasing
percentage of total revenue in 1997 as the Company estimates that approximately
60% of all AS/400s are located outside of the United States.

The Company intends to develop alliances with ISVs, system integrators and
manufacturers of hardware and/or software to create additional channels for
sales growth. By establishing and maintaining these alliances, the Company will
be able to utilize the marketing and sales efforts of others, including IBM. The
Company believes that, in order to provide the most comprehensive and
competitive data and systems availability solutions, it will be necessary to
develop and maintain close associations with producers of complementary
products. However, there can be no assurance that the Company will be able to
maintain its existing alliances or develop new alliances. The Company's failure
to maintain or develop new alliances could adversely affect the compatibility of
its products with existing and new platforms and other complementary hardware
and software products.

The Company believes that the widespread dependence upon midrange computer
systems along with the lack of awareness of HSA solutions for midrange computer
systems create an opportunity for the Company to

30
<PAGE> 33

educate the market on the existence and benefits of the Company's HSA solutions
for midrange computer systems. The Company is implementing this strategy by
developing public relations activities, increasing advertising through a variety
of industry media, participating in industry trade shows and sponsoring seminars
for information system managers.

The Company's primary target market includes transaction intensive
industries such as banking and finance, healthcare, hospitality and gaming,
telecommunications, manufacturing and retail. These industries are target
markets for the Company's products because of the mission critical nature of
their computer applications and the high cost of business interruptions and
system unavailability. The Company also targets large companies that use
mainframe computers and are candidates for "rightsizing" or converting
applications to run on more cost effective midrange systems. In addition, the
Company believes that the growth of the Internet has created a new market for
its IP/400 product, which will enable companies to utilize the Internet while
maintaining security and data integrity on their traditional enterprise
information systems. The Company's SOLO/400 product is being designed to meet
the needs of small- to medium-sized companies by providing the benefits of data
protection previously available only to companies with multiple AS/400
computers.

RELATIONSHIPS WITH IBM

The Company has numerous relationships with IBM for the sale and
distribution of its HSA products. Internationally, the Company has entered into
IBM Vendor Logo Agreements ("VLAs") enabling IBM to market and sell the
Company's Vision Suite products in Belgium, Denmark, Finland, Israel,
Luxembourg, Norway and Sweden. The Company also participates in the IBM
Cooperative Software Partner program, pursuant to which IBM and IBM Business
Partners can market and sell the Company's software products. Further, the
Company is a National Solution Provider and earns commission revenue from its
provision of services in connection with the sale of AS/400 systems to the
Company's customers. The Company has also been designated under the IBM
Rochester Client Series program as IBM's exclusive HSA offering for data
warehousing.

The Company participates in several development programs with IBM. The
Company is an "All Star" in the Partners In Development ("PID") program of the
IBM AS/400 Rochester Lab. The PID program affords the Company access to IBM's
AS/400 development team. A representative of the Company also sits on the HSA
Board at the Rochester Lab created to provide advice on the future of HSA plans
for the AS/400. In addition, the Company is one of a select group of Business
Partners who participate on IBM's San Francisco shareable framework Advisory
Board.

The Company has received numerous awards from IBM including Premier
Business Partner which is a status granted to only the top 1% of IBM's
approximately 8,000 worldwide Business Partners. A Premier Business Partner
makes a significant contribution to IBM's revenue and achieves superior customer
satisfaction. The Company has also been awarded the IBM Crystal Globe Award in
1994 for the significant competitive sale, the Business Partner of the Year for
the Western Region in 1996 and recognized as a top revenue leader in the Western
Region in 1995 and 1996. IBM also utilizes the Vision Suite products for its IBM
Direct Order processing service.

PRODUCT DEVELOPMENT

The Company believes that its future success will depend in part on its
ability to enhance its existing products and develop new products that keep pace
with technological advancements, respond to evolving end-user requirements and
achieve market acceptance. Products currently under development include cross-
platform data propagation software to accommodate Windows NT and UNIX platforms.
Future product plans include fully-functional HSA solutions using the Company's
core replication and data transportation technology for heterogeneous computing,
including Windows NT and UNIX platforms. The Company anticipates that it will
continue to commit significant resources to product development.

The market for the Company's products are characterized by rapid
technological advances, evolving standards and changes in end-user requirements.
The introduction of products embodying new technologies

31
<PAGE> 34

and the emergence of new standards could render the Company's existing products
and products currently under development obsolete and unmarketable. There can be
no assurance that the Company will be successful in developing and marketing
product enhancements and new products on a timely basis, if at all. Any failure
to successfully develop and market product enhancements and new products would
have a material adverse effect on the Company's business, operating results and
financial condition.

COMPETITION

The information systems industry is highly competitive and rapidly
changing. While the Company believes that it currently has only a limited number
of primary competitors which offer products that are directly competitive to the
Company's HSA products for the AS/400 market, the Company has numerous potential
competitors, including IBM, with technical and other resourses capable of
developing competitive products. In particular, there can be no assurance that
IBM will not incorporate one or more independently developed elements of HSA in
its operating system for the AS/400. Further, there can be no assurance that
competitors will not develop products that are competitive with the Company's
products or that these products will achieve greater market acceptance due to
more significant sales, marketing or product development resources. There can
also be no assurance that suppliers of operating systems or information systems
will not develop products that compete effectively in the Company's targeted
markets. The Company's success will depend, in part, upon its ability to
increase sales in its targeted markets and continue to develop new products and
product enhancements. The principal elements of competition in the Company's
market include the effect on system performance, functionality, reliability,
ease-of-use, customer support and price. While the Company believes that it
competes favorably with respect to the foregoing elements, there can be no
assurance that it will continue to do so.

In HSA markets other than the AS/400 market, the Company faces a variety of
potential competitors. Digital Equipment Corporation and IBM, among others,
provide software based clustering solutions. Several smaller companies such as
VERITAS Software Corporation have introduced backup and high availability
solutions. System management vendors such as Computer Associates International,
Inc. also provide backup and availability components in their products. While
the Windows NT market is still emerging, components such as backup and
clustering are provided by companies such as VERITAS Software Corporation,
Legato Systems, Inc., Octopus and Tandem Computers Incorporated. In addition,
Microsoft Corporation is a potential competitor, especially in clustering,
through its Wolfpack initiative. The Company believes that it may also face
competition in the AS/400, Windows NT and UNIX markets from mainframe storage
and system management vendors such as EMC Corporation, BMC Software, Inc. and
Computer Associates International, Inc. Additionally, database vendors such as
Oracle Corporation, Sybase, Inc. and Informix Corporation incorporate certain
HSA and data transportation components with their products. The Company also
believes that the use of cross-platform technologies (i.e., replicating or
propagating data between AS/400 and non-AS/400 platforms) will become an
important competitive element and that the number of competitors offering
cross-platform technologies will grow over the next several years. The Company
anticipates that a potential source of such future competition may be from
larger software, operating system and relational database software suppliers.
Within the AS/400 cross platform data propagation market, the Company believes
that its primary competitor is DataMirror Corporation.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

The Company relies primarily on a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its intellectual property. For example, the Company generally enters
into confidentiality and non-disclosure agreements with its employees and limits
access to and distribution of its proprietary information. In addition, the
Company licenses its software products pursuant to signed license agreements,
which impose certain restrictions on licensees' ability to utilize software. The
Company believes that its success depends upon the knowledge and experience of
its management and technical personnel and its ability to market its existing
products and to develop new products.

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<PAGE> 35

The Company's ability to compete successfully and achieve future revenue
growth will depend, in part, upon its ability to protect its proprietary
technology and operate without infringing upon the rights of others. There can
be no assurance that these measures will successfully protect the Company's
intellectual property or that the Company's intellectual property or proprietary
technology will not otherwise become known or be independently developed by
competitors. In addition, the laws of certain countries in which the Company's
products are or may be sold may not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States. The inability of the Company to protect its intellectual property and
proprietary technology could have a material adverse effect on its business,
operating results and financial condition.

FACILITIES

The Company's sales, marketing and administrative offices are located in an
office of approximately 12,500 square feet in Irvine, California. The sublease
of this space will expire in June 1998. The Company believes it will be able to
renew this sublease or obtain additional space. The Company's technical
development and research laboratory facility is located in a separate office of
approximately 17,000 square feet in Irvine, California, which sublease will
expire in December 1997. The Company has entered into a lease with the landlord
of the technical development and research laboratory facility which will
commence upon the expiration of the existing sublease and which will expire in
July 1998.

EMPLOYEES

As of December 31, 1996, the Company had 77 full-time employees. 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.

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<PAGE> 36

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the Company's
directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Robert J. Zwerling................. 43 President, Chief Executive Officer and Director
Christian F. Turner................ 36 Chief Technology Officer and Director
David B. McLelland................. 36 Executive Director of Product Engineering and
Director
David E. Peterson.................. 34 Chief Financial Officer, Vice President of Finance
and Director
Irving Meisner..................... 62 Vice President of Sales
Phillip B. Langford................ 41 Vice President of Marketing
Howard Buffett(1).................. 42 Director
Jonathan D. Lazarus(1)............. 45 Director
</TABLE>

- ---------------
(1) Member of Audit Committee

Robert J. Zwerling joined the Company in March 1995 as Chief Executive
Officer and has served as President and a director of the Company since October
1995 and December 1995, respectively. From May 1992 to August 1994, Mr. Zwerling
served as Managing Director of the ISIS Telecom Group of Computer Sciences
Corporation (a $3.5 billion NYSE-traded computing service company). The ISIS
Telecom Group was sold to Computer Sciences Corporation in May 1992 by EPC
International, a software application company founded by Mr. Zwerling in May
1984.

Christian F. Turner is a founder of the Company and has served as Chief
Technology Officer since March 1995, as President of the Company from inception
to October 1995 and as a director since incorporation.

David B. McLelland is a founder of the Company and has served as Executive
Director of Product Engineering since inception and a director since
incorporation.

David E. Peterson joined the Company in August 1994 as Chief Financial
Officer and Vice President of Finance and has served as a director since
December 1993. From January 1992 to August 1994, Mr. Peterson served as the
Chief Financial Officer of Combined Management Services, an organization that
provided management services to health care providers.

Irving Meisner joined the Company in April 1994 as Vice President of Sales.
From January 1991 to March 1994, Mr. Meisner served as a software product
manager and account executive for Application and Business Solutions, a
privately-held software company. From 1987 to 1989, Mr. Meisner served as
District Director for Wang Laboratories. From 1966 to 1987, Mr. Meisner was with
IBM, where he held a number of sales and management positions, the last of which
was Marketing Manager.

Phillip B. Langford joined the Company in February 1996 as Vice President
of Marketing. From August 1994 to January 1996, Mr. Langford was the Vice
President of Marketing and Advertising for the Orange County Business Journal.
In January 1992, Mr. Langford founded and acted as Senior Partner until August
1994 for The Langford Marketing Group, a marketing consulting company. Prior to
his employment with The Langford Marketing Group, Mr. Langford served as the
Vice President, National Marketing and Advertising, for Century 21 Real Estate
International.

Howard Buffett joined the Company as a director in March 1997. Since June
1996, Mr. Buffett has served as Chairman of the Board of The GSI Group, a
manufacturer of agricultural equipment. Since 1989, Mr. Buffett has also served
as President of Buffett Farms. From September 1995 to June 1996, Mr. Buffett was
Chairman of the Executive Committee and President, International Operations of
The GSI Group. From

34
<PAGE> 37

1989 to 1992, Mr. Buffett served as Corporate Vice President, Assistant to the
Chairman and a director of the Archer-Daniels-Midland Co., an agricultural
processor and merchandiser. Mr. Buffett is a member of the board of directors of
Berkshire Hathaway Inc., a diversified holding company, and Lindsay
Manufacturing Inc., a manufacturer of agricultural irrigation equipment. Mr.
Buffett also serves as a member of the board of directors of several non-profit
organizations.

Jonathan D. Lazarus joined the Company as a director in March 1997. Mr.
Lazarus recently retired after 10 years with Microsoft Corporation, where he
served as Director, Systems Strategy, Vice President, Strategic Relations and
Vice President, Systems Marketing. Prior to his employment with Microsoft
Corporation, Mr. Lazarus led the development of PC Magazine and PC Week as Vice
President, Editorial of Ziff Davis Publishing Company. Mr. Lazarus currently
serves as a member of the board of directors of several privately held
companies.

BOARD COMMITTEE AND DIRECTOR COMPENSATION

The Audit Committee of the Board of Directors consists of Messrs. Buffett
and Lazarus. The Audit Committee recommends to the Board of Directors the
independent public accountants to be selected to audit the Company's annual
financial statements and approves any special assignments given to such
accountants. The Audit Committee also reviews the planned scope of the annual
audit and the independent accountants' letter of comments and management's
response thereto, any major accounting changes made or contemplated and the
effectiveness and efficiency of the Company's internal accounting staff.

Non-employee members of the Board of Directors receive an annual retainer
fee of $25,000, plus $1,000 for each meeting attended, as well as reimbursement
of expenses incurred in connection with attending meetings. Upon joining the
Board of Directors, Mr. Buffett and Mr. Lazarus each received a nonqualified
stock option for 28,365 shares of Common Stock at an exercise price of $8.00 per
share under the Company's 1996 Plan. See "Employee Benefit Plans."

EXECUTIVE COMPENSATION

The following table sets forth summary information concerning compensation
paid by, or accrued for services rendered to, the Company in all capacities
during the fiscal year ended December 31, 1996, to the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers whose salary and bonus exceeded $100,000 (the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------
NAME AND PRINCIPAL POSITION SALARY BONUS
- --------------------------------------------------------------------- -------- --------
<S> <C> <C>
Robert J. Zwerling................................................... $143,048 $255,308
President and Chief Executive Officer
Christian F. Turner.................................................. 135,519 74,998
Chief Technology Officer
David E. Peterson.................................................... 95,616 54,424
Chief Financial Officer and Vice President of Finance
Irving Meisner....................................................... 435,150 36,182
Vice President of Sales
David B. McLelland................................................... 109,921 67,032
Executive Director of Product Engineering
</TABLE>

- ---------------
(1) Includes commissions paid based upon a percentage of certain revenue
targets. See "-- Employment Agreements."

EMPLOYMENT AGREEMENTS

In March 1995, the Company and Robert J. Zwerling entered into an
employment agreement, which was amended as of May 1, 1995 and October 1, 1996,
pursuant to which Mr. Zwerling receives an annual base salary of $210,000 and
annual bonuses of up to $108,000 based upon revenue and net income targets. If
the agreement is terminated by the Company without cause or the employee for
good reason, base salary will be paid by the Company through the date of the
scheduled expiration of the term of the agreement. Such

35
<PAGE> 38

agreement may continue after the expiration of its four year term subject to the
right of either party to terminate the agreement upon 30 days notice.

Effective October 1, 1996, the Company and Christian F. Turner entered into
an employment agreement, pursuant to which Mr. Turner receives an annual base
salary of $180,000 and receives annual bonuses of up to $84,000 based upon
revenue and net income targets. If the agreement is terminated by the Company
without cause or the employee for good reason, base salary will be paid by the
Company through the date of the scheduled expiration of the term of the
agreement. Such agreement may continue after the expiration of its three year
term subject to the right of either party to terminate the agreement upon 30
days notice.

In March 1995, the Company and David E. Peterson entered into an employment
agreement, pursuant to which Mr. Peterson receives an annual base salary of
$135,000 and receives an annual bonus of $25,000 and additional annual bonuses
of up to $48,000 based upon revenue and net income targets. Such agreement may
continue after the expiration of its four year term subject to the right of
either party to terminate the agreement upon 30 days notice.

Effective October 1, 1996, the Company and Irving Meisner entered into an
employment agreement pursuant to which Mr. Meisner receives an annual base
salary of $90,000, commissions equal to four percent of revenues in excess of
80% of target revenues and annual bonuses of up to $20,000 based upon revenue
targets. Such agreement may continue after the expiration of its three year term
subject to the right of either party to terminate the agreement upon 30 days
notice.

Effective October 1, 1996, the Company and David B. McLelland entered into
an employment agreement, pursuant to which Mr. McLelland receives an annual base
salary of $150,000 and receives annual bonuses of up to $48,000 based upon
revenue and net income targets. If the agreement is terminated by the Company
without cause or the employee for good reason, base salary will be paid by the
Company through the date of the scheduled expiration of the term of the
agreement. Such agreement may continue after the expiration of its three year
term subject to the right of either party to terminate the agreement upon 30
days notice.

EMPLOYEE BENEFIT PLANS

1996 Stock Incentive Plan. On January 2, 1997 and March 12, 1997, the
Company's 1996 Incentive Stock Option, Nonqualified Stock Option and Restricted
Stock Purchase Plan (the "1996 Plan") was adopted by the Company's Board of
Directors and stockholders, respectively, effective as of January 2, 1997. The
1996 Plan covers an aggregate of 861,645 shares of Common Stock. The 1996 Plan
provides for the granting of "incentive stock options," within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
nonstatutory options and restricted stock grants to directors, officers,
employees and consultants of the Company, except that incentive stock options
may not be granted to non-employee directors or consultants. The purpose of the
1996 Plan is to provide participants with incentives which will encourage them
to acquire a proprietary interest in, and continue to provide services to, the
Company. The 1996 Plan is administered by the Board of Directors, which has sole
discretion and authority, consistent with the provisions of the 1996 Plan, to
determine which eligible participants will receive options, the time when
options will be granted, the terms of options granted and the number of shares
which will be subject to options granted under the 1996 Plan. There are 267,840
options outstanding under the 1996 Plan.

Employee Stock Purchase Plan. On March 12, 1997, the Company adopted the
Employee Stock Purchase Plan (the "Purchase Plan"), to be effective upon the
completion of the Offering, covering an aggregate of 250,000 shares of Common
Stock. The Purchase Plan, which is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code, will be
implemented by six-month offerings with purchases occurring at six month
intervals commencing on the date of this Prospectus. The Purchase Plan will be
administered by the Board of Directors. Employees will be eligible to
participate if they are employed by the Company for at least 30 hours per week
and if they have been employed by the Company for at least 180 days. The
Purchase Plan permits eligible employees to purchase Common Stock through
payroll deductions, which may not exceed 15% of an employee's compensation. The
price of stock purchased under the Purchase Plan will be 85% of the lower of the
fair market value of the

36
<PAGE> 39

Common Stock at the beginning of each six-month offering period or on the
applicable purchase date. Employees may end their participation in any offering
period at any time during such period, and participation ends automatically on
termination of employment. The Board may at any time amend or terminate the
Purchase Plan, except that no such amendment or termination may adversely affect
options previously granted under the Purchase Plan. There are no rights to
purchase outstanding under the Purchase Plan.

401(k) Plan. The Company has adopted a tax-qualified employee savings and
profit sharing plan (the "401(k) Plan"), effective on November 1, 1996, covering
the Company's full-time employees located in the United States. The 401(k) Plan
is intended to qualify under Section 401(k) of the Code, so that contributions
to the 401(k) Plan by employees or by the Company, and the investment earnings
thereon, are not taxable to employees until withdrawn from the 401(k) Plan, and
so that contributions by the Company, if any, will be deductible by the Company
when made. Pursuant to the 401(k) Plan, employees may elect to reduce their
current compensation by up to 15% of their base salary, subject to Internal
Revenue Service limitations, and to have the amount of such reduction
contributed to the 401(k) Plan. The 401(k) Plan permits, but does not require,
additional matching contributions to the 401(k) Plan by the Company on behalf of
all participants in the 401(k) Plan. As of February 28, 1997, the Company has
not made any contributions to the 401(k) Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.

During the year ended December 31, 1996, the Company's Board of Directors
established the levels of compensation for the Company's executive officers. The
following executive officers, who are also directors of the Company,
participated in the deliberations of the Board regarding executive compensation
that occurred during the year ended December 31, 1996: Robert J. Zwerling,
President and Chief Executive Officer, Christian F. Turner, Chief Technology
Officer, David B. McLelland, Executive Director of Product Engineering, and
David E. Peterson, Chief Financial Officer and Vice President of Finance. See
"Certain Transactions" for a description of transactions between the Company and
certain members of the Board of Directors or their affiliates.

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

The Company's Bylaws provide that the Company will indemnify its directors
and officers and may indemnify its employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence by indemnified parties,
and permits the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
indemnified party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification. Following this Offering
the Company expects to have in place liability insurance coverage for its
directors and officers.

In addition, the Company's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty as a director to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the directors' fiduciary duty, 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
Company for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.

The Company has entered into separate indemnification agreements with its
directors and executive officers. These agreements require the Company, among
other things, to indemnify them against certain liabilities that may arise by
reason of their status or service as directors or officers (other than
liabilities arising from actions not taken in good faith or in a manner the
indemnitee believed to be opposed to the best interests of the Company), to
advance their expenses incurred as a result of any proceeding against them as to
which

37
<PAGE> 40

they could be indemnified and to obtain directors' insurance if available on
reasonable terms. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. The Company believes that its Certificate of
Incorporation and Bylaw provisions and indemnification agreements are necessary
to attract and retain qualified persons as directors and officers.

38
<PAGE> 41

CERTAIN TRANSACTIONS

In March 1995, the Company issued 1,198,305 shares of restricted common
stock to Robert J. Zwerling, the Company's Chief Executive Officer, in exchange
for a promissory note in the amount of $261,471.40. The note bearing interest at
the rate of 7% per annum, is secured by the restricted common stock and calls
for Mr. Zwerling to pay the balance of the note by making three annual payments
of principal and interest beginning June 30, 1996.

The Company entered into a cost sharing agreement with EPC International in
December 1995. This agreement allocates the cost of the Company's lease for its
principal office between the Company and EPC International, which shares office
space with the Company. Mr. Zwerling is the sole owner and Chairman of EPC
International. The costs of the lease are allocated between the companies based
on the number of employees located at the office.

The Company has entered into indemnification agreements with its directors
and certain officers. Such agreements require the Company to indemnify such
individuals to the fullest extent permitted by Delaware law. See
"Management -- Limitations on Liability and Indemnification."

In addition, the Company has entered into employment agreements with
certain executive officers of the Company and the Company has entered into
certain transactions involving certain directors of the Company. See
"Management -- Employment Agreements" and "-- Compensation Committee Interlocks
and Insider Participation."

39
<PAGE> 42

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of February 28, 1997, as
adjusted to give effect to the sale by the Company of the shares of Common Stock
offered hereby by (i) each person (or group of affiliated persons) who is known
by the Company to own beneficially 5% or more of the Company's Common Stock,
(ii) each of the Company's directors, (iii) each of the Named Executive
Officers, and (iv) all directors and executive officers of the Company as a
group.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED(2)
SHARES ----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIALLY OWNED(1) BEFORE OFFERING AFTER OFFERING
- ---------------------------------------------- --------------------- --------------- --------------
<S> <C> <C> <C>
Christian F. Turner........................... 2,585,400 39.4% 29.2%
c/o Vision Solutions, Inc.
2600 Michelson Drive
Irvine, California 92612
David B. McLelland............................ 2,064,600 31.5 23.3
c/o Vision Solutions, Inc.
2600 Michelson Drive
Irvine, California 92612
Robert J. Zwerling............................ 1,198,305 18.3 13.5
c/o Vision Solutions, Inc.
2600 Michelson Drive
Irvine, California 92612
Interlink Associates, L.P. ................... 437,100 6.7 4.9
201 Nort Service Road
Melville, NY 11747
Howard Buffett................................ -- * *
Jonathan D. Lazarus........................... -- * *
Irving Meisner................................ 4,650 * *
David E. Peterson............................. 143,685 2.2 1.6
All Executive Officers and Directors as a
Group (8 persons)........................... 5,996,640 91.5% 67.7%
</TABLE>

- ---------------
* Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options or warrants currently exercisable, or exercisable within 60 days
of March 12, 1997, are deemed outstanding for computing the percentage of
the person holding such options or warrants but are not deemed outstanding
for computing the percentage of any other person. Except as indicated by
footnote and subject to community property laws where applicable, to the
knowledge of the Company the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.

(2) Assumes that the Underwriters' over-allotment option is not exercised. In
the event that the Underwriters' over-allotment is exercised in full at an
assumed initial public offering price of $11.00 per share, Christian F.
Turner will sell 65,456 shares, David B. McLelland will sell 52,272 shares,
Interlink Associates, L.P. will sell 181,972 shares, New Millennium
Investment Associates will sell 36,395 shares, Great Bay Multi-Manager Fund
will sell 4,840 shares and Stephen F. Millard will sell 4,065 shares.
Following the Offering, assuming that the over-allotment option is exercised
in full at an assumed initial public offering price of $11.00 per share,
Christian F. Turner will own 2,519,944 shares (28.5%), David B. McLelland
will own 2,012,328 shares (22.7%) and Interlink Associates, L.P. will own
255,128 shares (2.9%). See "Underwriting."

40
<PAGE> 43

DESCRIPTION OF CAPITAL STOCK

Upon the completion of the Offering the authorized capital stock of the
Company will consist of 30,000,000 shares of Common Stock, $0.001 par value
("Common Stock"), and 5,000,000 shares of preferred stock, $0.001 par value
("Preferred Stock").

COMMON STOCK

As of March 12, 1997, there were 6,553,710 shares of Common Stock
outstanding held of record by 10 stockholders. There will be 8,853,710 shares of
Common Stock outstanding after the sale of the shares of Common Stock offered by
the Company hereby.

Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Subject to preferences that may be
applicable to the holders of outstanding shares of Preferred Stock, if any, the
holders of Common Stock are entitled to receive such lawful dividends as may be
declared by the Board of Directors. The Company's bank credit agreement
currently restricts the Company from paying cash dividends without the prior
written consent of the bank. In the event of liquidation, dissolution or winding
up of the Company, and subject to the rights of the holders of outstanding
shares of Preferred Stock, if any, the holders of shares of Common Stock shall
be entitled to receive pro rata all of the remaining assets of the Company
available for distribution to its stockholders. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and nonassessable, and shares of Common Stock to
be issued pursuant to the Offering shall be fully paid and nonassessable.

PREFERRED STOCK

As of March 12, 1997, no shares of Preferred Stock were outstanding. Upon
the closing of the Offering, the Board of Directors will have the authority,
without further action by the stockholders, to issue the authorized shares of
Preferred Stock in one or more series and to fix the rights, preferences and
privileges thereof, including voting rights, terms of redemption, redemption
prices, liquidation preferences, number of shares constituting any series or the
designation of such series, without further vote or action by the stockholders.
Although it presently has no intention to do so, the Board of Directors, without
stockholder approval, could issue Preferred Stock with voting and conversion
rights which could adversely affect the voting power of the holders of Common
Stock. This provision may be deemed to have a potential anti-takeover effect and
the issuance of Preferred Stock in accordance with such provision may delay or
prevent a change of control of the Company. See "Risk Factors -- Effect of
Certain Charter and Bylaw Provisions."

REGISTRATION RIGHTS

Under the terms of certain Subscription Agreements, each dated as of June
24, 1996, among the Company and certain holders of its securities, after the
Offering and upon the expiration of the 180-day lock-up agreement with the
Underwriters, the holders of approximately 545,910 shares of Common Stock will
be entitled to certain rights with respect to the registration of such shares
under the Securities Act. If the Company proposes to register any of its
securities under the Securities Act, either for its own account or the account
of other stockholders (other than the holders of Registrable Securities), the
holders of Registrable Securities are entitled to notice of such registration
and are entitled to include their Registrable Securities therein. Among other
conditions and limitations, the underwriters have the right to limit the number
of Registrable Securities included in any such registration.

DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law. In general, the statute prohibits a publicly-held
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 either
(i) prior to the date at which the person becomes an interested stockholder, the
board of directors approves such transaction or business combination, (ii) the
stockholder acquires more than 85% of the outstanding voting stock of the
corporation (excluding shares held

41
<PAGE> 44

by directors who are officers or held in certain employee stock plans) upon
consummation of such transaction, or (iii) the business combination is approved
by the board of directors and by two-thirds of the outstanding voting stock of
the corporation (excluding shares held by the interested stockholder) at a
meeting of stockholders (and not by written consent). A "business combination"
includes a merger, asset sale or other transaction resulting in a financial
benefit to such interested stockholder. For purposes of Section 203, an
"interested" stockholder is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock.

Upon the closing of the Offering, the Company's Certificate of
Incorporation will include a provision that allows the Board of Directors to
issue Preferred Stock in one or more series with such voting rights and other
provisions as the Board of Directors may determine. The Certificate of
Incorporation also will eliminate the ability of stockholders to call special
meetings, act by written consent and require advance notice to nominate a
director or take certain other actions. These provisions may be deemed to have a
potential anti-takeover effect and may delay or prevent a change of control of
the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is U.S. Stock
Transfer Corporation, Glendale, California.

42
<PAGE> 45

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no public market for the Common
Stock. Future sales of substantial amounts of Common Stock in the public market
could adversely affect prevailing market prices and adversely affect the
Company's ability to raise additional capital in the capital markets at a time
and price favorable to the Company.

Upon completion of the Offering, the Company will have 8,853,710 shares of
Common Stock outstanding. Of these shares, the 2,300,000 shares sold in the
Offering will be freely tradable without restriction or further registration
under the Securities Act, unless they are purchased by "affiliates" of the
Company as that term is used under the Securities Act. The remaining 6,553,710
shares held by existing stockholders will be "restricted securities" as defined
in Rule 144 under the Securities Act ("Restricted Shares"). Restricted Shares
may be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 promulgated under the Securities Act,
which is summarized below. Sales of Restricted Shares in the public market, or
the availability of such shares for sale, could adversely affect the market
price of the Common Stock.

All officers, directors and stockholders and certain option holders have
agreed with the Underwriters that they will not sell any Common Stock owned by
them for a period of 180 days after the effective date of the Offering without
the prior written consent of Allen & Company Incorporated (the "180-day
lock-up"), 6,553,710 Common Stock are subject to the 180-day lock-up. Upon the
expiration of the 180-day lock-up (or earlier upon the consent of Allen &
Company Incorporated), 6,553,710 Restricted Shares will become eligible for sale
subject to the volume and other restrictions of Rule 144.

In general, under Rule 144, as recently amended by the Securities and
Exchange Commission, effective April 29, 1997, beginning 90 days after the
effective date of the Offering, any person (or persons whose shares are
aggregated) who has beneficially owned Restricted Shares for at least one year
is entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then outstanding shares of the Company's
Common Stock (approximately 89,000 shares immediately after the Offering) or the
average weekly trading volume during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner of sale, notice and availability of current public information about the
Company.

The Company intends to file a registration statement on Form S-8 under the
Act to register shares of Common Stock reserved for issuance under its stock
option plans, thus permitting the resale of shares issued under the plan by
non-affiliates in the public market without restriction under the Securities
Act. Such registration statement will become effective immediately upon filing
which is expected on or shortly after the closing of the Offering. As of the
closing of the Offering, options or rights to purchase 267,840 shares of Common
Stock will be outstanding under the Company's stock option plans, of which
102,300 shares are subject to lock up agreements described above.

43
<PAGE> 46

UNDERWRITING

The Underwriters named below, for whom Allen & Company Incorporated and
Cowen & Company are acting as representatives (the "Representatives"), have
severally agreed, subject to the terms and conditions contained in the
underwriting agreement (the "Underwriting Agreement"), to purchase from the
Company the aggregate number of shares of Common Stock set forth opposite their
respective names below:

<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
---------------------------------------------------------------------- ---------
<S> <C>
Allen & Company Incorporated..........................................
Cowen & Company.......................................................

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

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase the shares of Common Stock offered hereby are subject
to approval of certain legal matters by their counsel and to certain other
conditions. If any of the shares of Common stock are purchased by the
Underwriters pursuant to the Underwriting Agreement, the Underwriters are
obligated to purchase all such shares, other than those covered by the
overallotment option described below.

The Underwriters propose initially to offer the shares to the public at the
public offering price set forth on the cover page of this Prospectus. The
Underwriters may allow a selling concession not in excess of per share to
certain dealers. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to other dealers. The public
offering price and concessions may be changed by the Representatives after the
initial public offering.

Certain stockholders of the Company have granted to the Underwriters an
option, expiring 30 days after the date of the Underwriting Agreement, to
purchase up to an additional 345,000 shares of Common Stock at the public
offering price, less underwriting discounts and commissions, all as set forth on
the cover page of this Prospectus. The Underwriters may exercise the option only
to cover over-allotments, if any, in the sale of the shares of Common Stock in
the Offering. To the extent that the Underwriters exercise their option, each
Underwriter will be committed, subject to certain conditions, to purchase a
number of such additional shares proportionate to such Underwriter's initial
commitment.

The Company and its directors, officers and stockholders have agreed to
deliver to the Representatives prior to the date of this Prospectus lock-up
agreements under which they agree not to, directly or indirectly offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of Common Stock or any securities
exchangeable or exercisable for or convertible into its Common Stock, whether
now owned or hereafter acquired or with respect to which the Company and any
such director, officer or stockholder has or hereafter acquires the power of
disposition, or participate in any registration statement under the Securities
Act with respect to any of the foregoing or enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock for a
period of 180 days after the date of this Prospectus, without the prior written
consent of Allen & Company Incorporated on behalf of the Underwriters. Allen &
Company Incorporated may, at its sole discretion and at any time without notice,
release all or any portion of the shares subject to such lock-up agreements. See
"Shares Eligible for Future Sale."

At the request of the Company, the Underwriters have reserved, pursuant to
a reserved share program, up to 5% of the shares of Common Stock offered hereby
for sale at the initial public offering price to certain persons associated
with, or designated by, the Company. The number of shares available for sale to
the general public will be reduced to the extent such individuals purchase such
reserved shares. Any reserved shares not so purchased will be released for sale
by the Underwriters to the general public no later than the closing date of

44
<PAGE> 47

the Offering (which is expected to be four business days after the date of this
Prospectus) on the same terms as the other shares offered hereby.

In the Underwriting Agreement, the Company and the Underwriters have agreed
to indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933. The Company has agreed to reimburse the
Underwriters, in an amount not to exceed $150,000, for their out of pocket
expenses incurred in connection with the Offering.

The Representatives have informed the Company that they do not intend to
confirm sales to accounts over which they exercise discretionary authority.

Prior to the Offering there has been no public market for the Common Stock.
The initial public offering price was determined by negotiation between the
Company and the Representatives. Among the factors considered in determining
such public offering price were the nature of the Company's business, its
history and present state of development, recent financial operating
information, prospects and management abilities, the general conditions of the
securities markets at the time of the Offering and other factors deemed
relevant.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Stradling, Yocca, Carlson & Rauth, a Professional Corporation,
Newport Beach, California. Certain legal matters in connection with this
Offering will be passed upon for the Underwriters by Werbel & Carnelutti, a
professional corporation, New York, New York.

EXPERTS

The Financial Statements of the Company as of December 31, 1995 and 1996
and for each of the years in the three year period ended December 31, 1996 and
the related financial statement schedule included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein, and are included in reliance upon the reports given
upon their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and to the exhibits and schedules filed therewith. A copy
of the Registration Statement may be inspected without charge at the public
reference facilities of the Commission located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
7 World Trade Center, Suite 1300, New York, New York 10048, and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any part of the
Registration Statement may be obtained at the prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 and its public reference facilities in New York, New York and Chicago,
Illinois, upon the payment of the fees prescribed by the Commission. The
Registration Statement is also available through the Commission's Website on the
World Wide Web at http://www.sec.gov.

Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified by such reference.

45
<PAGE> 48

VISION SOLUTIONS, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Balance Sheets as of December 31, 1995 and 1996....................................... F-3
Statements of Operations for the Three Years Ended December 31,1996................... F-4
Statements of Stockholders' Equity for the Three Years Ended December 31, 1996........ F-5
Statements of Cash Flows for the Three Years Ended December 31, 1996.................. F-6
Notes to Financial Statements......................................................... F-7
</TABLE>

F-1
<PAGE> 49

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Vision Solutions, Inc.:

We have audited the accompanying balance sheets of Vision Solutions, Inc.
(the "Company") as of December 31, 1995 and 1996, and the related statements of
operations, stockholders' equity and cash flows for the three years ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1996, and the results of its operations and its cash flows for the three years
ended December 31, 1996 in conformity with generally accepted accounting
principles.

Costa Mesa, California
February 10, 1997 (except for Note 9 for which the date is March 12, 1997 and
paragraph 1 of Note 1 and paragraph 5 of Note 7 as to which the date is
March , 1997)

The accompanying financial statements include the effects of a stock
exchange in connection with the reincorporation in the State of Delaware
approved by the Company's Board of Directors on March 12, 1997, anticipated to
be effective prior to the closing of this offering. The above opinion is in the
form which will be signed by Deloitte & Touche LLP upon consummation of the
stock exchange and reincorporation in the State of Delaware which is described
in Note 1 of the notes to the financial statements and assuming that from
February 10, 1997 to the date of such stock exchange and reincorporation, no
other events have occurred that would affect the accompanying financial
statements and notes thereto.

Deloitte & Touche LLP

Costa Mesa, California
March 13, 1997

F-2
<PAGE> 50

VISION SOLUTIONS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
---------- ----------
<S> <C> <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents (Note 1).................................... $ 88,300 $ 704,500
Short term investments (Note 1)....................................... -- 992,300
Accounts receivable, less allowance for doubtful accounts of $223,800
and $230,400 in 1995 and 1996, respectively (Note 4)................ 1,546,900 3,459,400
Prepaid expenses and other current assets............................. 146,500 376,800
---------- ----------
Total current assets........................................ 1,781,700 5,533,000
Property and equipment, net (Notes 1, 2 and 5)........................ 333,700 1,106,100
Capitalized software, net (Note 1).................................... 194,400 729,800
Other assets.......................................................... 25,500 74,200
---------- ----------
Total assets................................................ $2,335,300 $7,443,100
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable...................................................... $ 280,900 $1,326,100
Accrued liabilities (Note 6).......................................... 849,000 1,167,300
Deferred revenue (Note 1)............................................. 725,100 1,093,000
Current portion of capital lease obligations (Note 5)................. 21,300 49,000
Line of credit (Note 4)............................................... 247,100 616,000
Deferred income taxes (Note 8)........................................ -- 76,500
---------- ----------
Total current liabilities................................... 2,123,400 4,327,900
Capital lease obligations, net of current portion (Note 5)............ 130,300 154,300
Deferred income taxes (Note 8)........................................ -- 235,700

Commitments and contingencies (Notes 5 and 6)......................... -- --

STOCKHOLDERS' EQUITY (Notes 1, 7 and 9):
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none
issued and outstanding.............................................. -- --
Common stock, $0.001 par value; 30,000,000 shares authorized;
5,991,990 and 6,553,710 shares issued and outstanding in 1995 and
1996, respectively.................................................. 6,000 6,600
Additional paid-in capital............................................ 304,700 2,724,200
Retained earnings..................................................... 71,600 222,800
Notes receivable from sale of common stock............................ (300,700) (228,400)
---------- ----------
Total stockholders' equity.................................. 81,600 2,725,200
---------- ----------
Total liabilities and stockholders' equity.................. $2,335,300 $7,443,100
========== ==========
</TABLE>

See accompanying notes to Financial Statements.

F-3
<PAGE> 51

VISION SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Revenue (Note 1):
License fees......................................... $ 961,500 $3,057,800 $7,842,000
Service and support revenue.......................... 123,000 354,700 1,405,500
IBM partner revenue.................................. -- 272,700 623,600
Consulting and other revenue......................... 976,500 794,400 309,300
--------- --------- ---------
Total revenue................................ 2,061,000 4,479,600 10,180,400
--------- --------- ---------

Cost of revenue:
Cost of license fees................................. 600 1,100 65,300
Cost of service and support.......................... 126,500 521,700 1,025,100
Cost of consulting and other revenue................. 834,000 690,000 285,700
--------- --------- ---------
Total cost of revenue...................... 961,100 1,212,800 1,376,100
--------- --------- ---------
Gross profit........................................... 1,099,900 3,266,800 8,804,300

Operating expenses (Notes 5 and 6):
Sales and marketing.................................. 467,300 1,477,600 4,736,000
Research and development............................. 109,100 137,100 587,200
General and administrative........................... 564,900 1,526,900 3,055,100
--------- --------- ---------
Total operating expenses..................... 1,141,300 3,141,600 8,378,300
--------- --------- ---------
Income (loss) from operations.......................... (41,400) 125,200 426,000
Other income (expense), net............................ (3,400) 6,800 28,800
--------- --------- ---------
Income (loss) before income taxes...................... (44,800) 132,000 454,800
Provision for income taxes (Note 8).................... 800 2,000 313,000
--------- --------- ---------
Net income (loss)...................................... $ (45,600) $ 130,000 $ 141,800
========= ========= =========

Pro forma (unaudited):
Historical income before income taxes................ $ 454,800
Pro forma income taxes............................... 212,100
---------
Pro forma net income................................... $ 242,700
=========
Pro forma net income per share......................... $ 0.04
=========
Weighted average common shares......................... 6,302,500
=========
</TABLE>

See accompanying notes to Financial Statements.

F-4
<PAGE> 52

VISION SOLUTIONS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
NOTES
RECEIVABLE
FROM
COMMON STOCK RETAINED SALE OF
------------------ ADDITIONAL EARNINGS COMMON
SHARES AMOUNT PAID-IN CAPITAL (DEFICIT) STOCK TOTAL
--------- ------ --------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994................ 4,650,000 $4,700 $ 5,300 $ (12,800) $ -- $ (2,800)
Net loss................................ -- -- -- (45,600) -- (45,600)
--------- ------ ---------- -------- --------- ----------
BALANCE, December 31, 1994.............. 4,650,000 4,700 5,300 (58,400) -- (48,400)
Issuance of common stock for notes
receivable (Note 7)................... 1,341,990 1,300 299,400 -- (300,700) --
Net income.............................. -- -- -- 130,000 -- 130,000
--------- ------ ---------- -------- --------- ----------
BALANCE, December 31, 1995.............. 5,991,990 6,000 304,700 71,600 (300,700) 81,600
Issuance of common stock (Note 7)....... 557,070 600 2,445,100 2,445,700
Shareholder distribution................ -- -- -- (37,000) -- (37,000)
Reclassification of retained earnings
(Note 1).............................. -- -- (46,400) 46,400 -- --
Issuance of common stock for note
receivable (Note 7)................... 4,650 -- 20,800 -- (20,800) --
Payments on notes receivable from sale
of common stock (Note 7).............. -- -- -- -- 93,100 93,100
Net income.............................. -- -- -- 141,800 -- 141,800
--------- ------ ---------- -------- --------- ----------
BALANCE, December 31, 1996.............. 6,553,710 $6,600 $ 2,724,200 $ 222,800 $ (228,400) $2,725,200
========= ====== ========== ======== ========= ==========
</TABLE>

See accompanying notes to Financial Statements.

F-5
<PAGE> 53

VISION SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1994 1995 1996
--------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................ $ (45,600) $ 130,000 $ 141,800
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.............................. 7,800 15,800 254,000
Provision for losses on accounts receivable................ 37,300 186,500 6,600
Loss on disposal of asset.................................. -- 11,900 900
Deferred taxes............................................. -- -- 312,200
Changes in operating assets and liabilities:
Accounts receivable...................................... (116,900) (1,366,400) (1,919,100)
Prepaid expenses and other assets........................ (23,300) (133,900) (230,300)
Other assets............................................. -- (12,600) (48,700)
Accounts payable......................................... 146,600 84,000 1,045,200
Accrued liabilities...................................... (73,300) 627,800 318,300
Deferred revenue......................................... 92,200 623,200 367,900
--------- ----------- -----------
Net cash provided by operating activities........... 24,800 166,300 248,800
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property........................................ (20,800) (177,300) (904,900)
Software development costs................................... (21,700) (172,700) (573,600)
Purchase of marketable securities............................ -- -- (1,710,800)
Proceeds from maturity of marketable securities.............. -- -- 750,000
Amortization of discount on marketable securities............ -- -- (31,500)
--------- ----------- -----------
Net cash used in investing activities............... (42,500) (350,000) (2,470,800)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit.............................. -- 694,900 1,664,500
Payments on line of credit................................... -- (447,800) (1,295,600)
Payments on capital lease obligations........................ -- (6,800) (32,500)
Issuance of common stock..................................... -- -- 2,445,700
Reduction of notes receivable from sale of common stock...... -- -- 93,100
Shareholder distributions.................................... -- -- (37,000)
--------- ----------- -----------
Net cash provided by financing activities........... -- 240,300 2,838,200
--------- ----------- -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......... (17,700) 56,600 616,200
CASH AND CASH EQUIVALENTS, beginning of year................. 49,400 31,700 88,300
--------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year....................... $ 31,700 $ 88,300 $ 704,500
========= =========== ===========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION -- Cash
paid for:
Interest paid....................................... $ 3,400 $ 40,500 $ 56,800
========= =========== ===========
Income taxes paid................................... $ 800 $ 800 $ 800
========= =========== ===========
</TABLE>

NON-CASH TRANSACTIONS:

The Company financed $158,400 and $84,200 of computer equipment and furniture
purchases in 1995 and 1996, respectively, through capital leases with lending
institutions.

In 1995, the Company issued 1,341,990 shares of common stock to certain officers
in exchange for the issuance of $300,700 of notes receivable.

In 1996, the Company issued 4,650 shares of common stock to an employee in
exchange for the issuance of $20,800 of notes receivable.

See accompanying notes to Financial Statements.

F-6
<PAGE> 54

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996

1. GENERAL SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND MANAGEMENT'S PLANS

Nature of Operations -- Vision Solutions, Inc. (the "Company") (formerly
Midrange Information Systems, Inc.) was incorporated on December 13, 1993 in the
State of California. In connection with its proposed initial public offering,
the Company reincorporated in the State of Delaware and, as part of that
reincorporation, exchanged each share of outstanding Common Stock for 465 shares
of new Common Stock. All share, per share and stock option information included
in the accompanying financial statements have been restated to reflect the stock
exchange and reincorporation for all periods presented.

The Company develops, markets, implements and supports software that
enables the continuous availability of mission critical applications and data on
midrange computer platforms. The Company's comprehensive HSA Solution, Vision
Suite, which is currently available for IBM AS/400 computers, utilizes the
Company's proprietary replication and data transportation technology to provide
all of the required components of an effective HSA solution. Vision Suite
enables continuous availability of midrange computer systems and networks and
protection of all data 24 hours per day, seven days per week. The Company's
Vision Suite also serves as the foundation to the Company's Tiered Network
Technology architecture which enables the computers clustering of AS/400s to
deliver the scalability, availability and reliability of mainframe computers at
a fraction of the cost. The Company has extended the utility of its core data
replication and transportation technology to include Internet isolation and data
protection, data transportation for data warehouses and single system data
protection. In addition, the Company is currently developing its HSA software to
accommodate the Windows NT and UNIX platforms.

The Company's products and services are marketed and sold in the United
States through the Company's direct sales force and a network of business
partners and distributors, including IBM. The Company's international sales,
which comprised 22.8% of total revenue in 1996, are facilitated through a
network of business partners and distributors, which also include IBM. Revenue
derived from services performed outside the United States were 5.4%, 18.6% and
22.8% of the Company's total revenue in 1994, 1995 and 1996, respectively.
Revenue from one customer was 19.0% and 19.5% of total revenue for 1995 and
1996, respectively. No customer accounted for more than 10% of total revenue in
1994. The Company operates in the high-technology sector which is characterized
by rapid technological advancement and change. Management does not believe there
are any concentrations in any geographical region or industry sector.

Cash and Cash Equivalents -- Cash and cash equivalents represent
highly-liquid assets with original maturities of less than 90 days.

Investments -- The Company accounts for investments in accordance with
Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for
Certain Investments in Debt and Equity Securities. The Company's investments
consist of government debt securities with maturities of less than one year.
Investments purchased with an original maturity of three months or less are
classified as cash equivalents. On December 31, 1996, the Company classified all
of its investments as held-to-maturity. Held-to-maturity securities are stated
at amortized cost, adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization, as well as any interest on the
securities, was included in other income. As of December 31, 1996, unrealized
holding gains were immaterial.

Property and Equipment -- Property and equipment consists primarily of
furniture and computer equipment and is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of the assets, ranging from
three to seven years. Leasehold improvements are amortized over the term of the
lease or the estimated useful life of the improvement, whichever is shorter.
Repairs and maintenance costs are expensed as incurred.

F-7
<PAGE> 55

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes -- Effective June 27, 1996, the Company revoked its election
to be taxed as a Subchapter S corporation for federal and state tax purposes. In
connection with this election, the Company reclassified its retained deficit at
June 27, 1996 of $46,400 to additional paid-in capital. For all periods prior to
June 27, 1996, the Company elected to be treated as a Subchapter S corporation
for both federal and state taxation purposes. The Company accounts for income
taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Deferred
taxes on income result from temporary differences between the reporting of
income for financial statements and tax reporting purposes (Note 8).

Revenue Recognition:

The Company recognizes revenue in accordance with Statement of Position
91-1, Software Revenue Recognition, as follows:

- License Fees -- Revenue from software license fees is recognized upon
execution of a license agreement and delivery of product provided that
all significant contingencies have been removed and collection of the
related receivable is deemed probable.

- Service and Support -- Revenue from post-contract customer support is
recognized on the straight-line basis over the period the customer
support services are provided, generally twelve months. Consulting and
training revenue is recognized as services are performed.

- IBM Partner Revenue -- The Company recognizes commission revenue when
collectibility of the related receivable is deemed probable. Commissions
are remitted to the Company based upon IBM-related hardware sales in
accordance with the agreement between IBM and the Company.

- Consulting and Other -- Revenue from consulting and other includes
revenue from consulting engagements and from the sale of computer
hardware. Consulting revenue is recognized as services are performed and
hardware revenue is recognized when the hardware is delivered.

Capitalized Software -- Costs incurred in the research and development of
new software products are expensed as incurred until technological feasibility
has been established. Upon achieving technological feasibility, such costs are
capitalized in accordance with SFAS No. 86, Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed. Amortization is provided on a
straight-line basis over three years which is the estimated useful life of the
products. The Company has determined that based on future revenue projections
such costs were recoverable at December 31, 1996. Due to rapid technological
changes in software development, the estimated useful life of the products or
the anticipated future gross revenues, or both, may materially differ from
actual results.

Long-Lived Assets -- The Company accounts for the impairment and
disposition of long-lived assets in accordance with SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
In accordance with SFAS No. 121, long-lived assets to be held are reviewed for
events or changes in circumstances which indicate that their carrying value may
not be recoverable.

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 revenues and expenses
during the reporting years. Actual results could differ from those estimates.

Fair Value of Financial Instruments -- The recorded amounts of assets and
liabilities at December 31, 1995 and 1996 approximate fair value in accordance
with SFAS No. 107, Disclosures About Fair Value of Financial Instruments.

F-8
<PAGE> 56

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Concentration of Credit Risk -- The Company sells its products primarily to
large commercial companies and collateral is generally not required.

Reclassifications -- Certain amounts as previously reported have been
reclassified to conform to the 1996 presentation.

Pro Forma Income Statement Information

Income Taxes -- During fiscal 1996, the Company changed its status from a
Subchapter S corporation to a C corporation. The unaudited amounts shown for pro
forma income taxes reflects, at the assumed effective tax rate, what such income
tax amounts would have been if the Company had been a C corporation for all of
fiscal 1996.

Pro Forma Net Income Per Share -- Pro forma net income per share is
computed based upon the weighted average number of shares of Common Stock
outstanding and, in accordance with Staff Accounting Bulletin Topic 4D, the
dilutive effect of options to purchase shares of Common Stock issued within one
year of the initial filing of the Company's S-1 Registration Statement as if
they were outstanding for all of fiscal 1996 (Note 9).

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
1995 1996
-------- ----------
<S> <C> <C>
Computer equipment................................... $279,500 $ 957,200
Furniture and fixtures............................... 73,200 314,500
Leasehold improvements............................... 66,600
-------- ----------
352,700 1,338,300
Less accumulated depreciation and amortization....... (19,000) (232,200)
-------- ----------
Property and equipment, net.......................... $333,700 $1,106,100
======== ==========
</TABLE>

3. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31:

<TABLE>
<CAPTION>
1995 1996
-------- ----------
<S> <C> <C>
Accrued compensation and related expenses............ $671,700 $1,141,200
Other liabilities.................................... 177,300 26,100
-------- ----------
$849,000 $1,167,300
======== ==========
</TABLE>

4. LINE OF CREDIT

In July 1995, the Company entered into a $250,000 line of credit agreement
which expired on October 30, 1996; the principal was due on demand. At December
31, 1995, the Company had $49,000 of restricted cash under this line of credit
arrangement which is included in cash and cash equivalents.

In December 1996, the Company entered into a $1,500,000 line of credit
agreement, expiring in December 1997. Borrowings are collateralized by
substantially all of the assets of the Company. Under the terms of the
agreement, the Company may borrow the lesser of $1,500,000 or 80% of eligible
accounts receivable as defined in the agreement. Interest is payable monthly at
the bank's prime rate plus .75% (9.0% at December 31, 1996). The agreement also
contains provisions which allow the Company to borrow up to

F-9
<PAGE> 57

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

$250,000 for irrevocable letters of credit. Any such letters of credit reduce
the availability of borrowings under the related agreement. At December 31,
1996, the Company had no letters of credit outstanding.

The bank agreement requires the Company to maintain certain financial
ratios and restricts the payment of dividends on Common Stock without the bank's
consent. The Company was in compliance with these financial ratios at December
31, 1996. The agreement also contains provisions which allow the Company to
convert up to $500,000 of the outstanding balance to a 36-month term loan
subject to certain restrictions. At December 31, 1996, the Company had not
utilized the conversion feature.

5. LEASE COMMITMENTS

Capital lease obligations are recorded at the present value of future
minimum lease payments. Assets financed under capital leases included in
property and equipment are as follows at December 31, 1996:

<TABLE>
<S> <C>
Furniture and fixtures............................................ $159,000
Computer equipment................................................ 77,000
Less accumulated depreciation and amortization.................... (41,000)
--------
$195,000
========
</TABLE>

Depreciation of property financed under capital leases amounted to $39,500
for the year ended December 31, 1996.

Future minimum lease payments under capital leases and the present value of
future minimum lease payments as of December 31, 1996 are as follows:

<TABLE>
<S> <C>
1997.............................................................. $ 74,300
1998.............................................................. 74,200
1999.............................................................. 61,000
2000.............................................................. 50,200
--------
Total future minimum lease payments............................... 259,700
Less amount representing interest................................. (56,400)
--------
Present value of future minimum lease payments.................... 203,300
Less current portion.............................................. (49,000)
--------
$154,300
========
</TABLE>

The Company and a related party (Note 6) jointly lease their premises under
an operating lease expiring June 30, 1998. The related party occupies
approximately 10% of the premises and contributes its proportionate share of the
lease expense and other shared expenses totaling approximately $0, $3,700 and
$43,000 for the years ended December 31, 1994, 1995 and 1996, respectively. The
facility lease provides the Company with the option to renew its lease for an
additional five years. The Company subleases its previous facilities to third
parties under agreements expiring July 31, 1997, under which the Company will
receive $25,200 in 1997. Additionally, the Company leases office space and
equipment under operating leases which expire on various dates through the year
2000.

F-10
<PAGE> 58

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Future annual minimum lease payments, excluding sublease income, under
noncancelable operating lease arrangements at December 31, 1996 are as follows:

Rental expense under operating leases was approximately $40,000, $94,000
and $307,000 for the years ended December 31, 1994, 1995 and 1996, respectively.

6. COMMITMENTS AND CONTINGENCIES

During 1995 and 1996, five officers entered into employment agreements with
the Company which expire in 1999 and provide for certain salaries and bonuses.
See Note 7 for purchase of Common Stock by two of these officers.

7. STOCKHOLDERS' EQUITY

On March 30, 1995, the Board of Directors authorized the sale of 1,341,990
shares of the Company's common stock to two officers in exchange for notes
receivable totaling $300,700, with interest at 7% per annum, to be paid in three
annual installments beginning June 30, 1996. In addition, the 1,341,990 shares
issued are held as collateral against payment of the notes. In the event of
termination of employment of the officers, the Company must repurchase the
shares at their fair value at the date of termination. The notes receivable are
classified as a reduction to stockholders' equity in the accompanying financial
statements.

On September 3, 1996, the Board of Directors authorized the issuance of
4,650 shares of the Company's Common Stock to an employee ("Employee") for
$20,800. The Employee issued a note receivable totaling $20,800 to the Company,
with interest at 7% per annum, to be paid in 48 semi-monthly installments
beginning February 28, 1997. In addition, the 4,650 shares issued are held as
collateral against payment of the note. In the event of termination of
employment of the Employee, the Company has the option but not the obligation to
purchase all or part of the shares from Employee equal to the fair market value
of the shares being repurchased. The note receivable is classified as a
reduction to stockholders' equity in the accompanying financial statements.

The Company's Board of Directors determined the purchase price for both
1995 and 1996 issuances, which in their opinion represented the estimated fair
value of the Company's Common Stock, based on the historical results of
operations and the underlying value of the Company's net assets. As a result, no
compensation expense was charged to operations as a result of the Common Stock
agreements.

In June and July 1996, the Company raised net cash proceeds of $2,445,700
pursuant to the sale of 545,910 shares of its Common Stock, under a private
placement agreement. The Company also issued 11,160 shares of Common Stock to
the private placement agent, with a fair value of $51,000, that were recorded as
additional costs of the offering. All of the shares issued are restricted and
have certain registration rights. The holders of such shares were also entitled
to receive additional shares of Common Stock in the event

F-11
<PAGE> 59

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

that the Company's total revenue for the year ended December 31, 1996 was less
than $10,072,500. If the Company has not registered the shares of Common Stock
issued in connection with this placement by May 1, 2000, the holders of the
shares shall have the right to "put" such shares to the Company at a price equal
to the original purchase price, plus interest at treasury bond (30-year) rates,
due June 1, 2000. Provided funds of the Company are legally available, the
Company will be obligated to repurchase from the holder such shares at an amount
equal to the holders purchase price plus interest, as defined.

In connection with the Company's reincorporation in the State of Delaware,
certain provisions of the Company's Certificate of Incorporation and Bylaws may
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of the Company.
Such provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock. The Company's
Certificate of Incorporation allows the Company to issue up to 5,000,000 shares
of currently undesignated Preferred Stock, to determine the powers, preferences
and rights and the qualifications, limitations or restrictions granted to or
imposed on any unissued series of that preferred stock, and to fix the number of
shares constituting any such series and the designation of such series, without
any vote or future action by the stockholders. The Preferred Stock could be
issued with voting, liquidation, dividend and other rights superior to the
rights of the common stock. The Certificate of Incorporation also eliminates the
ability of stockholders to call special meetings. The Company's bylaws require
advance notice to nominate a director or take certain other actions. Such
provisions may make it more difficult for stockholders to take certain corporate
actions and could have the effect of delaying or preventing a change in control
of the Company. In addition, the Company has not elected to be excluded from the
provisions of Section 203 of the Delaware General Corporation Law, which imposes
certain limitations on transactions between a corporation and "interested"
stockholders, as defined in such provisions.

8. INCOME TAXES

Prior to June 27, 1996, the Company elected to be treated as a Subchapter S
corporation under the provisions of the Internal Revenue Code and the applicable
state revenue code. Accordingly, the provisions for income taxes for the period
ended June 27, 1996 and the years ended December 31, 1994 and 1995 are computed
by applying the California franchise tax rate for Subchapter S corporations of
1.5%. Effective June 27, 1996, the Company converted to a C corporation and
became subject to regular federal and state income taxes on an ongoing basis. As
a result, the Company recorded $197,100 of deferred income tax liabilities at
June 27, 1996.

The provision for income taxes consists of the following for the years
ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.................................. $ -- $ -- $ --
State.................................... 800 2,000 800
---- ------ --------
800 2,000 $ 800
Deferred:
Federal.................................. 277,400
State.................................... 34,800
---- ------ --------
312,200
---- ------ --------
$800 $2,000 $313,000
==== ====== ========
</TABLE>

F-12
<PAGE> 60

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The reconciliation of income tax expense computed at federal statutory
rates to income tax expense for the year ended December 31, 1996 is as follows:

<TABLE>
<S> <C>
Tax at federal statutory rates.................................... $154,600
State income taxes, net........................................... 23,800
Recording of deferred income tax liabilities in connection with
the conversion to C corporation................................. 197,100
Subchapter S corporation earnings not subject to federal tax...... (87,600)
Other, net........................................................ 25,100
--------
$313,000
========
</TABLE>

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred taxes as of December 31, 1996 are as follows:

<TABLE>
<S> <C>
Deferred tax:
Cash to accrual adjustment..................................... $(103,900)
Other.......................................................... 27,300
---------
Net current deferred income taxes........................... (76,600)
Net operating loss.......................................... 80,400
Capitalized software........................................ (316,000)
---------
Net noncurrent deferred income taxes........................ (235,600)
---------
Total deferred tax liabilities................................... $(312,200)
=========
</TABLE>

9. SUBSEQUENT EVENTS

On January 2, 1997 and March 12, 1997, the Company's 1996 Incentive Stock
Option, Nonqualified Stock Option and Restricted Stock Purchase Plan (the "1996
Plan") was adopted by the Company's Board of Directors and stockholders,
respectively, effective as of January 2, 1997. The 1996 Plan covers an aggregate
of 861,645 shares of Common Stock. The 1996 Plan provides for the granting of
"incentive stock options," within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), nonstatutory options and
restricted stock grants to directors, officers, employees and consultants of the
Company, except that incentive stock options may not be granted to non-employee
directors or consultants. The purpose of the 1996 Plan is to provide
participants with incentives which will encourage them to acquire a proprietary
interest in, and continue to provide services to, the Company. The 1996 Plan is
administered by the Board of Directors, which has sole discretion and authority,
consistent with the provisions of the 1996 Plan, to determine which eligible
participants will receive options, the time when options will be granted, the
terms of options granted and the number of shares which will be subject to
options granted under the 1996 Plan. As of March 12, 1997, options to purchase
267,840 shares of Common Stock were outstanding under the plan at a weighted
average exercise price of $7.84 per share of which none is currently
exercisable.

On March 12, 1997, the Company adopted the Employee Stock Purchase Plan
(the "Purchase Plan"), to be effective upon the completion of the Offering,
covering an aggregate of 250,000 shares of Common Stock. The Purchase Plan,
which is intended to qualify as an "employee stock purchase plan" under Section
423 of the Internal Revenue Code, will be implemented by six-month offerings
with purchases occurring at six-month intervals commencing on the date of this
Prospectus. The Purchase Plan will be administered by the Board of Directors.
Employees will be eligible to participate if they are employed by the Company
for at least 30 hours per week and if they have been employed by the Company for
at least 180 days. The Purchase Plan permits eligible employees to purchase
Common Stock through payroll deductions, which may not exceed

F-13
<PAGE> 61

VISION SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

15% of an employee's compensation. The price of stock purchased under the
Purchase Plan will be 85% of the lower of the fair market value of the Common
Stock at the beginning of each six-month offering period or on the applicable
purchase date. Employees may end their participation in any offering period at
any time during such period, and participation ends automatically on termination
of employment. The Board may at any time amend or terminate the Purchase Plan,
except that no such amendment or termination may adversely affect options
previously granted under the Purchase Plan. There are no rights to purchase
outstanding under the Purchase Plan.

F-14
<PAGE> 62

[TEXT OF INSIDE BACK COVER.]

THE POWER TO BE PRODUCTIVE. With Vision Solutions, businesses can
completely automate back-up tasks without scheduling downtime. And, they can
eliminate "Save While Active" system slow-downs, which enables greater system
performance and more efficient operations. Because downtime is expensive, Vision
Solutions' products not only protect and transport data, they also make it
continuously available. Tiered Network Technology distributes information over
the network, while assuring system response, resiliency and capacity.

INNOVATION. Utilizing our core technology of replication and data
transportation, Vision Solutions has also devised new products for Internet
isolation and data protection, data transportation for data warehouses and
single system data protection.

IBM PREMIER BUSINESS PARTNER. Very few companies receive IBM's coveted
title of Premier Business Partner, the highest honor IBM bestows on allied
businesses. Out of more than 8,000 IBM Business Partners, only the top 1% in the
world receive the designation, and only after an exhaustive evaluation of
technological quality and demonstrated levels of superior customer satisfaction.
The Premier Business Partner title is the culmination of many accolades bestowed
upon Vision Solutions by IBM, including All Star status in the Partners in
Development program and the AS/400 Crystal Global Award for Competitive
Excellence.
<PAGE> 63

======================================================

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 INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Summary Financial Data................ 4
Risk Factors.......................... 5
Use of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Financial Data............... 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 23
Management............................ 34
Certain Transactions.................. 39
Principal Stockholders................ 40
Description of Capital Stock.......... 41
Shares Eligible for Future Sale....... 43
Underwriting.......................... 44
Legal Matters......................... 45
Experts............................... 45
Available Information................. 45
Index to Financial Statements......... F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

======================================================
======================================================
2,300,000 SHARES

[LOGO]

VISION SOLUTIONS, INC.

COMMON STOCK
--------------------

PROSPECTUS
--------------------
ALLEN & COMPANY
INCORPORATED

COWEN & COMPANY
, 1997
======================================================
<PAGE> 64

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of the Common Stock being registered hereunder. All of the amounts
shown are estimates except for the SEC registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
TO BE PAID BY
THE COMPANY
-------------
<S> <C>
SEC registration fee............................................ $ 9,619
NASD filing fee................................................. 3,674
Nasdaq National Market application fee.......................... *
Printing expenses............................................... *
Legal fees and expenses......................................... *
Accounting fees and expenses.................................... *
Blue sky fees and expenses...................................... *
Transfer agent and registrar fees............................... *
Directors and officers insurance premiums....................... *
Miscellaneous................................................... *
--------
Total................................................. $850,000
========
</TABLE>

- ---------------
* To be filed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

(a) As permitted by the Delaware General Corporation Law, the Amended and
Restated Certificate of Incorporation of the Company (Exhibit 3.2 hereto)
eliminates the liability of directors to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a directors, except to the
extent otherwise required by the Delaware General Corporation Law.

(b) The Amended and Restated Certificate of Incorporation provides that the
Company will indemnify each person who was or is made a party to any proceeding
by reason of the fact that such person is or was a director or officer of the
Company against all expense, liability and loss reasonably incurred or suffered
by such person in connection therewith to the fullest extent authorized by the
Delaware General Corporation Law. The Company's Amended and Restated Bylaws
(Exhibit 3.4 hereto) provide for a similar indemnity to directors and officers
of the Company to the fullest extent authorized by the Delaware General
Corporation Law.

(c) The Amended and Restated Certificate of Incorporation also gives the
Company the ability to enter into indemnification agreements with each of its
directors and officers. The Company has entered into indemnification agreements
with certain of its directors and officers (Exhibit 10.6 hereto), which provide
for the indemnification of such persons against any an all expenses, judgments,
fines, penalties and amounts paid in settlement, to the fullest extent permitted
by law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following is a summary of transactions by the Company during the last
three years preceding the date hereof involving sales of the Company's
securities that were not registered under the Securities Act:

(1) From time to time during the three years preceding the date
hereof, the Registrant issued incentive and nonqualified stock options to
purchase Common Stock pursuant to the Registrant's 1996 Incentive Stock
Plan (the "1996 Plan") to officers, directors and employees of the
Registrant. From inception through the fiscal year ended December 31, 1996,
no options to purchase Common Stock pursuant to the 1996 Plan were
exercised. Exemption from the registration provisions of the Act is
claimed, among other exemptions, with respect to the grant of options
referred to above, on the basis that

II-1
<PAGE> 65

the grant of options did not involve a "sale" of securities and, therefore,
registration thereof was not required.

(2) In June, 1996, the Registrant issued 545,910 shares of Common
Stock for an aggregate purchase price of $2,500,714 pursuant to a private
placement to "accredited investors." The foregoing transaction was
completed without registration under the Act in reliance upon Section 4(2)
of the Act for transactions not involving a public offering, among others,
on the basis that such transaction did not involve any public offering and
the purchasers were sophisticated with access to the kind of information
registration would provide. Broker commissions in the amount of $50,000 and
11,160 shares of Common Stock of the Company were paid in connection with
the foregoing transaction.

(3) In March 1995, the Company issued 143,685 shares of restricted
Common Stock to David E. Peterson, the Company's Chief Financial Officer,
in exchange for a promissory note in the amount of $39,220.71. The note,
bearing interest at the rate of 7% per annum, is secured by the restricted
Common Stock and calls for Mr. Peterson to pay the balance of the note by
making three annual payments of principal and interest beginning June 30,
1996. The foregoing transaction was completed without registration under
the Act in reliance upon Section 4(2) of the Act for transactions not
involving a public offering, among others, on the basis that such
transaction did not involve any public offering and the purchaser was
sophisticated with access to the kind of information registration would
provide.

(4) In March 1995, the Company issued 1,198,305 shares of restricted
Common Stock to Robert J. Zwerling, the Company's Chief Executive Officer,
in exchange for a promissory note in the amount of $261,471.40. The note,
bearing interest at the rate of 7% per annum, is secured by the restricted
Common Stock and calls for Mr. Zwerling to pay the balance of the note by
making three annual payments of principal and interest beginning June 30,
1996. The foregoing transaction was completed without registration under
the Act in reliance upon Section 4(2) of the Act for transactions not
involving a public offering, among others, on the basis that such
transaction did not involve any public offering and the purchaser was
sophisticated with access to the kind of information registration would
provide.

(5) In October 1996, the Company issued 4,650 shares of restricted
Common stock to Irving Meisner, the Company's Vice President of Sales, in
exchange for a promissory note in the amount of $20,800. The note, bearing
interest at the rate of 7% per annum, is secured by the restricted Common
Stock and calls for Mr. Meisner to pay the balance of the note by making 48
semi-monthly payments of principal and interest beginning February 28,
1997. The foregoing transaction was completed without registration under
the Act in reliance upon Section 4(2) of the Act for transactions not
involving a public offering, among others, on the basis that such
transaction did not involve any public offering and the purchaser was
sophisticated with access to the kind of information registration would
provide.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ----------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Incorporation of the Company.
3.2 -- Form of Amended and Restated Certificate of Incorporation of the Company.*
3.3 -- Bylaws of the Company.
3.4 -- Form of Amended and Restated Bylaws of the Company.*
5.1 -- Opinion of Stradling, Yocca, Carlson & Rauth, a professional corporation.*
10.1 -- Vision Solutions, Inc. 1996 Stock Incentive Plan (the "1996 Plan").
10.2 -- Form of Stock Option Agreement for the 1996 Plan.
10.3 -- Form of Nonqualified Stock Option Agreement for the 1996 Plan.
</TABLE>

II-2
<PAGE> 66

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ----------------------------------------------------------------------------------
<C> <C> <S>
10.4 -- Vision Solutions, Inc. Employee Stock Purchase Plan.
10.5 -- Loan and Security Agreement and schedule thereto, dated December 10, 1996, between
the Company and Silicon Valley Bank.
10.6 -- Form of Indemnification Agreement.*
10.7 -- Sublease, dated August 7, 1996, between the Company and Red Robin International,
Incorporated.
10.8 -- Agreement of Sublease, dated November 8, 1995, among the Company, EPC
International and Citicorp North America, Inc.
10.9 -- Office Space Lease, dated September 23, 1996, between the Company and The Irvine
Company.
10.10 -- Subscription Agreements, dated June 24, 1996, between the Company and each of
certain stockholders.
10.11 -- Employment Agreement, dated October 1, 1996, between the Company and Christian F.
Turner.*
10.12 -- Employment Agreement, dated October 1, 1996, between the Company and David B.
McLelland.*
10.13 -- Employment Agreement, dated March 30, 1995, among the Company and Robert J.
Zwerling, and Amendment thereto dated October 1, 1996.*
10.14 -- Employment Agreement, dated March 30, 1995, between the Company and David E.
Peterson, and Amendment thereto dated October 1, 1996.*
10.15 -- Employment Agreement dated October 1, 1996, between the Company and Irving
Meisner.*
11.1 -- Statement regarding computation of pro forma net income per share.
23.1 -- Consent of Stradling, Yocca, Carlson & Rauth, a professional corporation (see
Exhibit 5.1).*
23.2 -- Consent of Deloitte & Touche LLP.
24.1 -- Power of Attorney (see page II-5).
27.1 -- Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

(b) Financial Statement Schedules

<TABLE>
<CAPTION>
NUMBER
------------------------------------------------------------------------------------
<S> <C>
Schedule II -- Valuation and Qualifying Accounts
</TABLE>

All other schedules are omitted because they are not required under the
related instructions, are inapplicable, or the information is included in the
financial statements or the notes thereto.

ITEM 17. UNDERTAKINGS

The Company 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 Company pursuant
to the foregoing provisions or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is

II-3
<PAGE> 67

asserted by such director, officer or controlling person in connection with the
securities being registered, the Company 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 of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

The Company hereby undertakes that:

(1) 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 Company 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.

(2) For the purpose of determining any liability under the 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> 68

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 Irvine,
State of California, on the 14th day of March, 1997.

VISION SOLUTIONS, INC.

By: /s/ ROBERT J. ZWERLING
------------------------------------
Robert J. Zwerling
President and Chief Executive
Officer

POWER OF ATTORNEY

We, the undersigned directors and officers of Vision Solutions, Inc., do
hereby constitute and appoint Robert J. Zwerling and David E. Peterson or either
of them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) to this
Registration Statement, or any related registration statement that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
as amended; and we do hereby ratify and confirm all that the said attorneys and
agents, or either of them, shall 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 below by the following persons in
the capacities and on the dates indicated.

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

/s/ ROBERT J. ZWERLING President, Chief Executive March 14, 1997
- ------------------------------------------ Officer and Director (Principal
Robert J. Zwerling Executive Officer)

/s/ DAVID E. PETERSON Vice President of Finance, Chief March 14, 1997
- ------------------------------------------ Financial Officer and Director
David E. Peterson (Principal Financial and
Principal Accounting Officer)

/s/ CHRISTIAN F. TURNER Chief Technology Officer and March 14, 1997
- ------------------------------------------ Director
Christian F. Turner

/s/ DAVID B. MCLELLAND Executive Director of Product March 14, 1997
- ------------------------------------------ Engineering and Director
David B. McLelland

/s/ HOWARD BUFFETT Director March 14, 1997
- ------------------------------------------
Howard Buffett

/s/ JONATHAN LAZARUS Director March 14, 1997
- ------------------------------------------
Jonathan Lazarus
</TABLE>

II-5
<PAGE> 69

Schedule II

Valuation and Qualifying Accounts
(in thousands)

<TABLE>
<CAPTION>
BEGINNING ENDING
BALANCE ADDITIONS DEDUCTIONS BALANCE
--------- --------- ---------- -------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts -- December 31, 1994..... $ -- 37 -- $ 37
==== === = ====
Allowance for doubtful accounts -- December 31, 1995..... $ 37 187 -- $ 224
==== === = ====
Allowance for doubtful accounts -- December 31, 1996..... $ 224 6 -- $ 230
==== === = ====
</TABLE>

II-6
<PAGE> 70

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- --------------------------------------------------------------------- ------------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement.......................................
3.1 -- Certificate of Incorporation of the Company..........................
3.2 -- .Form of Amended and Restated Certificate of Incorporation of the
Company*.............................................................
3.3 -- Bylaws of the Company................................................
3.4 -- Form of Amended and Restated Bylaws*.................................
5.1 -- Opinion of Stradling, Yocca, Carlson & Rauth, a professional
corporation*.........................................................
10.1 -- Vision Solutions, Inc. 1996 Stock Incentive Plan (the "1996 Plan")...
10.2 -- Form of Stock Option Agreement for the 1996 Plan.....................
10.3 -- Form of Nonqualified Stock Option Agreement for the 1996 Plan........
10.4 -- Vision Solutions, Inc. Employee Stock Purchase Plan*.................
10.5 -- Loan and Security Agreement and schedule thereto, dated December 10,
1996, between the Company and Silicon Valley Bank....................
10.6 -- Form of Indemnification Agreement*...................................
10.7 -- Sublease, dated August 7, 1996, between the Company and Red Robin
International, Incorporated..........................................
10.8 -- Agreement of Sublease, dated November 8, 1995, among the Company, EPC
International and Citicorp North America, Inc. ......................
10.9 -- Office Space Lease, dated September 23, 1996, between the Company and
The Irvine Company...................................................
10.10 -- Subscription Agreements, dated June 24, 1996, between the Company and
each of certain stockholders.........................................
10.11 -- Employment Agreement, dated October 1, 1996, between the Company and
Christian F. Turner*.................................................
10.12 -- Employment Agreement, dated October 1, 1996, between the Company and
David B. McLelland*..................................................
10.13 -- Employment Agreement, dated March 30, 1995, among the Company and
Robert J. Zwerling, and Amendment thereto dated October 1, 1996*.....
10.14 -- Employment Agreement, dated March 30, 1995, between the Company and
David E. Peterson, and Amendment thereto dated October 1, 1996*......
10.15 -- Employment Agreement dated October 1, 1996, between the Company and
Irving Meisner*......................................................
11.1 -- Statement regarding computation of pro forma net income per share....
23.1 -- Consent of Stradling, Yocca, Carlson & Rauth, a professional
corporation (see Exhibit 5.1)*.......................................
23.2 -- Consent of Deloitte & Touche LLP.....................................
24.1 -- Power of Attorney (see page II-5)....................................
27.1 -- Financial Data Schedule..............................................
</TABLE>

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

* To be filed by amendment.

<PAGE> 1
EXHIBIT 1.1

W&C DRAFT OF 3/12/97

===============================================================================

_____________ SHARES

VISION SOLUTIONS, INC.

COMMON STOCK

______________________________

UNDERWRITING AGREEMENT
SELECTED DEALER AGREEMENT

______________________________

_________________, 1997

===============================================================================
<PAGE> 2

_______________ SHARES

VISION SOLUTIONS, INC.

COMMON STOCK

___________________________

UNDERWRITING AGREEMENT

___________________________

______________, 1997

ALLEN & COMPANY INCORPORATED
COWEN & COMPANY
As Representatives of the Several
Underwriters
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022

Dear Sirs:

VISION SOLUTIONS, INC., a Delaware corporation (the
"Company"), and the selling stockholders, __________, (the "Selling
Stockholders") hereby confirm their agreement with the several Underwriters
named in schedule A hereto (the "Underwriters"), for which you are acting as
representatives (the "Representatives"), as follows:

1. DESCRIPTION OF SECURITIES. The Company has
authorized by appropriate corporate action and proposes to issue and sell to
the Underwriters up to ________ shares of its Common Stock, $.001 par value, as
further described in Section 3 hereof. The shares of Common Stock to be sold
to the Underwriters by the Company are herein referred to as the "Purchased
Shares". In addition, as further described in Section 3 hereof, the Selling
Stockholders are granting to the Underwriters an option to purchase up to
______ additional shares of the Company's Common Stock (the "Option Shares").
The Purchased Shares and Option Shares are herein collectively referred to as
the "Shares".
<PAGE> 3
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
COMPANY.

(a) The Company represents and warrants to and
agrees with each Underwriter that:

(i) A registration statement on Form S-1 (File No.
333-________) with respect to the Shares, including a preliminary form of
prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
under the Act, and has been filed with the Commission under the Act; such
amendment or amendments to such registration statement, copies of which have
heretofore been delivered to you, as may have been made prior to the date of
this Agreement have been so prepared and filed; and the Company has so prepared
and proposes so to file in a timely manner after the effective date of such
registration statement the final form of prospectus. Such registration
statement (including all exhibits thereto), as finally amended and revised as
of the time the Underwriters first offer the Shares for sale to the public
together with information, if any, which is permitted to be, and is,
subsequently filed pursuant to Rule 430A of the Rules and Regulations, is
herein referred to as the "Registration Statement". Such prospectus in the
form filed pursuant to Rule 424(b) of the Rules and Regulations, or, if no
final prospectus is filed with the Commission pursuant to Rule 424(b), in such
form as such final prospectus is included in the Registration Statement, is
herein referred to as the "Prospectus". Each preliminary form of prospectus is
herein referred to as a "Preliminary Prospectus".

(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time of filing of
each Preliminary Prospectus, such prospectus did not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
When the Registration Statement becomes effective and at all times subsequent
thereto up to and at each Closing Date (hereinafter defined) (i) the
Registration Statement and Prospectus and any amendments or supplements thereto
will contain as of their respective dates all material statements and
information which are required to be included therein in accordance with the
Act and Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and (ii) neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will include as of their respective dates any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not

2
<PAGE> 4
misleading; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon, and in conformity with, written information furnished to the
Company by any Underwriter through you specifically for use in the preparation
thereof.

(iii) Set forth on Schedule B hereto is the name of each
subsidiary of the Company which holds assets or conducts operations which are
material to the condition (financial or otherwise), results of operations,
business or prospects of the Company and each such subsidiary taken as a whole
and, unless otherwise indicated thereon, the Company holds all right, title and
interest in and to the entire equity interest in each such subsidiary. Except
as described in the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, neither
the Company, nor any entity which is either identified in the Prospectus as a
subsidiary of the Company or listed on Schedule B hereto (each individually a
"Subsidiary" and collectively the "Subsidiaries"), taken as a whole, has
incurred any direct or, to the best of the Company's knowledge, contingent
material liabilities or material obligations, or entered into any material
transactions or contracts not in the ordinary course of business, and there has
not been any change in its capital shares, options or warrants, nor any
material increase or decrease in the amount thereof outstanding or in any of
its long-term debt outstanding, except pursuant to the terms of the instruments
governing the same, or any material adverse change in the condition (financial
or otherwise), results of operations, business or prospects of the Company and
the Subsidiaries taken as a whole.

(iv) Except as set forth in the Prospectus, there is not
now pending or, to the knowledge of the Company, threatened, any action, suit
or proceeding to which the Company or any Subsidiary is a party before any
court or governmental agency or body which might result in any material adverse
change in the condition (financial or otherwise), results of operations,
business or prospects of the Company and the Subsidiaries taken as a whole, or
might materially and adversely affect the properties, assets or ability to do
business as contemplated in the Prospectus of the Company and the Subsidiaries
taken as a whole; and there are no contracts or documents required to be filed
as exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been filed as exhibits to the Registration
Statement.

(v) This Agreement has been duly authorized, executed and
delivered on behalf of the Company and constitutes a valid and binding
agreement of the Company, enforceable in accordance with its terms, except (1)
that such enforcement may be subject

3
<PAGE> 5
to bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights, (2) that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought and (3) as rights to indemnity or
contribution hereunder may be limited by federal or state securities laws; the
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or violation
of any term or provision of, or constitute a default under, any currently
existing statute, any indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which it or its property is bound, the charter or by-laws of the Company
or any Subsidiary or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or over their properties;
no consent, approval, authorization or order of any court or governmental
agency or body is required for the consummation by the Company of the
transactions on its part herein contemplated, except such as may be required
under the Act or as may be required under state or other securities or blue sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters; and neither the Company nor any of the Subsidiaries is now in
default, and no event has occurred which with the giving of notice or lapse of
time or both would be a default, under any contract, agreement, indenture,
mortgage or other undertaking to which such entity is a party and which is
material to the condition (financial or otherwise), results of operations,
business or prospects of the Company and the Subsidiaries taken as a whole.

(vi) Each of the Company and the Subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with full power and
authority, corporate or otherwise, to own its properties and conduct is
business as described and contemplated in the Registration Statement, and is
duly qualified to do business as a foreign corporation in good standing in all
other jurisdictions where its operations or ownership of property requires such
qualifications and where failure so to qualify would impair title to any
material properties of the Company which would have a material adverse effect
on the condition (financial or otherwise) results of operations, business or
prospects of the Company and the Subsidiaries, taken as a whole, or expose it
to liabilities material to the Company and the Subsidiaries taken as a whole in
such jurisdictions.

(vii) The Company has the authorized and outstanding
capital stock set forth in the Prospectus; the outstanding capital stock of the
Company conforms, and the Shares

4
<PAGE> 6
when issued and sold as herein contemplated will conform, in all material
respects, to all statements in relation thereto contained in the Registration
Statement and the Prospectus and all such stock has been duly authorized and
the outstanding capital stock has been and the Shares, when issued and
delivered against payment therefor as provided herein, will be validly issued,
fully-paid and nonassessable; except as stated in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to the
Shares and there are no outstanding rights, options or warrants to acquire any
securities of the Company; to the extent that any rights, options or warrants
to acquire any securities of the Company are outstanding, except as otherwise
set forth in the Prospectus, the issuance of the Shares as described in the
Prospectus will not result in an adjustment of the exercise price or number of
shares issuable upon the exercise in respect of any such rights, options or
warrants; and, except as otherwise set forth in the Prospectus, the Company
owns (directly or indirectly) under valid title the respective outstanding
shares of capital stock of the Subsidiaries, free and clear of any material
liens, encumbrances or claims.

(viii) Except as otherwise set forth in the Prospectus, to
the best of its knowledge, each of the Company and the Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
licenses, trademarks, service marks and trade names necessary to carry on its
business as presently conducted, and except as set forth in the Prospectus,
neither the Company nor any of the Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
patents, patent licenses, trademarks, service marks or trade names which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, could materially and adversely affect the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company and the
Subsidiaries taken as a whole.

(ix) Except as stated in the Prospectus, the Company holds in
good standing or has applied for all licenses, permits, authorizations,
franchises, consents and orders of all federal, state, local, and foreign
governmental bodies necessary to carry on its business as reflected or
contemplated in the Prospectus; except as stated in the Prospectus the Company
has good and marketable title to all personal property owned by it, in each
case free and clear of all liens, encumbrances and defects with such exceptions
as are not material to the Company and the Subsidiaries taken as a whole; and
the real property and personal property referred to in the Prospectus as held
under lease by the Company is held by it under valid, subsisting and
enforceable leases with only such exceptions as in the aggregate are not
material and do not materially interfere with the conduct of the business of
the Company and the Subsidiaries taken as a whole as contemplated by the
Prospectus.

5
<PAGE> 7
(x) To the best of its knowledge, the Company is
conducting and proposes to conduct its business so as to comply in all material
respects with all applicable federal, state, local and foreign governmental
statutes, rules and regulations; and except as set forth in the Prospectus,
neither the Company nor any Subsidiary is charged with, or, to the best of the
knowledge of the Company, is under investigation with respect to, any violation
of any of such statutes, rules or regulations or is the subject of any pending
or threatened proceeding by an governmental body or regulatory authority
relating to any such violation.

(xi) The Company and each of the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the business in which
they are engaged; and neither the Company nor any of the Subsidiaries 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 materially and adversely affect the business or financial condition
of the Company and the Subsidiaries taken as a whole, except as described or
contemplated in the Prospectus.

(xii) Deloitte & Touche LLP, which has examined and
expressed its opinion on certain of the financial statements of the Company
filed with the Commission as a part of the Registration Statement, are, to the
Company's best knowledge, independent accountants with respect to the Company
within the meaning of the Act and the Rules and Regulations; the financial
statements, together with the related notes, forming part of the Registration
Statement and Prospectus fairly present the financial condition of the Company
and its results of operations as of the dates and for the periods described in
such opinion in the Prospectus; and such financial statements have been
prepared in accordance with the requirements of the Commission.

(xiii) The Company and each of the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that transactions are executed in accordance with management's
general or specific authorizations and are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles.

(xiv) Except as stated in the Prospectus, the Company knows
of no outstanding claims for services, either in the nature of a finder's fee
or origination fee, with respect to the transactions contemplated hereby, and
the Company agrees to indemnify and hold the Underwriters harmless from any
such claim

6
<PAGE> 8
for any such services of such nature arising from the act of any person other
than any Underwriter.

(xv) Except for the Selling Stockholders, no person holds
a right to require or participate in the registration under the Act of the
Common Stock of the Company to be effected by the Registration Statement, which
right has not been effectively waived by the holder thereof as of the date
hereof.

(xvi) The Company has obtained from each of its officers,
directors and holders of shares of, or options to purchase shares of, the
Company's Common Stock an executed agreement that, except as otherwise
specifically allowed in such agreement, they will not, without the prior
written consent of Allen & Company Incorporated on behalf of the Underwriters,
sell, offer for sale, contract to sell or otherwise dispose of any shares of
the Company's Common Stock or any securities exercisable for or convertible
into its Common Stock for a period of 180 days from the date of the final
Prospectus.

(b) Each Selling Stockholder, severally and not
jointly, represents and warrants to, and agrees with, each Underwriter and the
Company that:

(i) All consents, approvals, authorizations, and orders
necessary for the execution and delivery by such Selling Stockholder of this
Agreement, and for the sale and delivery of the Option Shares to be sold by
such Selling Stockholder hereunder (other than, at the time of execution
hereof, (if the Registration Statement has not yet been declared effective by
the Commission) the issuance of the order of the Commission declaring the
Registration Statement effective and such authorizations, approvals or consents
as may be necessary from the NASD or under state or other securities or Blue
Sky laws) have been obtained. Such Selling Stockholder has full right, power
and authority to enter into this Agreement and to sell, assign, transfer, and
deliver the Option Shares to be sold by such Selling Stockholder hereunder.
This Agreement has been duly executed and delivered by such Selling Stockholder
and is a valid and binding agreement, enforceable in accordance with its terms,
except (1) that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, (2) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought and (3) as rights to indemnity or contribution
hereunder may be limited by federal or state securities laws.

(ii) Neither the sale of Option Shares to be sold by such
Selling Stockholder hereunder, nor the execution, delivery, and performance of
this Agreement will result in a breach or

7
<PAGE> 9
violation of any material term or provision of, or constitute a default under,
any currently existing material and relevant statute, any material indenture,
mortgage, deed of trust, loan or note agreement, or other material agreement or
instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is bound, or any order, rule, or regulation of any court or
governmental agency or body having jurisdiction over such Selling Stockholder
or over any of such Selling Stockholder's properties.

(iii) Such Selling Stockholder has, and immediately prior to
the Closing Date such Selling Stockholder will have, valid and marketable title
to the Option Shares to be sold by such Selling Stockholder hereunder, free and
clear of all liens, encumbrances, equities, and claims (other than pursuant to
this Agreement and restrictions under applicable securities law). Upon
delivery of such Option Shares and payment therefor pursuant hereto, valid and
marketable title to such Option Shares, free and clear of all liens,
encumbrances, equities, and claims, will pass to the Underwriters.

(iv) Such Selling Stockholder has not taken and will not take
(directly or indirectly) any action which is designed to or which has
constituted or might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company in order to
facilitate the sale or resale of the Shares.

(v) Any statement or omission in the Registration
Statement, the Prospectus, or any post-effective amendment or supplement
thereto that is or was made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly for
use therein is true, complete and correct in all material respects and does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make such statements, in
light of the circumstances under which they were made, not misleading.

(vi) Nothing has come to such Selling Stockholder's attention
to cause it to have reason to believe that the Company's representations and
warranties contained in this Agreement are not accurate in any material
respect.

(vii) Such Selling Stockholder has carefully read the
Registration Statement, the Prospectus, and this Agreement and that to its best
knowledge its representations, warranties, and other statements contained in
this Agreement are accurate in all material respects on the date hereof and
will be accurate in all material respects on and as of the First Closing Date
(as defined in Section 3 hereof) with the same effect as if made on the First
Closing Date, and such Selling Stockholder has performed all of

8
<PAGE> 10
its obligations and satisfied all conditions on its part to be performed or
satisfied at or prior to the First Closing Date.

3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to sell to
each Underwriter and each Underwriter agrees, severally and not jointly, to
purchase from the Company at a purchase price of $______ per Share, the
aggregate number of Shares set forth opposite the name of such Underwriter in
Schedule A hereto.

The Company will deliver the Purchased Shares to you for the
accounts of the several Underwriters at the office of Allen & Company
Incorporated, 711 Fifth Avenue, New York, New York, against payment of the
purchase price therefor by certified or official bank check or checks in New
York Clearing House funds, payable to the order of Vision Solutions, Inc., at
10:00 A.M., New York Time, on ____________________, 1997, or at such other time
and date not later than five full business days thereafter as you and the
Company may determine, such time and date of delivery and payment being herein
called the "First Closing Date". The certificates for the Purchased Shares to
be so delivered will be made available to you at such office for checking at
least one full business day prior to such Closing Date and will be in such
names and denominations as you may request not less than two full business days
prior to such Closing Date.

On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Selling Stockholder grant to the Underwriters an option to purchase up to
________ Option Shares at the same price per share as the Underwriters shall
pay for the Purchased Shares. The number of Option Shares to be contributed by
the Company and the Selling Stockholders to cover such over-allotments shall be
allocated among the Selling Stockholders and with the priority as set forth in
Schedule C to this Agreement. Such option may be exercised only to cover
over-allotments arising in connection with the sale of Purchased Shares by the
Underwriters, such exercise to be upon written notice by you to the Company
within 30 days of the date hereof setting forth the number of Option Shares as
to which the Underwriters are exercising the option, and with the priority as
set forth in Schedule C to this Agreement, the denominations and names in which
certificates for such Shares should be registered and the time and place at
which such certificates are to be delivered. Such time and place (unless such
time is the First Closing Date), herein referred to as the "Second Closing
Date", shall be determined by you but shall not be earlier than the First
Closing Date, nor earlier than three full business days or later than ten

9
<PAGE> 11
full business days after the exercise of such option. The Selling Shareholders
will deliver Option Shares to you for the accounts of the several Underwriters
against payment of the purchase price therefor by certified or official bank
check or checks in New York Clearing House funds payable to the order of the
Selling Stockholders, as the case may be. The number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the aggregate
number of Option Shares purchased as the number of Purchased Shares set forth
opposite the name of such Underwriter in Schedule A hereto bears to
____________.

It is understood that you, individually and not as the
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment on behalf of any Underwriter or Underwriters for Shares to be
purchased by such Underwriter or Underwriters. Any such payment by you shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.

After the Registration Statement becomes effective, the
several Underwriters propose to offer the Shares to the public as set forth in
the Prospectus.

4. COVENANTS OF THE COMPANY. The Company covenants and
agrees with the several Underwriters that:

(a) The Company will use its best efforts to
cause the Registration Statement and any subsequent amendment
thereto to become effective as promptly as possible; it will
notify you, promptly after it shall receive notice thereof, of
the time when the Registration Statement or any subsequent
amendment to the Registration Statement has become effective
or any supplement to the Prospectus has been filed; it will
notify you promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or
Prospectus or for additional information; it will prepare and
file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or
Prospectus which, in your reasonable opinion, may be necessary
or advisable in connection with the distribution of the Shares
by the Underwriters; it will promptly prepare and file with
the Commission, and promptly notify you of the filing of, any
amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or
omissions, if, at any time when a prospectus relating to the
Shares is required to be delivered under the Act, any event
shall have occurred as a result of which the Prospectus or any
other prospectus relating to the Shares as then in

10
<PAGE> 12
effect would include an untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein not misleading; in case any Underwriter is
required to deliver a prospectus after the nine-month period
referred to in Section 10(a)(3) of the Act in connection with
sales of the Shares, it will prepare promptly upon request,
but at the expense of such Underwriter, such amendment or
amendments to the Registration Statement and such prospectus
or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act; and it will
file no amendment or supplement to the Registration Statement
or Prospectus that shall not previously have been submitted to
you in writing a reasonable time prior to the proposed filing
thereof with an opportunity to review and comment on such
amendment or supplement.

(b) The Company will advise you, promptly after
it shall receive notice or obtain knowledge thereof, of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order
suspending trading in the Shares or other of the Company's
securities or of the initiation or threat of any proceeding
for that purpose; and it will use promptly its best efforts to
prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.

(c) The Company will use its best efforts to
qualify the Shares for sale under the blue sky or securities
laws of such jurisdictions as you may reasonably designate and
to continue such qualifications in effect for so long as may
be required for purposes of the distribution of the Shares,
except that the Company shall not be required in connection
therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of
process in any state.

(d) The Company will furnish to you, as soon as
available, copies of the Registration Statement (two of which
will be signed and will include all exhibits), each
Preliminary Prospectus, the Prospectus, and any amendments or
supplements to such documents, including any prospectus
prepared to permit compliance with Section 10(a)(3) of the
Act, all in such quantities as you may from time to time
reasonably request.

(e) The Company will make generally available to
its securityholders as soon as practicable, a financial
statement (which will be in reasonable detail but need

11
<PAGE> 13
not be audited) covering a 12-month period beginning after the
effective date of the Registration Statement which shall
satisfy the provisions of Section 11(a) of the Act.

(f) The Company agrees, during each fiscal year
for a period of five years from the date hereof, to furnish to
its stockholders as promptly as may be practicable an annual
report (including financial statements audited by independent
public accountants) and to furnish quarterly financial
statements (which need not be audited and which may be
condensed or summarized) for each of the first three quarters
of each fiscal year, statements of operations and surplus of
the Company for such quarter in reasonable detail and
certified by the Company's principal financial or accounting
officer; (i) as soon as practicable after the end of each
fiscal year, financial statements of the Company as at the end
of such fiscal year, including statements of operations,
retained earnings and changes in financial position of the
Company for such fiscal year, all in reasonable detail and
accompanied by a copy of the report thereon of independent
public accountants or the Company's annual report on Form
10-K; and (ii) as soon as they are available, copies of all
reports and financial statements furnished to or filed with
the Commission. During such period, if and so long as the
Company shall have active subsidiaries, the foregoing
financial statements shall be on a combined or consolidated
basis to the extent that the accounts of the Company and its
subsidiaries are combined or consolidated.

(g) The Company covenants and agrees with the
several Underwriters that the Company will pay or cause to be
paid the following: (i) the fees, disbursements, and expenses
of the Company's counsel and accountants in connection with
the registration of the Shares under the Act; (ii) all other
expenses in connection with the preparation, printing, and
filing of the Registration Statement, each Preliminary
Prospectus, and the Prospectus and amendments and supplements
thereto, and the mailing and delivering of copies thereof to
the Underwriters and dealers; (iii) the cost of printing or
duplicating this Agreement, the Selected Dealer Agreement, the
Blue Sky Memorandum, and any other documents in connection
with the offering, purchase, sale and delivery of the Shares;
(iv) all costs and expenses in connection with the issuance
and delivery of the Shares hereunder to the Underwriters,
including related transfer taxes, if any; (v) all expenses in
connection with the qualification of the Shares for

12
<PAGE> 14
offering and sale under the securities laws of various
jurisdictions, including the reasonable fees and disbursements
of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky Survey; (vi)
the filing fees incident to securing any required review by
the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares; (vii) the costs of preparing
stock certificates; (viii) the cost and charges of any
transfer agent or registrar; and (ix) all other costs and
expenses of the Company incident to the performance of its
obligations hereunder which are not otherwise specifically
provided for in this Section 4. The Company shall reimburse
the Underwriters, upon request from time to time, for their
reasonable itemized out-of-pocket expenses up to a maximum of
$150,000, including their legal fees and disbursements and
travel, roadshow and syndicate expenses, upon the presentation
of reasonable documentation thereof. If the Underwriters are
unable or unwilling to proceed with the offering on the terms
and conditions set forth in this Agreement for any reason
(except as set forth in the proviso below), the Underwriters
shall bear all of their own out-of- pocket expenses, including
legal fees and disbursements and travel, roadshow and
syndicate expenses; provided, however, that if the
Underwriters' decision not to proceed with the offering on the
terms and conditions set forth in this Agreement is based upon
any of the reasons specified in Section 10(b)(i), (excluding
termination for reasons that are beyond the reasonable control
of the Company) the Company shall be required to reimburse the
Underwriters for their out-of-pocket expenses as specified in
the preceding sentence.

(h) The Company agrees that it will not, without
the prior written consent of Allen & Company Incorporated on
behalf of the Underwriters, sell, offer for sale, contract to
sell or otherwise dispose of any shares of its Common Stock or
any securities exercisable for or convertible into shares of
its Common Stock, other than (i) shares issuable pursuant to
currently outstanding rights, options and warrants, for a
period of 180 days after the date of the final Prospectus;
(ii) the grant of options or shares under the Company's 1996
Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan or Employee Stock Purchase
Plan; or (iii) in connection with the acquisition of assets,
products or businesses, provided that in the case of this
clause (iii) none of such shares shall be publicly resaleable
during such 180 day period. In addition, the Company also
agrees

13
<PAGE> 15
to obtain the written agreement of each officer, director and
holder of shares of, or options to purchase shares of, the
Company's Common Stock that such person will not, without such
prior written consent, sell, offer for sale, contract to sell
or otherwise dispose of any of such Common Stock held by such
holder for a period of 180 days after the date of the final
Prospectus, except as may otherwise be specifically allowed in
the agreements referenced in paragraph 2(a)(xvi) above.

5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
obligations of the several Underwriters to purchase and pay for the Purchased
Shares on the First Closing Date and the Option Shares on the Second Closing
Date, as provided herein shall be subject to the accuracy, as of the date
hereof and such Closing Date (as if made on and as of such Closing Date), of
the representations and warranties of the Company and the Selling Stockholders
herein, to the performance by the Company and the Selling Stockholders of their
obligations hereunder, and to the following additional conditions:

(a) The Registration Statement shall have become
effective not later than 5:30 P.M., New York City Time, on the
date of this Agreement, or such later date as shall be
consented to in writing by you; if required, the Prospectus
and any amendment or supplement thereto shall have been filed
with the Commission in the manner and within the time period
required by Rule 424(b) under the Act; and no stop order
suspending the effectiveness thereof shall have been issued
and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall
have been complied with to your satisfaction.

(b) Prior to such Closing Date, except as
contemplated in the Prospectus, there shall not have been any
change in the capital shares, nor the issuance of any material
rights, options, or warrants to purchase any capital shares,
nor any material increase or decrease in any long-term debt of
the Company or any of the Subsidiaries or any material adverse
change in the condition (financial or otherwise), results of
operations, business or prospects of the Company or any of the
Subsidiaries which in your reasonable judgment renders it
inadvisable to proceed with the offering and sale of the
Shares.

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<PAGE> 16
(c) You shall have received the opinion of
Stradling, Yocca, Carlson & Rauth, counsel for the Company, in
form and substance satisfactory to you and dated such Closing
Date, to the effect that:

(i) each of the Company and its
Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation
with full corporate power and authority to own its
properties and to conduct its business as described
in the Registration Statement and is duly qualified
to do business as a foreign corporation in each state
or jurisdiction where its operations and the
ownership of its properties requires such
qualification, except with respect to qualification
as a foreign corporation in such jurisdictions in
which the failure to so qualify has not had and will
not have a material adverse effect on the business of
the Company and the Subsidiaries taken as a whole;

(ii) the Company has authorized capital
stock as set forth in the Prospectus; all shares of
Common Stock, including the Shares, conform as to
legal matters in all material respects to the
appropriate descriptions thereof under the heading
"Description of Capital Stock" in the Prospectus; all
outstanding shares of Company capital stock have been
duly authorized and are validly issued, fully paid
and non-assessable and to the best of such counsel's
knowledge, fully paid; and the issuance of the Shares
has been duly authorized and, when issued and
delivered in accordance with this Agreement, the
Shares will be validly issued, fully paid and
non-assessable; and, to the best of such Counsel's
knowledge, except as described in the Prospectus, the
issuance of the Shares as described in the Prospectus
will not result in any adjustment of the exercise
price or number of shares issuable upon exercise in
respect of any outstanding options or warrants of the
Company; and, except as otherwise set forth in the
Registration Statement, the Company owns (directly or
indirectly of record, and to the best of such
counsel's knowledge, beneficially) all of the
respective outstanding shares of capital stock of
each of the Subsidiaries, to the best of the
knowledge of such counsel, free and clear of any
material liens, encumbrances or claims;

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<PAGE> 17
(iii) this Agreement has been duly
authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms,
except that (1) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect
relating to creditors' rights, (2) the remedy of
specific performance and injunctive and other forms
of equitable relief may be subject to equitable
defenses and to the discretion of the court before
which any proceeding therefor may be brought, and (3)
rights to indemnity or contribution hereunder may be
limited by federal or state securities laws; the sale
of the Shares under this Agreement and the
consummation of the transactions herein contemplated
do not result in a breach or violation of any terms
or provisions of, or constitute a default under, any
presently existing statute, or to the best of such
counsel's knowledge, any indenture, mortgage, deed of
trust, note agreement or other agreement or
instrument known to such counsel to which the Company
is a party or by which it or its properties are bound
or affected, or to which any of the material property
or assets of the Company or the Subsidiaries is
subject, the Company's certificate of incorporation
or by-laws, or, to the best of such counsel's
knowledge, any order, rule or regulation of any court
or governmental agency or body having jurisdiction
over the Company or the Subsidiary or over their
respective properties;

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

(v) the Registration Statement has
become effective under the Act and to the best of
such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the
Act;

(vi) except as stated in the Prospectus,
to the best of such counsel's knowledge, the Company

16
<PAGE> 18
and the Subsidiaries hold all material licenses,
permits, authorizations, franchises, consents and
orders, in each case valid and in good standing, of
Federal, State or local, and foreign governmental
bodies necessary to carry on their respective
businesses as reflected in the Registration
Statement;

(vii) the agreements or documents to which
the Company or the Subsidiaries are a party which are
summarized under the headings "Management -
Employment Agreements," "Certain Transactions,"
"Description of Capital Stock - Registration Rights"
and "_____________" in the Prospectus conform in all
material respects to such summaries;

(viii) to the best of such counsel's
knowledge, there are no legal or governmental
proceedings pending or threatened to which the
Company or any Subsidiary is a party or to which any
properties of the Company or the Subsidiaries are
subject which is required to be described in the
Registration Statement or the Prospectus and is not
so described;

(ix) the Registration Statement and the
Prospectus, and each amendment or supplement thereto,
as of their respective effective or issue dates,
comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations
(except that such counsel need express no opinion as
to the financial statements, notes to financial
statements, related schedules or other financial or
statistical data contained in the Registration
Statement or the Prospectus);

(x) to the best of such counsel's knowledge, all
contracts and documents pertaining to the Company
required to be filed as Exhibits to the Registration
Statement have been filed as required or have been
appropriately incorporated by reference and all
contracts and documents required to be described in
the Prospectus have been accurately described therein
in all material respects;

(xi) Such counsel shall also state that it has
participated in conferences with officers and other
representatives of the Company, representatives of
the independent public accountants for the Company
and the

17
<PAGE> 19
representatives of the Underwriters, at which the
contents of the Registration Statement and the
Prospectus and related matters were discussed and,
although such counsel is not passing upon and does
not assume any responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement and the Prospectus, on
the basis of the foregoing (relying as to materiality
to a large extent upon the opinions of officers and
other representatives of the Company), no facts have
come to such counsel's attention which lead such
counsel to believe that the Registration Statement
(except with respect to the financial statements and
schedules thereto and other financial or statistical
data, as to which such counsel need not make any
statement) at the time it became effective or at the
Closing 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 with respect to the financial
statements and schedules thereto and other financial
or other statistical data, as to which such counsel
need not make any statement) on the date thereof or
on the Closing Date contained any untrue statement of
a material fact or omitted to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances in which they were
made, not misleading.

In rendering the foregoing opinions, such counsel may
rely as to factual matters on certificates of officers and
representatives of the Company or any Subsidiary and of public
officials, and will not be required to independently verify
the accuracy or completeness of information or documents
furnished to it in respect to the Registration Statement or
the Prospectus. To the extent that such counsel's opinion
relates to the laws of jurisdictions other than California and
Delaware, such counsel shall be permitted to rely on the
opinion of local counsel reasonably satisfactory to counsel
for the several Underwriters.

(d) You shall have received from _______________,
counsel to the Selling Stockholders, an opinion, dated such
Closing Date, in form and substance satisfactory to you, with
respect to legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably
require.

18
<PAGE> 20
(e) [You shall have received from
_______________, patent counsel to the Company, an opinion,
dated such Closing Date, in form and substance satisfactory to
you, to the effect that the statements in the Prospectus under
the captions "_____________", insofar as they pertain to legal
matters, fairly present in all material respects the
information presented therein.]

(f) You shall have received from Werbel &
Carnelutti, A Professional Corporation, counsel for the
several Underwriters, an opinion or opinions, dated such
Closing Date, 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.

(g) You shall have received, at the time of
execution of this Agreement and on such Closing Date from
Deloitte & Touche LLP, independent public accountants, a
letter or letters, dated the date of delivery thereof,
substantially in the form and substance heretofore approved by
you.

(h) You shall have received a certificate, dated
such Closing Date, of each of the President and Chief
Executive Officer and the Chief Financial Officer of the
Company, delivered on behalf of the Company, to the effect
that:

(i) the representations and warranties
of the Company in this Agreement are true and correct
as if made on and as of such Closing Date; and the
Company has complied with all the agreements and
satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing
Date;

(ii) no stop order suspending the
effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been
instituted or, to their knowledge, are contemplated
by the Commission; and

(iii) except as contemplated in the
Prospectus, neither the Company nor any Subsidiary
taken as a whole has incurred any direct or, to the
best of the Company's knowledge, contingent

19
<PAGE> 21
material liabilities or obligations since the date of
the financial statements included in the Prospectus,
other than liabilities incurred in the ordinary course
of business, or entered into any material transactions
or contracts not in the ordinary course of business,
and there has not been any change in its capital
shares, nor the issuance of any material rights,
options, or warrants to purchase any capital shares,
nor any material increase or decrease in any thereof
or in any long-term debt or any material adverse
change in the condition (financial or otherwise)
results of operations, business or prospects of the
Company and the Subsidiaries taken as a whole.

(i) The Company and the Selling Stockholders
shall have furnished to you such certificates, in addition to
those specifically mentioned herein, as you may have
reasonably requested, as to the accuracy and completeness at
such Closing Date of any statement in the Registration
Statement or Prospectus, as to the accuracy at such Closing
Date of the representations and warranties of the Company
herein, as to the performance by the Company of its
obligations hereunder, and as to the fulfillment of the
conditions concurrent and precedent to the obligations of the
Underwriters hereunder.

(j) The Company shall have furnished to you the
agreements described in Section 2(a)(xvi) of this Agreement.

6. INDEMNIFICATION. (a) The Company and the
Selling Stockholders, severally and not jointly, will indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon 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, and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending
against any such loss, claim, damage, liability or action; provided, however,
that neither the Company

20
<PAGE> 22
nor the Selling Stockholders will be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, such Preliminary Prospectus, the Prospectus
or such amendment or such supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through you
specifically for use therein; and provided further, that the foregoing
indemnity with respect to Preliminary Prospectuses shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) if such untrue statement or omission or alleged untrue statement
or omission made in any Preliminary Prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus has not been furnished to the person
asserting any such losses, claims, damages, or liabilities at or prior to the
written confirmation of the sale of such Shares to such person; and provided
further, that no indemnification pursuant to this Section 6(a) shall be sought
from the Selling Stockholders unless the Company shall, after reasonable
efforts by the Underwriters to secure indemnification from the Company, have
failed to satisfy its indemnification obligations under this Section 6(a), and
in no event shall the liability of any Selling Stockholder under this Section
6(a), if any, exceed the gross proceeds (minus the amount of the underwriting
discount paid thereon) received by such Selling Stockholders from the sale of
his Option Shares pursuant to this Agreement. Such indemnity obligation will
be in addition to any liability which the Company and the Selling Stockholders
may otherwise have. The indemnity agreement of the Company and the Selling
Stockholders contained in this paragraph (a) and the representations and
warranties of the Company and the Selling Stockholders 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 Shares.

(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act and the Selling Stockholders, against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director, officer or controlling person, or the Selling
Stockholders may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be

21
<PAGE> 23
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you specifically for use therein; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person, or the Selling Stockholders in
connection with investigating or defending against any such loss, claim,
damage, liability or action. Such indemnity obligation will be in addition to
any liability which such Underwriter may otherwise have. 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 Shares.

(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section, notify the indemnifying party of the commencement thereof.
Indemnification shall not be available to any party who shall fail so to give
notice, if the party to whom notice was required to be given was unaware of the
action, suit, investigation, inquiry or proceeding to which the notice would
have related, to the extent that such party was prejudiced by the failure to
give notice; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel chosen by
such indemnifying party which is reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, that (i) if the indemnified party reasonably determines that
there may be a conflict between the positions of the indemnifying party and of
the indemnified party in conducting the defense of such action, suit,
investigation, inquiry or proceeding, then counsel for the indemnified party
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
and (ii) in any event, the indemnified party shall be entitled to

22
<PAGE> 24
have counsel chosen by such indemnified party participate in, but not conduct,
the defense at the sole expense of the indemnified party. No indemnifying
party shall be liable to any indemnified party in respect to any settlement
effected without its prior written consent, which consent shall not be
unreasonably withheld. In addition, the indemnifying party will not, without
the prior written consent of an indemnified party, 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 if such indemnified party is a party to such claim, action or suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability arising out
of such claim, action, suit or proceeding.

7. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6(a) or 6(b)
hereof is for any reason, other than the first proviso to Section 6(a), held to
be unavailable, the Company, the Selling Stockholders and the Underwriters
shall contribute to the aggregate losses, claims, damages and liabilities of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by the Company and the Selling
Stockholders from persons other than the Underwriters, such as persons who
control the Company within the meaning of Section 15 of the Act, officers of
the Company who signed the Registration Statement and directors of the Company,
who may also be liable for contribution) to which the Company, the Selling
Stockholders and one or more of the Underwriters may be subject, in such
proportions so that the Underwriters are responsible for that portion in each
case represented by the percentage that the respective underwriting discounts
appearing on the cover page of the Prospectus bear to the public offering price
of the Shares, and the Company and the Selling Stockholders are responsible for
the remaining portion in such proportion as the Shares offered by the Company
and the Selling Stockholders bear to the total number of Shares; provided,
however, that (i) except as may be provided in its Master Agreement Among
Underwriters provided to Allen & Company Incorporated, in no case shall any
Underwriter be responsible for any amount in excess of the underwriting
discount applicable to the Shares purchased by such Underwriter hereunder and
(ii) the liability of each Selling Stockholder under this Section 7, if any,
shall not exceed the gross proceeds (minus the amount of the underwriting
discount paid thereon) received by such Selling Stockholder from the sale of
his Option Shares pursuant to this Agreement, and (iii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For

23
<PAGE> 25
purposes of this Section 7, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same right to contribution as the Company, subject
in each case to clauses (i) and (ii) of this Section 7. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 7,
notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this Section 7. No party shall
be liable for contribution with respect to any action or claim settled without
its consent, which consent shall not be unreasonably withheld.

8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company, the Selling
Stockholders and the Underwriters herein or in certificates delivered pursuant
hereto shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling
person, the Company, or any of its officers, directors, or controlling persons
or the Selling Stockholders, and shall survive delivery of the Shares to the
several Underwriters hereunder.

9. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Shares to be
purchased by such Underwriter or Underwriters hereunder upon tender of such
Shares in accordance with the terms hereof, and if the aggregate number of
Shares which such defaulting Underwriter or Underwriters so agreed but failed
to purchase does not exceed 10% of the Shares, the remaining Underwriters shall
be obligated severally in proportion to their respective commitments hereunder
to take up and pay for the Shares of such defaulting Underwriter or
Underwriters. If one or more of the Underwriters shall fail or refuse (other
than for a reason sufficient to justify the termination of this Agreement) to
purchase on any Closing Date the aggregate number of Shares agreed to be
purchased by such Underwriter or Underwriters and the aggregate number of
Shares agreed to be purchased by such Underwriter or Underwriters shall exceed
10% of the aggregate number of Shares to be sold on any Closing Date hereunder
by the Company and the Selling Stockholders to the Underwriters, then the other
Underwriters shall have the right to purchase or procure one or more other
underwriters to purchase, in such proportions as they may agree upon and upon
the terms herein set

24
<PAGE> 26
forth, the Shares which such defaulting Underwriter or Underwriters agreed to
purchase, and this Agreement shall be carried out accordingly. If such other
Underwriters do not exercise such right within thirty-six hours after receiving
notice of any such default, which notice the Representatives shall have also
promptly delivered to the Company, then the Company shall have the right to
procure another party or parties reasonably satisfactory to the Representatives
to purchase or agree to purchase such Shares on the terms herein set forth. If
the Company is unable to procure another such party, the Company may notify the
Representatives that the non-defaulting Underwriters are, by the giving of such
notice, released from their obligations to purchase such number of Shares being
sold hereunder by the Company and the Selling Stockholders as are indicated in
such notice as, when subtracted from the total number of Shares originally
agreed to be purchased by all of the Underwriters hereunder, shall leave a
reduced number of Shares to be purchased by the non-defaulting Underwriters not
in excess of 110% of the aggregate number of Shares originally contracted to be
purchased hereunder by the non-defaulting Underwriters, and each of them, in
which event such non-defaulting Underwriters shall purchase such reduced number
of Shares. In any such case, either the Representatives or the Company shall
have the right to postpone any Closing Date for a period of not more than seven
business days in order that necessary changes and arrangements may be effected
by the Representatives and the Company. If neither the non-defaulting
Underwriters nor the Company shall make arrangements within the period stated
for the purchase of the Shares which such defaulting Underwriter or
Underwriters agreed to purchase, including such arrangements for the purchase
of a reduced number of Shares as are provided for in this Section 9, then this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriters to the Company or the Selling Stockholders and without liability
on the part of the Company or the Selling Stockholders to the Underwriters.

In the event of any termination of this Agreement pursuant to
the preceding paragraph of this Section, neither the Company nor the Selling
Stockholders shall be under any liability to any Underwriter (except as
provided in Section 4(g) and 6 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the number of Shares to be purchased by such
Underwriter hereunder, which Underwriter shall remain liable to the Company,
the Selling Stockholders and the other Underwriters for damages resulting from
such default) be under any liability to the Company or the Selling Stockholders
(except as provided in Section 6 hereof).

The term "Underwriter" in this Agreement shall include any
person substituted for an Underwriter under this Section 9.

25
<PAGE> 27
10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION. (a)
This Agreement shall become effective at such time after the declaration by the
Commission of the effectiveness of the Registration Statement as you in your
discretion shall first release the Shares for sale to the public. For the
purposes of this Section the Shares shall be deemed to have been released for
sale to the public upon release by you for publication of a newspaper
advertisement relating to the Shares or upon release by you of letters or
telegrams offering the Shares for sale to securities dealers, whichever shall
first occur. By giving notice as hereinafter specified before the time this
Agreement becomes effective, you, as Representatives of the several
Underwriters, or the Company may prevent this Agreement from becoming effective
without liability on the part of the Company or the Selling Stockholders to any
Underwriter or of any Underwriter to the Company or the Selling Stockholders,
other than as provided in Sections 4(g) and 6 hereof.

(b) You, as Representatives of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time at or prior to the First Closing Date if (i)
either the Company or the Selling Stockholders shall have failed, refused or
been unable, at or prior to the First Closing Date, to perform any material
agreement on its part to be performed, or because any other material condition
of the Underwriters' obligations hereunder required to be fulfilled by the
Company is not fulfilled; (ii) trading on the New York Stock Exchange shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York Stock Exchange by the New York Stock Exchange or by order of the
Commission or any other governmental authority having jurisdiction, since the
execution of this Agreement; (iii) a banking moratorium shall have been
declared by Federal or New York authorities since the execution of this
Agreement; or (iv) an outbreak of major hostilities or other national calamity
shall have occurred. Any such termination shall be without liability on the
part of the Company or the Selling Stockholders to any Underwriter or of any
Underwriter to the Company or the Selling Stockholders other than as provided
in Sections 4(g) and 6 hereof.

(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company and the Selling Stockholders shall be notified promptly by you by
telephone or telegram, confirmed by letter. If the Company shall elect to
prevent this Agreement from becoming effective, you shall be notified promptly
by the Company by telephone or telegram, confirmed by letter.

11. NOTICES. All notices or communications hereunder, except
as herein otherwise specifically provided, shall be in

26
<PAGE> 28
writing and if sent to you shall be mailed, delivered or telecopied and
confirmed to you c/o Allen & Company Incorporated, 711 Fifth Avenue, New York,
New York 10022, with copy to Werbel & Carnelutti, a Professional Corporation,
711 Fifth Avenue, New York, New York 10022, Attention: Robert H. Werbel, Esq.,
or if sent to the Company shall be mailed, delivered or telecopied and
confirmed to the Company at 2600 Michelson Drive, 11th Floor, Irvine,
California 92612, with a copy to Stradling, Yocca, Carlson & Rauth, 680 Newport
Center Drive, Suite 1600, Newport Beach, CA 92660, Attention: K.C. Schaaf,
Esq., or if sent to the Selling Stockholders shall be mailed, delivered or
telecopied and confirmed to _________________________. Notice to any
Underwriter pursuant to Section 6 shall be mailed, delivered or telecopied and
confirmed to such Underwriter's address as set forth in its Master Agreement
Among Underwriters furnished to Allen & Company Incorporated.

12. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the several Underwriters and the Company, the Selling
Stockholders and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or corporation.
No purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign merely by reason of such purchase.

In all dealings with the Company and the Selling Stockholders
under this Agreement, you shall be and are authorized to act on behalf of each
of the several Underwriters, and the Company and the Selling Stockholders shall
be entitled to act and rely upon any statement request, notice or agreement on
behalf of each of the several Underwriters if the same shall have been made or
given in writing by you.

13. APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to agreements made, and to be fully performed, therein.

27
<PAGE> 29
If the foregoing correctly sets forth the understanding
between the Company and the several Underwriters, please so indicate in the
space provided below for that purpose whereupon this letter shall constitute a
binding agreement between the Company and the several Underwriters.

Very truly yours,

VISION SOLUTIONS, INC.

By:___________________________
President

Accepted as of the date
first above written:

ALLEN & COMPANY INCORPORATED
COWEN & COMPANY

By: Allen & Company Incorporated

By: ______________________________
Vice President

On behalf of each of the several
Underwriters named in Schedule A hereto.

28
<PAGE> 30
SCHEDULE A

<TABLE>
<CAPTION>
NUMBER
NAME AND ADDRESS OF UNDERWRITER OF SHARES
- ------------------------------- ---------
<S> <C>
Allen & Company Incorporated . . . . . . . . . . . . .
Cowen & Company .. . . . . . . . . . . . . . . . . . .

---------

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

29
<PAGE> 31
SCHEDULE B

SUBSIDIARIES OF THE COMPANY

30
<PAGE> 32
_________ SHARES

VISION SOLUTIONS, INC.

COMMON STOCK

SELECTED DEALER AGREEMENT

_________________, 1997

Dear Sirs:

1. PURCHASE OF SECURITIES BY THE SEVERAL UNDERWRITERS. The several
Underwriters named in the enclosed Prospectus, on whose behalf we are acting as
Representatives, have severally agreed to purchase from Vision Solutions, Inc.
(the "Company") and __________ (the "Selling Stockholders") an offering of
___________ Shares of the Company's Common Stock (the "Shares"), as set forth
in the Prospectus and subject to the terms of the Underwriting Agreement
between the several Underwriters, the Company and the Selling Stockholders.
The Shares are described in the Prospectus, additional copies of which will be
supplied in reasonable quantities upon request to us.

2. OFFERING TO SELECTED DEALERS. One or more of the several
Underwriters acting through us are severally offering a portion of the Shares
to certain dealers ("Selected Dealers") as principals, subject to the terms and
conditions of their purchase, to the terms and conditions hereof, and to the
modification or cancellation of the offering without notice, at the public
offering price set forth in the Prospectus, less a concession not in excess of
$____ per Share. Shares purchased by the several Underwriters, and not sold to
the Selected Dealers as aforesaid, may be sold by the several Underwriters.
Any of the several Underwriters may be included among the Selected Dealers.

The offering of a portion of the Shares to Selected Dealers may be
made on the basis of reservations or allotments against subscription. We are
advising you by telegram of the method and terms of the offering. Acceptance
of any reserved Shares received by us at the office of Allen & Company
Incorporated, 711 Fifth Avenue, New York, New York 10022, after the time
specified therefor in the telegrams, and any subscriptions for additional
Shares, will be subject to prior sale and allotment. Subscription books may be
closed by us at any time without notice, and the right is reserved to reject
any subscriptions in whole or in part.

3. OFFERING TO PUBLIC BY SELECTED DEALERS. Upon receipt of the
aforementioned telegram, the Shares purchased by you hereunder may be
re-offered to the public in conformity with the
<PAGE> 33
terms of offering set forth in the Prospectus. You may, in accordance with the
rules of the National Association of Securities Dealers, Inc., reallow a
concession of $_____ per Share sold by you to any other dealer or broker who is
a member of the National Association of Securities Dealers, Inc., provided such
discount is retained.

Neither you nor any other person is or has been authorized by the
Company, any of the several Underwriters or us to give information or make any
representations in connection with the sale of the Shares other than those
contained in the Prospectus.

In the event that during the term of this agreement we, as
Representatives for the account of the several Underwriters, shall purchase or
contract to purchase, at or below the original public offering price set forth
in the Prospectus, any of the Shares purchased by you hereunder (which Shares
theretofore were not effectively placed for investment by you, including Shares
represented by transfers), we may, at our election, either (a) require you to
repurchase such Shares at a price equal to the total cost of such Shares
purchased by us, including brokerage commissions, if any, and transfer taxes on
the redelivery, or (b) charge you with and collect from you an amount equal to
the selling concession with respect to the Shares so purchased by us.

4. PAYMENT AND DELIVERY. Payment for the Shares which you have
agreed to purchase hereunder shall be made by you on _________, 1997, or such
later date as we may advise you, at 9:00 a.m., New York Time, at Allen &
Company Incorporated's office at 711 Fifth Avenue, New York, New York 10022, by
certified or bank cashier's check payable in New York Clearing House funds to
the order of Allen & Company Incorporated, against delivery of such Shares.
Delivery instructions must be in our hands at said address as such time as we
request.

Additional Shares confirmed to you shall be delivered on such date or
dates as we shall advise you.

5. BLUE SKY MATTERS. Neither we nor any of the several Underwriters
shall have any obligation or responsibility with respect to the right of any
dealer to sell the Shares in any jurisdiction, notwithstanding any information
which may be furnished as to the states under the securities laws of which it
is believed the Shares may be sold.

6. TERMINATION. This agreement shall terminate 20 full days after
the First Closing Date (as defined in the Underwriting Agreement) but may be
extended for a period or periods not exceeding in the aggregate 20 days as we
may determine. We may terminate this Agreement at any time without prior
notice. Notwithstanding the termination of this agreement, you shall remain
liable for your portion of any transfer tax or other

2
<PAGE> 34
liability which may be asserted or assessed against us or any one or more of
the several Underwriters or Selected Dealers based upon the claim that the
Selected Dealers or any of them constitute a partnership, an association, an
unincorporated business or other separate entity.

7. OBLIGATIONS OF SELECTED DEALERS. Your acceptance hereof will
constitute an obligation on your part to purchase, upon the terms and
conditions hereof, the aggregate amount of the Shares reserved for and accepted
by you and to perform and observe all the terms and conditions hereof.

You are not authorized to act as agent for any of the several
Underwriters in offering Shares to the public or otherwise. Nothing contained
herein shall constitute the Selected Dealers an association, or partners with
the several Underwriters, with us, or with each other.

8. POSITION OF THE REPRESENTATIVES. We shall have full authority to
take such action as we may deem advisable in respect of all matters pertaining
to the offering or arising hereunder, but shall act only as Representatives of
the several Underwriters. Neither we nor any of the several Underwriters shall
be under any liability to you, except for our own want of good faith,
obligations assumed in this agreement, or any liabilities arising under the
Securities Act of 1933. No obligation not expressly assumed by us in this
agreement shall be implied hereby or inferred herefrom.

9. NOTICES. All communications from you should be addressed to us,
c/o Allen & Company Incorporated, 711 Fifth Avenue, New York, New York 10022.
Any notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address to which this letter is mailed.

3
<PAGE> 35
Please confirm the foregoing by signing the duplicate copy of this
agreement enclosed herewith and returning it to us at the address in Section 9
above.

Very truly yours,

ALLEN & COMPANY INCORPORATED
COWEN & COMPANY

By: Allen & Company Incorporated

By: ______________________________
Vice President

4
<PAGE> 36
ALLEN & COMPANY INCORPORATED
COWEN & COMPANY
As Representatives of the several Underwriters
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022

Sirs:

We hereby confirm our agreement to purchase __________ Shares
of Vision Solutions, Inc. (the "Shares"), subject to your acceptance or
rejection in whole or in part in the case of a subscription subject to
allotment or in excess of any reservation, and subject to all the other terms
and conditions stated in the foregoing letter.

We hereby acknowledge receipt of the prospectus relating to
the above described Shares (the "Prospectus") and we further state that in
purchasing the Shares confirmed to us we have relied upon such Prospectus and
on no other statements whatsoever, written or oral.

We hereby represent that we are a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and agree to
comply with the provisions of Article III, Section 24 of the NASD's Rules of
Fair Practice (the "NASD Rules"), or, if we are not such a member, we are a
foreign dealer or institution that is not registered under Section 15(b) of the
Securities Exchange Act of 1934 and that hereby agrees (i) to make no sales
within the United States, its territories or its possessions or to persons who
are citizens thereof or residents therein, (ii) if the offering of the Shares
is one within the scope of the NASD's Interpretation with Respect to
Free-Riding and Withholding, not to make other sales of Shares to persons
enumerated in paragraphs "1" through "5" of such Interpretation or in a manner
inconsistent with paragraph "6" thereof and (iii) to comply with the provisions
of Article III, Sections 8, 24, 25 (as applicable to a non- member
broker/dealer in a foreign country) and 36 of the NASD Rules.

Name of Selected Dealer

__________________________________

__________________________________
(Authorized Signature)

Dated: ______________, 1997

<PAGE> 1
EXHIBIT 3.1

CERTIFICATE OF INCORPORATION
OF
VISION SOLUTIONS, INC.

ARTICLE 1

The name of this Corporation is VISION SOLUTIONS, INC.

ARTICLE 2

The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805. The name of
the Corporation's registered agent at that address is Prentice Hall Corporation
Systems, Inc., New Castle County.

ARTICLE 3

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware, as amended from time to time.

ARTICLE 4

The total number of shares of capital stock which this Corporation has
authority to issue is 100 shares of Common Stock, $0.001 par value per share.

ARTICLE 5

(a) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors and elections of directors need
not be by written ballot unless otherwise provided in the Bylaws. The number of
directors of the Corporation shall be fixed from time to time by the Board of
Directors either by a resolution or Bylaw adopted by the affirmative vote of a
majority of the entire Board of Directors.

(b) Meetings of the stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the Delaware Statutes) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or by the Bylaws of the Corporation.

<PAGE> 2

ARTICLE 6

A director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision shall not eliminate
or limit the liability of a director (i) for any breach of his 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 the law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derives an improper personal
benefit. If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further limiting or eliminating the
personal liability of directors, then the liability of the directors of the
Corporation shall be limited or eliminated to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended from time to
time. Any repeal or modification of this Article 6 by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.

ARTICLE 7

The Board of Directors of the Corporation shall have the power to make,
alter, amend, change, add to or repeal the Bylaws of the Corporation.

ARTICLE 8

The name and address of the Incorporator of the Corporation is as
follows:

Bridget C. Brandenberger
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660-6441

I, THE UNDERSIGNED, being the Incorporator, for the purpose of forming
a corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereunto set my hand this 28th day of February 1997.

--------------------------------
Bridget C. Brandenberger

<PAGE> 1
any other officer becomes vacant, any person or body empowered to elect or
appoint that officer may choose a successor. Each such successor shall hold
office for the unexpired term, and in the case of the president, the treasurer
and the secretary until his successor is chosen and qualified or in each case he
sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a
directorship shall be filled as specified in Section 3.5 of these by-laws.

SECTION 7. CAPITAL STOCK.

7.1 Stock Certificates. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the by-laws, be prescribed from time to
time by the board of directors. Such certificate shall be signed by the chairman
or vice chairman of the board, if any, or the president or a vice president and
by the treasurer or an assistant treasurer or by the secretary or an assistant
secretary. Any of or all the signatures on the certificate may be a facsimile.
In case an officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent, or registrar at the time of its issue.

7.2 Loss of Certificates. In the case of the alleged theft, loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms, including receipt of a bond
sufficient to indemnify the corporation against any claim on account thereof, as
the board of directors may prescribe.

SECTION 8. TRANSFER OF SHARES OF STOCK.

8.1 Transfer on Books. Subject to the restrictions, if any, stated or
noted on the stock certificate, shares of stock may be transferred on the books
of the corporation by the surrender to the corporation or its transfer agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
board of directors or the transfer agent of the corporation may reasonably
require. Except as may be otherwise required by law, by the certificate of
incorporation or by these by-laws, the corporation shall be entitled to treat
the record holder of stock as shown on its books as the owner of such stock for
all purposes, including the payment of dividends and the right to receive notice
and to vote or to give any consent with respect thereto and to be held liable
for such calls and assessments, if any, as may lawfully be made thereon,
regardless of any transfer, pledge or other disposition of such stock until the
shares have been properly transferred on the books of the corporation.

It shall be the duty of each stockholder to notify the corporation of
his post office address.

8.2 Record Date and Closing Transfer Books. 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 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 not be more than sixty nor less than ten days before the
date

10
<PAGE> 2
of such meeting. If no such record date is fixed by the board of directors, the
record date for determining the 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.

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 days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no such record date has been fixed by the board of directors, 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 the General Corporation Law of the State of Delaware, 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 Delaware by hand or certified or registered mail, return
receipt requested, to its principal place of business or to an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. If no record date has been fixed by the board of
directors and prior action by the board of directors is required by the General
Corporation Law of the State of Delaware, 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.

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 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 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 days prior to such payment, exercise or other
action. If no such 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 9. INDEMNIFICATION.

9.1 Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director officer of the corporation or is or was serving at the request of the
corporation as a director or officer of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer or
in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware

11
<PAGE> 3
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the corporation to provide broader indemnification rights than such law
permitted the corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director or officer
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in this Section 9.1
with respect to proceedings to enforce rights to indemnification, the
corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the corporation. The right
to indemnification conferred in this Section 9.1 shall be a contract right and
shall include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the corporation of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is not further right to
appeal that such indemnitee is not entitled to be indemnified for such expenses
under this Section 9 or otherwise (hereinafter an "undertaking").

9.2 Right of Indemnitee to Bring Suit. If a claim under Section 9.1 of
these by-laws is not paid in full by the corporation within forty-five (45) days
after a written claim has been received by the corporation, the indemnitee may
at any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim. If successful in whole or part in any such suit or in a
suit brought by the corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall be entitled to be paid also
the expense of prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) any suit by the corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the corporation
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. 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
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
corporation (including its board of directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right hereunder, or by the corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be

12
<PAGE> 4
indemnified or to such advancement of expenses under this Section 9 or otherwise
shall be on the corporation.

9.3 Non-Exclusivity of Rights. The rights of indemnification and to
the advancement of expenses conferred in this Section 9 shall not be exclusive
of and shall not affect any other right which any person may have or thereafter
acquire under any statue, provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise, and
shall inure to the benefit of the heirs and legal representatives of such
person.

9.4 Insurance. The corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.

9.5 Indemnification of Employees or Agents of the Corporation. The
corporation may, to the extent authorized from time to time by the board of
directors, grant rights to indemnification and to the advancement of expenses,
to any employee or agent of the corporation to the fullest extent of the
provisions of this Section 9 with respect to the indemnification and advancement
of expenses of directors or officers of the corporation.

9.6 Indemnification Contracts. The board of directors is authorized to
enter into a contract with any director, officer, employee or agent of the
corporation, or any person serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including employee benefit plans, providing
for indemnification rights equivalent to or, if the board of directors so
determines, greater than, those provided for in this Section 9.

9.7 Effect of Amendment. Any amendment, repeal or modification of any
provision of this Section 9 by the stockholders or the directors of the
corporation shall not adversely affect any right or protection of a director or
officer of the corporation existing at the time of such amendment, repeal or
modification.

SECTION 10. CORPORATE SEAL.

10.1 Subject to alteration by the directors, the seal of the
corporation shall consist of a flat-faced circular die with the word "Delaware"
and the name of the corporation cut or engraved thereon, together with such
other words, dates or images as may be approved from time to time by the
directors.

SECTION 11. EXECUTION OF PAPERS.

11.1 Except as the board of directors may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts or other obligations made,
accepted or endorsed by the corporation shall be signed by the chairman of the
board, if any, the president, a vice president or the treasurer.

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<PAGE> 5
SECTION 12. FISCAL YEAR.

12.1 The fiscal year of the corporation shall end on the December 31st.

SECTION 13. AMENDMENTS.

13.1 These by-laws may be adopted, amended or repealed by vote of a
majority of the directors then in office or by vote of a majority of the stock
outstanding and entitled to vote. Any by-law, whether adopted, amended or
repealed by the stockholders or directors, may be amended or reinstated by the
stockholders or the directors.

<PAGE> 1
EXHIBIT 10.1

VISION SOLUTIONS, INC.

1996 INCENTIVE STOCK OPTION,
NONQUALIFIED STOCK OPTION
AND RESTRICTED STOCK PURCHASE PLAN

This 1996 INCENTIVE STOCK OPTION, NONQUALIFIED STOCK OPTION AND RESTRICTED
STOCK PURCHASE PLAN (the "Plan") is hereby established by Vision Solutions,
Inc., a California corporation (the "Company") and adopted by its Board of
Directors as of January 2, 1997 (the "Effective Date").

ARTICLE 1.

PURPOSES OF THE PLAN

1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee directors), and consultants and other service
providers upon whose judgment, initiative and efforts the successful conduct and
development of the Company's business largely depends, and (b) to provide
additional incentives to such persons or entities to devote their utmost effort
and skill to the advancement and betterment of the Company, by providing them an
opportunity to participate in the ownership of the Company and thereby have an
interest in the success and increased value of the Company.

ARTICLE 2.

DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings
indicated:

2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.

2.2 AFFILIATED COMPANY. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.

2.3 BOARD. "Board" means the Board of Directors of the Company.

2.4 CHANGE IN CONTROL. "Change in Control" shall mean (i) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial
ownership of more than fifty percent (50%) of the outstanding securities of the
Company; (ii) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which
<PAGE> 2

the Company is incorporated; (iii) the sale, transfer or other disposition of
all or substantially all of the assets of the Company; (iv) a complete
liquidation or dissolution of the Company; or (v) any reverse merger in which
the Company is the surviving entity but in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger.

2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

2.6 COMMITTEE. "Committee" means a committee of two or more members of the
Board appointed to administer the Plan, as set forth in Section 7.1 hereof.

2.7 COMMON STOCK. "Common Stock" means the Common Stock, $0.01 par value,
of the Company, subject to adjustment pursuant to Section 4.2 hereof.

2.8 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.

2.9 EFFECTIVE DATE. "Effective Date" means the date on which the Plan is
adopted by the Board, as set forth on the first page hereof.

2.10 EXERCISE PRICE. "Exercise Price" means the purchase price per share of
Common Stock payable upon exercise of an Option.

2.11 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:

(a) If the Common Stock is then listed or admitted to trading on a
Nasdaq market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the closing sale price on the date of valuation on
such Nasdaq market system or principal stock exchange on which the Common Stock
is then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on such Nasdaq market system or such exchange on the next preceding
day on which a closing sale price is quoted.

(b) If the Common Stock is not then listed or admitted to trading on
a Nasdaq market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the average of the closing bid and asked prices
of the Common Stock in the over-the-counter market on the date of valuation.

(c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall be
conclusive and binding on all interested parties.

2
<PAGE> 3

2.12 INCENTIVE OPTION. "Incentive Option" means any Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.

2.13 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.

2.14 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers, Inc.

2.15 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that is
not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Stockholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.

2.16 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement" means
an Option Agreement with respect to a Nonqualified Option.

2.17 OFFEREE. "Offeree" means a Participant to whom a Right to Purchase has
been offered or who has acquired Restricted Stock under the Plan.

2.18 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.

2.19 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.

2.20 OPTIONEE. "Optionee" means a Participant who holds an Option.

2.21 PARTICIPANT. "Participant" means an individual or entity who holds an
Option, a Right to Purchase or Restricted Stock under the Plan.

2.22 PURCHASE PRICE. "Purchase Price" means the purchase price per share of
Restricted Stock payable upon acceptance of a Right to Purchase.

2.23 RESTRICTED STOCK. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.

2.24 RIGHT TO PURCHASE. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.

2.25 SERVICE PROVIDER. "Service Provider" means a consultant or other
person or entity who provides services to, or has an important business
relationship with, the Company or an Affiliated Company and who the
Administrator authorizes to become a Participant in the Plan.

3
<PAGE> 4

2.26 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the written
agreement entered into between the Company and the Offeree with respect to a
Right to Purchase offered under the Plan.

2.27 10% STOCKHOLDER. "10% Stockholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.

ARTICLE 3.

ELIGIBILITY

3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company or
of an Affiliated Company (including members of the Board if they are employees
of the Company or of an Affiliated Company) are eligible to receive Incentive
Options under the Plan.

3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other key
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan.

3.3 LIMITATION ON SHARES. In no event shall any Participant be granted
Rights to Purchase or Options in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds two hundred fifty (250) shares, subject to adjustment for changes in the
capital structure of the Company as provided in Section 4.2 hereof.

ARTICLE 4.

PLAN SHARES

4.1 SHARES SUBJECT TO THE PLAN. A total of seven hundred (700) shares of
Common Stock may be issued under the Plan, subject to adjustment as to the
number and kind of shares pursuant to Section 4.2 hereof. For purposes of this
limitation, in the event that (a) all or any portion of any Option or Right to
Purchase granted or offered under the Plan can no longer under any circumstances
be exercised, or (b) any shares of Common Stock are reacquired by the Company
pursuant to an Incentive Option Agreement, Nonqualified Option Agreement or
Stock Purchase Agreement, the shares of Common Stock allocable to the
unexercised portion of such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.

4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding shares
of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of

4
<PAGE> 5

shares subject to this Plan, and the number and kind of shares and the price per
share subject to outstanding Option Agreements, Rights to Purchase and Stock
Purchase Agreements in order to preserve, as nearly as practical, but not to
increase, the benefits to Participants.

ARTICLE 5.

OPTIONS

5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.

5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered
by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 85% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the
person to whom an Incentive Option is granted is a 10% Stockholder on the date
of grant, the Exercise Price shall not be less than 110% of Fair Market Value on
the date the Incentive Option is granted.

5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be made
upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee 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; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee 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 (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.

5
<PAGE> 6

5.4 TERM AND TERMINATION OF OPTIONS. The term and termination of each
Option shall be as fixed by the Administrator, but no Option may be exercisable
more than ten (10) years after the date it is granted. An Incentive Option
granted to a person who is a 10% Stockholder on the date of grant shall not be
exercisable more than five (5) years after the date it is granted.

5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and be
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.

5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.

5.7 NONTRANSFERABILITY OF OPTIONS. No Incentive Option shall be assignable
or transferable except by will or the laws of descent and distribution, and
during the life of the Optionee shall be exercisable only by such Optionee;
provided, however, that, in the discretion of the Administrator, any Incentive
Option may be assigned or transferred in any manner which an "incentive stock
option" is permitted to be assigned or transferred under the Code. In the
discretion of the Administrator, any Nonqualified Option may be assigned or
transferred subject to such limitations and restrictions as the Administrator
may determine in its sole discretion.

5.8 RIGHTS AS STOCKHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a Stockholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.

ARTICLE 6.

RIGHTS TO PURCHASE

6.1 NATURE OF RIGHT TO PURCHASE. A Right to Purchase granted to an Offeree
entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.

6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights with
respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem

6
<PAGE> 7

desirable. Each Stock Purchase Agreement may be different from each other Stock
Purchase Agreement.

6.3 PURCHASE PRICE; PAYMENT OF PURCHASE PRICE. The Purchase Price per
share of Restricted Stock covered by each Right to Purchase shall be determined
by the Administrator, subject to the following: (a) the Purchase Price shall be
not less than 85% of Fair Market Value on the date the Right to Purchase is
granted; and (b) if the person to whom the Right to Purchase is a 10%
Stockholder on the date of grant, the Purchase Price shall not be less than 100%
of Fair Market Value on the date the Right to Purchase is granted. Subject to
any legal restrictions, payment of the Purchase Price upon acceptance of a Right
to Purchase Restricted Stock may be made, in the discretion of the
Administrator, by: (a) cash; (b) check; (c) the surrender of shares of Common
Stock owned by the Offeree that have been held by the Offeree for at least six
(6) months, which surrendered shares shall be valued at Fair Market Value as of
the date of such exercise; (d) the Offeree's promissory note in a form and on
terms, including security arrangements, acceptable to the Administrator; (e) the
cancellation of indebtedness of the Company to the Offeree; (f) the waiver of
compensation due or accrued to the Offeree for services rendered; or (g) any
combination of the foregoing methods of payment or any other consideration or
method of payment as shall be permitted by applicable corporate law.

6.4 RIGHTS AS A STOCKHOLDER. Upon complying with the provisions of Section
6.2 hereof, an Offeree shall have the rights of a Stockholder with respect to
the Restricted Stock purchased pursuant to the Right to Purchase, including
voting and dividend rights, subject to the terms, restrictions and conditions as
are set forth in the Stock Purchase Agreement. Unless the Administrator shall
determine otherwise, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company in accordance with the terms of the
Stock Purchase Agreement.

6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement or by the Administrator.
In the event of termination of a Participant's employment, service as a director
of the Company or Service Provider status for any reason whatsoever (including
death or disability), the Stock Purchase Agreement may provide, in the
discretion of the Administrator, that the Company shall have the right,
exercisable at the discretion of the Administrator, to repurchase any shares of
Restricted Stock on such terms as may be provided in the Stock Purchase
Agreement.

6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.

6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.

6.8 NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be assignable
or transferable except by will or the laws of descent and distribution or as
otherwise provided by the Administrator.

7
<PAGE> 8

ARTICLE 7.

ADMINISTRATION OF THE PLAN

7.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.

7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's rights under any Option or Right to Purchase under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to Restricted Stock; (h) to extend
the exercise date of any Option or acceptance date of any Right to Purchase; (i)
to provide for rights of first refusal and/or repurchase rights; (j) to amend
outstanding Option Agreements and Stock Purchase Agreements to provide for,
among other things, any change or modification which the Administrator could
have provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants.

7.3 LIMITATION ON LIABILITY. No employee of the Company or member of the
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.

8
<PAGE> 9

ARTICLE 8.

CHANGE IN CONTROL

8.1 CHANGE IN CONTROL. In the event that the Company proposes to enter
into a transaction which will result in a Change in Control of the Company, or
any other event should occur which would result in a Change in Control of the
Company, the Plan and all outstanding Options and Rights to Purchase shall
terminate effective concurrently with the Change in Control, unless provision is
made in writing in connection with such Change in Control for the continuance of
the Plan and for the assumption of all outstanding Options and Rights to
Purchase, or for the substitution for such Options and Rights to Purchase, new
options and new rights to purchase shares of a successor corporation, with
appropriate adjustments and to the number and kinds of shares and prices, in
which event, the Plan, the Options and Rights to Purchase, or the new options
and new rights to purchase substituted therefor, shall continue in the manner
and under the terms so provided. If provision is not made in such Change in
Control for the continuance of the Plan and the assumption of Options and Rights
to Purchase theretofore granted, or the substitution for such Options and Rights
to Purchase of new options and rights to purchase covering shares of a successor
corporation, then the Administrator shall cause written notice of the proposed
Change in Control transaction to be given to the persons holding Options and
Rights to Purchase not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction, in which event all outstanding
Options and Rights to Purchase shall to the extent then exercisable, may be
exercised at any time prior to the Change in Control. The Administrator in its
discretion may, at any time, take one or more of the following actions: (A)
provide for the purchase of each Option or Right to Purchase for an amount of
cash or other property that could have been received upon the exercise of the
Option or Right to Purchase to the extent such Option or Right to Purchase was
then exercisable, (B) adjust the terms of the Options and Rights to Purchase in
a manner determined by the Administrator to reflect the Change in Control, or
(C) make such other provision as the Administrator may consider equitable.

ARTICLE 9.

AMENDMENT AND TERMINATION OF THE PLAN

9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend or
terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any Participant under an
outstanding Option Agreement or Stock Purchase Agreement without such
Participant's consent. The Board may alter or amend the Plan to comply with
requirements under the Code relating to Incentive Options or other types of
options which give Optionee more favorable tax treatment than that applicable to
Options granted under this Plan as of the date of its adoption, or to comply
with provisions under applicable securities laws, including without limitation,
Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.

9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to

9
<PAGE> 10

Purchase may be granted under the Plan thereafter, but Option Agreements, Stock
Purchase Agreements and Rights to Purchase then outstanding shall continue in
effect in accordance with their respective terms.

9.3 STOCKHOLDER APPROVAL. The Company shall submit this Plan for approval
by its Stockholders within 12 months after the Effective Date. Any Option
exercised or any issuance of Restricted Stock before Stockholder approval is
obtained must be rescinded if Stockholder approval is not obtained within 12
months after the Effective Date. No shares of Common Stock issued upon such
exercise shall be counted in determining whether such Stockholder approval is
obtained.

ARTICLE 10.

TAX WITHHOLDING

10.1 WITHHOLDING. The Company shall have the power to withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy any
applicable Federal, state, and local tax withholding requirements with respect
to any Options exercised or Restricted Stock issued under the Plan. To the
extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the
purchase of or lapse of restrictions on Restricted Stock or (b) delivering to
the Company shares of Common Stock owned by the Participant. The shares of
Common Stock so applied or delivered in satisfaction of the Participant's tax
withholding obligation shall be valued at their Fair Market Value as of the date
of measurement of the amount of income subject to withholding.

ARTICLE 11.

MISCELLANEOUS

11.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits under
the Plan may not be assigned or alienated, whether voluntarily or involuntarily.
Any unauthorized attempt at assignment, transfer, pledge or other disposition
shall be without effect.

11.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to interfere
with the right of the Company or any Affiliated Company to discharge any
Participant at any time.

10
<PAGE> 11

11.3 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.

<PAGE> 1
EXHIBIT 10.2

VISION SOLUTIONS, INC.

INCENTIVE STOCK OPTION AGREEMENT

This Incentive Stock Option Agreement (the "Agreement") is entered into
as of ____________________, 19__, by and between Vision Solutions, Inc., a
California corporation (the "Company") and ____________________________ (the
"Optionee") pursuant to the Company's 1996 Incentive Stock Option, Nonqualified
Stock Option and Restricted Stock Purchase Plan (the "Plan").

1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of _________ shares (the
"Shares") of the Common Stock of the Company at a purchase price of $ _________
per share (the "Exercise Price"), subject to the terms and conditions set forth
herein and the provisions of the Plan. This Option is intended to qualify as an
"incentive stock option" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"). If this Option fails in whole or in part to
qualify as an incentive stock option, then this Option shall to that extent
constitute a nonqualified stock option.

2. VESTING OF OPTION. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any vested installment, as follows:

<TABLE>
<CAPTION>
This Option shall be
On or After: Exercisable as to:
------------ ------------------

<S> <C> <C>
(i) , 19 : shares
---------------- ----- ------------------

(ii) , 19 : an additional shares
---------------- ----- ------------------

(iii) , 19 : an additional shares
---------------- ----- ------------------

(iv) , 19 : an additional shares
---------------- ----- ------------------
</TABLE>

The right to exercise may vest sooner as provided in Section 11 below. The
Administrator of the Plan shall have the right, but not the obligation, to
accelerate the vesting of this Option. Notwithstanding the foregoing, no shares
shall vest after the date of termination of Optionee's "Continuous Service" (as
defined in Section 3 below), but this Option shall continue to be exercisable in
accordance with Section 3 hereof with respect to that number of shares that have
vested as of the date of termination of Optionee's Continuous Service.

3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the first to occur of the following:

(a) the expiration of _________ (___) years from the date of this
Agreement;

(b) the expiration of three (3) months from the date of termination
of Optionee's Continuous Service if such termination occurs for any reason other
than permanent disability or death;
<PAGE> 2

provided, however, that if Optionee dies during such three-month period the
provisions of Section 3(d) below shall apply;

(c) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to permanent disability
of the Optionee (as defined in Section 22(e)(3) of the Code);

(d) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to Optionee's death or
if death occurs during the three-month period following termination of
Optionee's Continuous Service pursuant to Section 3(b) or 3(c) above, as the
case may be; or

(e) a Change in Control of the Company if such options are terminated
pursuant to Section 11.

As used herein, the term "Continuous Service" means (i) employment by
either the Company or any parent or subsidiary corporation of the Company, or by
a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code) or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable, (ii) service as a member of the Board of Directors of the
Company, or (iii) so long as Optionee is engaged as a consultant or service
provider to the Company or other corporation referred to in clause (i) above.
The expiration of Continuous Service shall be the date Optionee no longer
renders service for the Company or related entities as provided above,
regardless of the period for which the Company may continue to make compensation
payments to Optionee.

4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Section 2 above, and until termination of this Option
in accordance with Section 3 above, the portion of this Option which has vested
may be exercised in whole or in part by the Optionee (or, after Optionee's
death, by the successor designated in Section 5 below) upon delivery of the
following to the Company at its principal executive offices:

(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares may
be purchased);

(b) a check or cash in the amount of the Exercise Price (or payment
of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 5.3
of the Plan);

(c) a check or cash in the amount reasonably requested by the Company
to satisfy the Company's withholding obligations under federal, state or other
applicable tax laws with respect to the taxable income, if any, recognized by
the Optionee in connection with the exercise of this Option (unless the Company
and Optionee shall have made other arrangements for deductions or withholding
from Optionee's wages, bonus or other compensation payable to Optionee, or by
the withholding of Shares issuable upon exercise of this Option or the delivery
of Shares owned by the Optionee in

2
<PAGE> 3

accordance with Section 10.1 of the Plan, provided such arrangements satisfy the
requirements of applicable tax laws); and

(d) a letter, if requested by the Company, in such form and substance
as the Company may require, setting forth the investment intent of the Optionee,
or person designated in Section 5 below, as the case may be.

5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under
this Agreement may not be assigned or transferred except by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of Optionee's death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, Optionee's legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.

6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.

(a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.

(b) Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities Act
of l933, as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that Optionee's exercise
of the Option may be expressly conditioned upon Optionee's delivery to the
Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Act and the resulting restrictions on transfer.
Optionee acknowledges that, because Shares received upon exercise of an Option
may be unregistered, Optionee may be required to hold the Shares indefinitely
unless they are subsequently registered for resale under the Act or an exemption
from such registration is available.

(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.

7. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which Optionee resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may deem necessary or advisable.

3
<PAGE> 4

8. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. The Company agrees
to use its reasonable best efforts to obtain from any applicable regulatory
agency such authority or approval as may be required in order to issue and sell
the Shares to the Optionee pursuant to this Option. Inability of the Company to
obtain, from any such regulatory agency, authority or approval deemed by the
Company's counsel to be necessary for the lawful issuance and sale of the Shares
hereunder and under the Plan shall relieve the Company of any liability in
respect of the nonissuance or sale of such Shares as to which such requisite
authority or approval shall not have been obtained.

9. RIGHT OF FIRST REFUSAL.

(a) The Shares acquired pursuant to the exercise of this Option may
be sold by the Optionee only in compliance with the provisions of this Section
9, and subject in all cases to compliance with the provisions of Section 6(b)
hereof. Prior to any intended sale, Optionee shall first give written notice
(the "Offer Notice") to the Company specifying (i) Optionee's bona fide
intention to sell or otherwise transfer such Shares, (ii) the name and address
of the proposed purchaser(s), (iii) the number of Shares the Optionee proposes
to sell (the "Offered Shares"), (iv) the price for which Optionee proposes to
sell the Offered Shares, and (v) all other material terms and conditions of the
proposed sale.

(b) Within 30 days after receipt of the Offer Notice, the Company or
its nominee(s) may elect to purchase all or any portion of the Offered Shares at
the price and on the terms and conditions set forth in the Offer Notice by
delivery of written notice (the "Acceptance Notice") to the Optionee specifying
the number of Offered Shares that the Company or its nominees elect to purchase.
Within 15 days after delivery of the Acceptance Notice to the Optionee, the
Company and/or its nominee(s) shall deliver to the Optionee a check (or, at the
discretion of the Company, such other form of consideration set forth in the
Offer Notice) in the amount of the purchase price of the Offered Shares to be
purchased pursuant to this Section 9, against delivery by the Optionee of a
certificate or certificates representing the Offered Shares to be purchased,
duly endorsed for transfer to the Company or such nominee(s), as the case may
be. If the Company and/or its nominee(s) do not elect to purchase all of the
Offered Shares, the Optionee shall be entitled to sell the balance of the
Offered Shares to the purchaser(s) named in the Offer Notice at the price
specified in the Offer Notice or at a higher price and on the terms and
conditions set forth in the Offer Notice, provided, however, that such sale or
other transfer must be consummated within 60 days from the date of the Offer
Notice and any proposed sale after such 60-day period may be made only by again
complying with the procedures set forth in this Section 9.

(c) The Optionee may transfer all or any portion of the Shares to a
trust established for the sole benefit of the Optionee and/or his or her spouse
or children without such transfer being subject to the right of first refusal
set forth in this Section 9, provided that the Shares so transferred shall
remain subject to the terms and conditions of this Agreement and no further
transfer of such Shares may be made without complying with the provisions of
this Section 9.

(d) Any Successor of Optionee pursuant to Section 5 hereof, and any
transferee of the Shares pursuant to this Section 9, shall hold the Shares
subject to the terms and conditions of this Agreement, including without
limitation the repurchase rights set forth in Section 10 below, and no further
transfer of the Shares may be made without complying with the provisions of this
Section 9.

4
<PAGE> 5

(e) All stock certificates evidencing the Shares shall be imprinted
with a legend substantially as follows:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS AGAINST TRANSFER, INCLUDING A RIGHT OF
FIRST REFUSAL IN FAVOR OF THE COMPANY, AND CERTAIN REPURCHASE
OPTIONS AS SET FORTH IN A STOCK OPTION AGREEMENT DATED
___________________, 19______. TRANSFER OF THESE SHARES MAY BE
MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID AGREEMENT, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."

(f) The rights provided the Company and its nominee(s) under this
Section 9 shall terminate upon the closing of an underwritten public offering of
Shares of the Company's Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act").

10. REPURCHASE OPTION.

(a) In the event Optionee ceases Continuous Service with the Company
for any reason (the "Termination"), any Shares acquired or which may thereafter
be acquired pursuant to the exercise of this Option (the "Purchased Shares")
(whether held by Optionee or one or more of Optionee's transferees) will be
subject to repurchase by the Company pursuant to the terms and conditions set
forth in this Section 10 (the "Repurchase Option").

(b) The purchase price for each Purchased Share will be the "Fair
Market Value" (as defined below) for such share as determined on the date of
Termination (the "Repurchase Price").

(c) The Company's board of directors (the "Board") may elect to
purchase all or any portion of the Purchased Shares by delivering written notice
(the "Repurchase Notice") to the holder or holders of the Purchased Shares
within 90 days after the later of (i) Termination, or (ii) the last date this
Option may be exercised by Optionee or a Successor. The Repurchase Notice will
set forth the number of Purchased Shares to be acquired from Optionee, the
aggregate consideration to be paid for such Shares and the time and place for
the closing of the transaction. The number of Purchased Shares to be repurchased
by the Company shall first be satisfied to the extent possible from the
Purchased Shares held by Optionee at the time of delivery of the Repurchase
Notice. If the number of Purchased Shares then held by Optionee is less than the
total number of Purchased Shares which the Company has elected to purchase, the
Company shall purchase the remaining Purchased Shares elected to be purchased
from the other holder(s) of Purchased Shares under this Agreement, pro rata
according to the number of Purchased Shares held by such other holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest share).

5
<PAGE> 6

purchased pursuant to the Repurchase Option either (i) in one lump sum payment
by delivery of a check or wire transfer on the Repurchase Date in an amount
equal to the Repurchase Price, or (ii) by delivery on the Repurchase Date of (A)
a check or wire transfer in an amount equal to the sum of the aggregate original
cost of the Purchased Shares to be repurchased, in any event not exceeding in
the aggregate the Repurchase Price (the "Cash Repurchase Payment"), and (B) a
promissory note of the Company in a principal amount equal to the Repurchase
Price minus the Cash Repurchase Payment, bearing interest at the rate of the
lesser of (i) eight percent (8%), or (ii) the prime rate of interest then in
effect of Bank of America, NT&SA, per annum non-compounded commencing on the
Repurchase Date and providing for payment of the principal amount, plus accrued
interest, in thirty-six (36) installments on the last day of each calendar month
for the next thirty-six (36) months following the Repurchase Date. In addition,
the Company may pay the Repurchase Price for such Shares by offsetting amounts
outstanding under any bona fide debts owed by Optionee to the Company. The
Company will be entitled to receive customary representations and warranties
from the sellers regarding such sale and to require all sellers' signatures be
guaranteed.

(e) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Purchased Shares by the Company shall be subject
to applicable restrictions contained in the applicable state law and in the
Company's and its subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Purchased Shares hereunder which
the Company has otherwise elected to make, or if the Company should otherwise
deem it appropriate, the Company may assign its repurchase rights to one or more
third parties or make such repurchases as soon as it is permitted to do so under
such restrictions; provided, however, that, notwithstanding such restrictions,
the Company shall deliver the Repurchase Notice as provided in paragraph 10(c)
above, and shall remain bound by the terms of such Repurchase Notice until such
time as the Purchased Shares are actually purchased by the Company pursuant to
such notice.

(f) For purposes of this Section 10, the Fair Market Value will be
the fair value of the Common Stock as determined in good faith by the Board of
Directors of the Company.

(g) The rights provided the Company under this Section 10 shall
terminate upon the closing of an underwritten public offering of Shares of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act.

11. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the
outstanding Shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other similar change
in the capital structure of the Company, then appropriate adjustment shall be
made by the Administrator to the number of Shares subject to the unexercised
portion of this Option and to the Exercise Price per share, in order to
preserve, as nearly as practical, but not to increase, the benefits of the
Optionee under this Option, in accordance with the provisions of Section 4.2 of
the Plan.

6
<PAGE> 7

outstanding Options, or for the substitution for such Options of new options to
purchase shares of a successor corporation, with appropriate adjustments and to
the number and kinds of shares and prices, in which event, the Plan and the
Options, or the new options substituted therefor, shall continue in the manner
and under the terms so provided. If provision is not made in such Change in
Control for the continuance of the Plan and the assumption of Options, or the
substitution for such Options of new options covering shares of a successor
corporation, then the Administrator shall cause written notice of the proposed
Change in Control transaction to be given to the persons holding Options not
less than fifteen (15) days prior to the anticipated effective date of the
proposed transaction, in which this Option, to the extent then exercisable, may
be exercised prior to the Change in Control.

13. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option
nor the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved, subject to any
other written employment agreement to which the Company and Optionee may be a
party.

14. RIGHTS AS STOCKHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
stockholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.

15. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time following the
effective date of the registration statement filed by the Company with respect
to such offering, as the Company or the underwriter may specify.

16. INTERPRETATION. This Option is granted pursuant to the terms of the
Plan, all defined terms, unless otherwise defined herein, shall have the meaning
set forth in the Plan, and this Option shall in all respects be interpreted in
accordance with the Plan. The Administrator shall interpret and construe this
Option and the Plan, and any action, decision, interpretation or determination
made in good faith by the Administrator shall be final and binding on the
Company and the Optionee. As used in this Agreement, the term "Administrator"
shall refer to the committee of the Board of Directors of the Company appointed
to administer the Plan, and if no such committee has been appointed, the term
Administrator shall mean the Board of Directors.

17. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at Optionee's most recent
address as shown in the employment or stock records of the Company.

7
<PAGE> 8

18. SEVERABILITY. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.

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

20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of California without
giving effect to any choice or conflict of law provisions or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction.

21. ARBITRATION, FEES AND COSTS.

(a) Except solely as set forth in clause (c) of this Section 21, each
dispute, difference, controversy or claim arising in connection with or related
or incidental to, or question occurring under, this Agreement or the subject
matter hereof, or otherwise in any way related to the employment of Optionee by
the Company, shall be finally settled under the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA") by an arbitral tribunal
composed of three (3) arbitrators, at least one of whom shall be an attorney
experienced in corporate transactions, appointed by agreement of the parties in
accordance with said Rules. In the event the parties fail to agree upon a panel
of arbitrators from the first list of potential arbitrators proposed by the AAA,
the AAA will submit a second list in accordance with said Rules. In the event
the parties shall have failed to agree upon a full panel of arbitrators from
said second list, any remaining arbitrators to be selected shall be appointed by
the AAA in accordance with said Rules. If, at the time of arbitration, the
parties agree in writing to submit the dispute to a single arbitrator, said
single arbitrator shall be appointed by agreement of the parties in accordance
with the foregoing procedure, or, failing such agreement, by the AAA in
accordance with said Rules. The foregoing arbitration proceedings may be
commenced by any party by notice to the other parties.

(b) The place of arbitration shall be Orange County, California.

(c) The parties hereby exclude any right to appeal to any court on
the merits of the dispute. The provisions of this Section 21 may be enforced in
any court having jurisdiction over the award or any of the parties or any of
their respective assets, and judgment on the award (including without
limitation, equitable remedies) granted in any arbitration hereunder may be
entered in any such court. Nothing contained in this Section 21 shall prevent
any party from seeking protection in the form of preliminary or temporary
equitable relief.

(d) Each party shall bear its own fees, costs and expenses, including
without limitation, attorneys' fees, incurred in connection with such
arbitration, regardless of the outcome of the arbitration. In no event shall the
arbitrator be entitled to award punitive or exemplary damages.

(e) Each of the parties hereby acknowledges that he or it has been
informed by the other party that the provisions of this Section 21 constitute a
material inducement upon which such party is relying and will rely upon in
entering into this Agreement and the transactions contemplated hereby.

8
<PAGE> 9

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

"VISION SOLUTIONS, INC." "OPTIONEE"

By:
------------------------------ ------------------------------
Its: (Signature)
------------------------------

------------------------------
(Type or print name)

<PAGE> 1
EXHIBIT 10.3

VISION SOLUTIONS, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

This Incentive Stock Option Agreement (the "Agreement") is entered into
as of _________________________, 19__, by and between Vision Solutions, Inc., a
California corporation (the "Company") and
_______________________________________ (the "Optionee") pursuant to the
Company's 1996 Incentive Stock Option, Nonqualified Stock Option and Restricted
Stock Purchase Plan (the "Plan").

1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of shares (the
"Shares") of the Common Stock of the Company at a purchase price of $ per
share (the "Exercise Price"), subject to the terms and conditions set forth
herein and the provisions of the Plan. This Option is a nonqualified stock
option.

<TABLE>
<CAPTION>
This Option shall be
On or After: Exercisable as to:
------------ ------------------
<S> <C> <C>
(i) , 19 : shares
------------------ ----- ---------------

(ii) , 19 : an additional shares
------------------ ----- ---------------

(iii) , 19 : an additional shares
------------------ ----- ---------------

(iv) , 19 : an additional shares
------------------ ----- ---------------
</TABLE>

3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the first to occur of the following:

(a) the expiration of _________ (___) years from the date of this
Agreement;

(b) the expiration of Optionee's Continuous Service, for any reason,
including termination of employment with or without cause or as a result of a
death or disability of Optionee.
<PAGE> 2
(c) a Change in Control of the Company if such options are terminated
pursuant to Section 11.

As used herein, the term "Continuous Service" means (i)
employment by either the Company or any parent or subsidiary corporation of the
Company, or by a corporation or a parent or subsidiary of a corporation issuing
or assuming a stock option in a transaction to which Section 424(a) of the Code
applies, which is uninterrupted except for vacations, illness (except for
permanent disability, as defined in Section 22(e)(3) of the Code) or leaves of
absence which are approved in writing by the Company or any of such other
employer corporations, if applicable, (ii) service as a member of the Board of
Directors of the Company, or (iii) so long as Optionee is engaged as a
consultant or service provider to the Company or other corporation referred to
in clause (i) above. The expiration of Continuous Service shall be the date
Optionee no longer renders service for the Company or related entities as
provided above, regardless of the period for which the Company may continue to
make compensation payments to Optionee.

(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares may
be purchased);

2
<PAGE> 3

exercise this Option by reason of the death of the Optionee (individually, a
"Successor") shall succeed to the Optionee's rights and obligations under this
Agreement. After the death of the Optionee, only a Successor may exercise this
Option.

6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.

(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.

9. RIGHT OF FIRST REFUSAL.

3
<PAGE> 4

number of Shares the Optionee proposes to sell (the "Offered Shares"), (iv) the
price for which Optionee proposes to sell the Offered Shares, and (v) all other
material terms and conditions of the proposed sale.

(e) All stock certificates evidencing the Shares shall be imprinted
with a legend substantially as follows:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS AGAINST TRANSFER, INCLUDING A RIGHT OF
FIRST REFUSAL IN FAVOR OF THE COMPANY, AND CERTAIN REPURCHASE
OPTIONS AS SET FORTH IN A STOCK OPTION AGREEMENT DATED
_______________________, 19___. TRANSFER OF THESE SHARES MAY BE
MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID AGREEMENT, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."

(f) The rights provided the Company and its nominee(s) under this
Section 9 shall terminate upon the closing of an underwritten public offering of
Shares of the Company's Common

4
<PAGE> 5

Stock pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act").

10. REPURCHASE OPTION.

(b) The purchase price for each Purchased Share will be the "Fair
Market Value" (as defined below) for such share as determined on the date of
Termination (the "Repurchase Price").

(d) The closing of the purchase of the Purchased Shares pursuant to
the Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice, which date shall not be more than one (1) month nor less
than five (5) days after the delivery of such notice (the "Repurchase Date").
The Company may, at its option, pay for the Purchased Shares to be purchased
pursuant to the Repurchase Option either (i) in one lump sum payment by delivery
of a check or wire transfer on the Repurchase Date in an amount equal to the
Repurchase Price, or (ii) by delivery on the Repurchase Date of (A) a check or
wire transfer in an amount equal to the sum of the aggregate original cost of
the Purchased Shares to be repurchased, in any event not exceeding in the
aggregate the Repurchase Price (the "Cash Repurchase Payment"), and (B) a
promissory note of the Company in a principal amount equal to the Repurchase
Price minus the Cash Repurchase Payment, bearing interest at the rate of the
lesser of (i) eight percent (8%), or (ii) the prime rate of interest then in
effect of Bank of America, NT&SA, per annum non-compounded commencing on the
Repurchase Date and providing for payment of the principal amount, plus accrued
interest, in thirty-six (36) installments on the last day of each calendar month
for the next thirty-six (36) months following the Repurchase Date. In addition,
the Company may pay the Repurchase Price for such Shares by offsetting amounts
outstanding under any bona fide debts owed by Optionee to the Company. The
Company will be entitled to receive customary representations and warranties
from the sellers regarding such sale and to require all sellers' signatures be
guaranteed.

5
<PAGE> 6

(f) For purposes of this Section 10, the Fair Market Value will be
the fair value of the Common Stock as determined in good faith by the Board of
Directors of the Company.

12. CHANGE IN CONTROL. In the event that the Company proposes to enter
into a transaction which will result in a Change in Control of the Company (as
defined in the Plan), or any other event should occur which would result in a
Change in Control of the Company, all outstanding Options shall terminate
effective concurrently with the Change in Control, unless provision is made in
writing in connection with such Change in Control for the continuance of the
Plan and for the assumption of all outstanding Options, or for the substitution
for such Options of new options to purchase shares of a successor corporation,
with appropriate adjustments and to the number and kinds of shares and prices,
in which event, the Plan and the Options, or the new options substituted
therefor, shall continue in the manner and under the terms so provided. If
provision is not made in such Change in Control for the continuance of the Plan
and the assumption of Options, or the substitution for such Options of new
options covering shares of a successor corporation, then the Administrator shall
cause written notice of the proposed Change in Control transaction to be given
to the persons holding Options not less than fifteen (15) days prior to the
anticipated effective date of the proposed transaction, in which this Option, to
the extent then exercisable, may be exercised prior to the Change in Control.

6
<PAGE> 7

discharge or otherwise), with or without cause, is specifically reserved,
subject to any other written employment agreement to which the Company and
Optionee may be a party.

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

21. ARBITRATION, FEES AND COSTS.

(a) Except solely as set forth in clause (c) of this Section 21, each
dispute, difference, controversy or claim arising in connection with or related
or incidental to, or question

7
<PAGE> 8

occurring under, this Agreement or the subject matter hereof, or otherwise in
any way related to the employment of Optionee by the Company, shall be finally
settled under the Commercial Arbitration Rules of the American Arbitration
Association (the "AAA") by an arbitral tribunal composed of three (3)
arbitrators, at least one of whom shall be an attorney experienced in corporate
transactions, appointed by agreement of the parties in accordance with said
Rules. In the event the parties fail to agree upon a panel of arbitrators from
the first list of potential arbitrators proposed by the AAA, the AAA will submit
a second list in accordance with said Rules. In the event the parties shall have
failed to agree upon a full panel of arbitrators from said second list, any
remaining arbitrators to be selected shall be appointed by the AAA in accordance
with said Rules. If, at the time of arbitration, the parties agree in writing to
submit the dispute to a single arbitrator, said single arbitrator shall be
appointed by agreement of the parties in accordance with the foregoing
procedure, or, failing such agreement, by the AAA in accordance with said Rules.
The foregoing arbitration proceedings may be commenced by any party by notice to
the other parties.

(b) The place of arbitration shall be Orange County, California.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

"VISION SOLUTIONS, INC." "OPTIONEE"

By:
------------------------------ ------------------------------
Its: (Signature)
------------------------------

------------------------------
(Type or print name)

<PAGE> 1

EXHIBIT 10.5

SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT

BORROWER: VISION SOLUTIONS, INC.

ADDRESS: 2600 MICHELSON DRIVE, SUITE 1100 IRVINE, CALIFORNIA 92612

DATE: DECEMBER 10, 1996

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 3003 Tasman Drive, Santa
Clara, California 95054 and the borrower named above (the "Borrower"), whose
chief executive office is located at the above address ("Borrower's Address").

1. LOANS.

1.1 LOANS. Silicon, in its reasonable discretion, will make loans to
the Borrower (the "Loans") in amounts determined by Silicon in its reasonable
discretion up to the amount (the "Credit Limit") shown on the Schedule to this
Agreement (the "Schedule"), provided no Event of Default and no event which,
with notice or passage of time or both, would constitute an Event of Default
has occurred. The Borrower is responsible for monitoring the total amount of
Loans and other Obligations outstanding from time to time, and Borrower shall
not permit the same, at any time, to exceed the Credit Limit. If at any time
the total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, the Borrower shall immediately pay the amount of the excess to Silicon,
without notice or demand.

1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule hereto. Interest shall be payable
monthly, on the due date shown on the monthly billing from Silicon to the
Borrower. Silicon may, in its discretion, charge interest to Borrower's
deposit accounts maintained with Silicon.

1.3 FEES. The Borrower shall pay to Silicon a loan origination fee in
the amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.

1.4 LETTERS OF CREDIT. Silicon, in its reasonable discretion, will,
from time to time during the term of this Agreement, on the request of the
Borrower, issue letters of credit for the account of the Borrower ("Letters of
Credit"), in an aggregate amount at any one time outstanding not to exceed the
Letter of Credit Sublimit shown on the Schedule, provided that, on the date
the Letters of Credit are to be issued, Borrower has available to it Loans in
an amount equal to or greater than the face amount of the Letters of Credit to
be issued. Letters of Credit shall be in form and substance acceptable to
Silicon in its sole discretion, shall be payable in United States dollars and
shall have an expiry date no later than the Maturity Date. Prior to the
issuance of any Letters of Credit, Borrower shall execute and deliver to
Silicon applications for letters of credit, and letter of credit agreements on
Silicon's standard forms, and such other documentation as Silicon shall specify
(the "Letter of Credit Documentation"). Fees for Letters of Credit shall be as
provided in the Letter of Credit Documentation. Borrower shall indemnify,
defend and hold Silicon harmless from any loss, cost, expense or liability,
including without limitation reasonable attorneys fees, arising out of or
relating to Letters of Credit. The Credit Limit and the Loans available to
Borrower under this Agreement shall be reduced by the face amount of Letters of
Credit from time to time outstanding.

2. GRANT OF SECURITY INTEREST.

2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement
means the following: the obligation to pay all Loans and all interest thereon
when due, and to pay and perform when due all other present and future
indebtedness, liabilities, obligations, guarantees, covenants, agreements,
warranties and representations of the Borrower to Silicon, whether joint or
several, monetary or non-monetary, and whether created pursuant to this
Agreement or any other present or future agreement or otherwise. Silicon may,
in its discretion, require that Borrower pay monetary Obligations in cash to
Silicon, or charge them to Borrower's Loan account, in which event they will
bear interest at the same rate applicable to the Loans. Silicon may also, in
its discretion, charge any monetary Obligations to Borrower's deposit accounts
maintained with Silicon. Silicon will notify the Borrower

-1-
<PAGE> 2

SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT

of any such charges to Borrower's deposit accounts. Such charges shall not be
deemed to be a setoff for any purpose.

2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's interest
in the types of property described below, whether now owned or hereafter
acquired, and wherever located (collectively, the "Collateral"): (a) All
accounts, contract rights, chattel paper, letters of credit, documents,
securities, money, and instruments, and all other obligations now or in the
future owing to the Borrower; (b) All inventory, goods, merchandise, materials,
raw materials, work in process, finished goods, farm products, advertising,
packaging and shipping materials, supplies, and all other tangible personal
property which is held for sale or lease or furnished under contracts of
service or consumed in the Borrower's business, and all warehouse receipts and
other documents; and (c) All equipment, including without limitation all
machinery, fixtures, trade fixtures, vehicles, furnishings, furniture,
materials, tools, machine tools, office equipment, computers and peripheral
devices, appliances, apparatus, parts, dies, and jigs; (d) All general
intangibles including, but not limited to, deposit accounts, goodwill, names,
trade names, trademarks and the goodwill of the business symbolized thereby,
trade secrets, drawings, blueprints, customer lists, patents, patent
applications, copyrights, security deposits, loan commitment fees, federal,
state and local tax refunds and claims, all rights in all litigation presently
or hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, all claims of
Borrower against Silicon, all rights to purchase or sell real or personal
property, all rights as a licensor or licensee of any kind, all royalties,
licenses, processes, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation
credit, liability, property and other insurance), and all other rights,
privileges and franchises of every kind; (e) All books and records, whether
stored on computers or otherwise maintained; and (f) All substitutions,
additions and accessions to any of the foregoing, and all products, proceeds
and insurance proceeds of the foregoing, and all guaranties of and security for
the foregoing; and all books and records relating to any of the foregoing.
Silicon's security interest in any present or future technology (including
patents, trade secrets, and other technology) shall be subject to any licenses
or rights now or in the future granted by the Borrower to any third parties in
the ordinary course of Borrower's business; provided that if the Borrower
proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold such release in its
* discretion**.

* REASONABLE

* PROVIDED THAT LICENSES BY BORROWER OF ANY SUCH TECHNOLOGY IN THE
ORDINARY COURSE OF BORROWER'S BUSINESS SHALL NOT BE SUBJECT TO ANY SUCH REQUEST
PROCEDURE OR OTHERWISE REQUIRE THE CONSENT OF SILICON

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations will continue to be true,
and that the Borrower will comply with all of the following covenants:

3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower, if a corporation,
is and will continue to be, duly authorized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Borrower
is and will continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a material adverse
effect on the Borrower. The execution, delivery and performance by the
Borrower of this Agreement, and all other documents contemplated hereby have
been duly and validly authorized, are enforceable against the Borrower in
accordance with their terms, and do not violate any law or any provision of,
and are not grounds for acceleration under, any * agreement or instrument which
is binding upon the Borrower **. Borrower has no subsidiaries except as set
forth on the Schedule.

* MATERIAL

** OR ANY AGREEMENT THE VIOLATION OF WHICH MAY HAVE A MATERIAL ADVERSE
EFFECT ON THE BORROWER

3.2 NAME; TRADE NAMES AND STYLES. The name of the Borrower set forth
in the heading to this Agreement is its correct name. Listed on the Schedule
hereto are all prior names of the Borrower and all of Borrower's present and
prior trade names. The Borrower shall give Silicon 15 days' prior written
notice before changing its name or doing business under any other name. The
Borrower has complied, and will in the future comply, with all laws relating to
the conduct of business under a fictitious business name.

3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth
in the heading to this Agreement is the Borrower's chief executive office. In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location *.

* OTHER THAN FOR THE MOVEMENT OF ANY IMMATERIAL ITEMS OF EQUIPMENT TO A
DIFFERENT LOCATION

3.4 TITLE TO COLLATERAL, PERMITTED LIENS. The Borrower is now, and
will at all times in the future be, the sole owner of all the Collateral,
except for items of equipment which are leased by the Borrower. The Collateral
now is and will remain free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims, except for the following
("Permitted Liens"): (i) purchase money security interests in specific items of
equipment; (ii) leases

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SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT

of specific items of equipment; (iii) liens for taxes not yet payable; (iv)
additional security interests and liens consented to in writing by Silicon in
its reasonable discretion, which consent shall not be unreasonably withheld;
and (v) security interests being terminated substantially concurrently with
this Agreement. Silicon will have the right to require, as a condition to its
consent under subparagraph (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on Silicon's then
standard form, acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that the Borrower agree that any uncured default in any
obligation secured by the subordinate security interest shall also constitute
an Event of Default under this Agreement. * Silicon now has, and will continue
to have, a perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and the Borrower will at all
times defend Silicon and the Collateral against all claims of others. None of
the Collateral now is or will be affixed to any real property in such a manner,
or with such intent, as to become a fixture.

* OTHER THAN AS SPECIFIED IN THE COLLATERAL AGREEMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT OF EVEN DATE HEREWITH BETWEEN SILICON AND BORROWER (THE
"COLLATERAL AGREEMENT"),

3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the
Collateral in good working condition *, and the Borrower will not use the
Collateral for any unlawful purpose. The Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.

* , REASONABLE WEAR AND TEAR EXCEPTED

3.6 BOOKS AND RECORDS. The Borrower has maintained and will maintain
at the Borrower's Address complete and accurate books and records, comprising
an accounting system in accordance with generally accepted accounting
principles.

3.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower. The Borrower is now and will
continue to be solvent. The Borrower will provide Silicon: (i) within 30 days
after the end of each month, a monthly financial statement prepared by the
Borrower, and a Compliance Certificate in such form as Silicon shall reasonably
specify, signed by the Chief Financial Officer of the Borrower, certifying that
as of the end of such month the Borrower was in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations showing
compliance with the financial covenants set forth on the Schedule and such other
information as Silicon shall reasonably request; and (ii) within 90 days
following the end of the Borrower's fiscal year, complete annual financial
statements, certified by independent certified public accountants acceptable to
Silicon and accompanied by the unqualified report thereon by said independent
certified public accountants.

3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower. The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower. The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any * liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.

* MATERIAL

3.9 COMPLIANCE WITH LAW. The Borrower has complied, and will comply,
in all material respects, with all provisions of all foreign, federal, state
and local laws and regulations relating to the Borrower, including, but not
limited to, those relating to the Borrower's ownership of real or personal
property, conduct and licensing of the Borrower's business, and environmental
matters.

3.10 LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or (to best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or
against the Borrower involving amounts in excess of $100,000.

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Silicon Valley Bank Loan and Security Agreement

3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.

4. ADDITIONAL DUTIES OF THE BORROWER.

4.1 FINANCIAL AND OTHER COVENANTS. The Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule to this
Agreement.

4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of
all outstanding Loans and all other Obligations exceeds the Credit Limit,
without limiting Silicon's other remedies, and whether or not Silicon declares
an Event of Default, Borrower shall remit to Silicon all checks and other
proceeds of Borrower's accounts and general intangibles, in the same form as
received by Borrower, within one day after Borrower's receipt of the same, to be
applied to the Obligations in such order as Silicon shall determine in its
discretion.

4.3 INSURANCE. The Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as *. All
such insurance policies shall name Silicon as an additional loss payee, and
shall contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall apply
such proceeds in reduction of the Obligations as Silicon shall determine in its
sole and absolute discretion, except that, provided no Event of Default has
occurred, Silicon shall release to the Borrower insurance proceeds with respect
to equipment totaling less than $100,000, which shall be utilized by the
Borrower for the replacement of the equipment with respect to which the
insurance proceeds were paid. Silicon may require reasonable assurance that the
insurance proceeds so released will be so used. If the Borrower fails to provide
or pay for any insurance, Silicon may, but is not obligated to, obtain the same
at the Borrowers' expense. The Borrower shall promptly deliver to Silicon copies
of all reports made to insurance companies.

* ARE CUSTOMARY IN THE BORROWER'S INDUSTRY

4.4 REPORTS. The Borrower shall provide Silicon with such written reports
* with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify **.

* THAT BORROWER HAS OTHERWISE PREPARED IN THE CONDUCT OF ITS BUSINESS

** OTHER THAN FOR SUCH REPORTS AND OTHER INFORMATION AS ARE SET FORTH IN
THIS AGREEMENT AS AMENDED FROM TIME TO TIME

4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times, and
upon one business day notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy the Borrower's
accounting books and records and Borrower's books and records relating to the
Collateral. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
audits shall be at Silicon's expense, exempt that the Borrower shall reimburse
Silicon for its reasonable out of pocket costs for semi-annual accounts
receivable audits by Silicon, its agents, or third parties retained by Silicon
*, and Silicon may debit Borrower's deposit accounts with Silicon for the cost
of such semi-annual accounts receivable audits (in which event Silicon shall
send notification thereof to the Borrower). Notwithstanding the foregoing,
after the occurrence of an Event of Default all audits shall be at the
Borrower's expense.

* IN AN ANNUAL AMOUNT NOT TO EXCEED $3,000

4.6 NEGATIVE COVENANTS. Except as may be permitted in the Schedule
hereto, the Borrower shall not, without Silicon's prior written consent, do any
of the following: (i) merge or consolidate with another corporation, except
that the Borrower may merge or consolidate with another corporation if the
Borrower is the surviving corporation in the merger and the aggregate value of
the assets acquired in the merger do not exceed 25% of Borrower's Tangible Net
Worth (as defined in the Schedule) as of the end of the month prior to the
effective date of the merger, and the assets of the corporation acquired in the
merger are not subject to any liens or encumbrances, except Permitted Liens;
(ii) acquire any assets outside the ordinary course of business for an
aggregate purchase price exceeding 25% of Borrower's Tangible Net Worth (as
defined in the Schedule) as of the end of the month prior to the effective date
of the acquisition; (iii) enter into any other transaction outside the ordinary
course of business (except as permitted by the other provisions of this
Section)+; (iv) sell or transfer any Collateral, except for the sale of
finished inventory in the ordinary course of tho Borrower's business, and
except for the sale of obsolete or unneeded equipment in the ordinary course of
business; (v) make any loans of any money or any other assets *; (vi) incur any
debts, outside the ordinary course of business, which would have a material,
adverse effect on the Borrower or an the prospect of repayment of the
Obligations; (vii) guarantee or otherwise become liable with respect to the
obligations of another party or entity; (viii) pay or declare any dividends on
the Borrower's stock (except for dividends payable solely in stock of the
Borrower) **; (ix) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of the Borrower's stock ***; (x) make any change in the
Borrower's capital structure which has a material adverse effect on the
Borrower or on the prospect of repayment of the Obligations; or (xi) dissolve
or elect to dissolve. Transactions permitted by the foregoing provisions of
this Section are only permitted if no Event of Default and no event which
(with notice or passage of time or both) would constitute an Event of Default
would occur as a result of such transaction.

+, RELATING TO WHICH THE CONSENT OF SILICON SHALL NOT BE UNREASONABLY
WITHHELD

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<PAGE> 5

Silicon Valley Bank Loan and Security Agreement

* provided that Borrower may make such loans if the aggregate amount
thereof does not exceed 25% of Borrower's Tangible Net Worth (as defined in the
Schedule) as of the end of each month

** provided that Borrower may effect such dividends if the aggregate
amount thereof does not exceed 25% of Borrower's Tangible Net Worth (as defined
in the Schedule) as of the end of each month

*** provided that Borrower may effect such transactions if the
aggregate amount of stock acquired in connection therewith does not exceed 25%
of Borrower's Tangible Net Worth (as defined in the Schedule) as of the end of
each month

4.7 Litigation Cooperation. Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to
Silicon, make available the Borrower and its officers, employees and agents and
the Borrower's books and records to the extent that Silicon may deem them
reasonably necessary in order to prosecute or defend any such suit or
proceeding.

4.8 Verification. Silicon may, from time to time, following prior
notification to "Borrower, verify directly with the respective account debtors
the validity, amount and other matters relating to the Borrower's accounts, by
means of mail, telephone or otherwise, either in the name of the Borrower or
Silicon or such other name as Silicon may reasonably choose, provided that no
prior notification to ** Borrower shall be required following an Event of
Default. * and consent of ** or consent by

4.9 Execute Additional Documentation. The Borrower agrees, at its
expense, on request by Silicon, to execute all documents in form satisfactory
to Silicon, as Silicon, may deem reasonably necessary or useful in order to
perfect and maintain Silicon's perfected security interest in the Collateral,
and in order to fully consummate all of the transactions contemplated by this
Agreement.

5. TERM.

5.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule hereto (the "Maturity Date").

5.2 Early Termination. This Agreement may be terminated, without
penalty, prior to the Maturity Date as follows: (i) by the Borrower, effective
three business days after written notice of termination is given to Silicon; or
(ii) by Silicon at any time after the occurrence of an Event of Default,
without notice, effective immediately.

5.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, the Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether
or not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or
on any earlier effective date of termination, there are any outstanding letters
of credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said letters of credit, pursuant to Silicon's then
standard form cash pledge agreement. * Subject to the preceding sentence,
notwithstanding any termination of the Agreement, all of Silicon's security
interests in all of the Collateral and all of the terms and provisions of this
Agreement shall continue in full force and effect until all Obligations have
been paid and performed in full; provided that, without limiting the fact that
Loans are subject to the reasonable discretion of Silicon, Silicon may, in its
sole discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of Silicon,
nor shall any such termination relieve the Borrower of any Obligation to
Silicon, until all of the Obligations have been paid and performed in full.
Upon payment and performance in full of all the Obligations, Silicon shall
promptly deliver to the Borrower termination statements, requests for
reconveyances and such other documents as may be required to fully terminate any
of Silicon's security interests.

* Subject to the preceding sentence, notwithstanding

6 EVENTS OF DEFAULT AND REMEDIES.

6.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon
by the Borrower or any of the Borrower's officers, employees or agents, now or
in the future, shall be untrue or misleading in any material respect; or (b)
the Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time exceed the Credit Limit; or (d) the Borrower shall fail
to comply with any of the financial covenants set forth in the Schedule or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured; or (e) the Borrower shall fail to pay or perform any other
non-monetary Obligation, which failure is not cured within 5 * business days
after the date due; or (f) Any levy, assessment attachment, seizure, lien or
encumbrance is made on all or any part of the Collateral which is not cured
within 10 ** days after the occurrence of the same; or (g) Dissolution,
termination of existence, insolvency or business failure of the Borrower; or
appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by the Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect; or (h) the
commencement of any proceeding against the Borrower or any guarantor of any

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Silicon Valley Bank Loan and Security Agreement

of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 *** days after the date commenced; (i) revocation
or termination of, or limitation or denial of liability upon, any guaranty of
the Obligations or any attempt to do any of the foregoing; or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (j) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing; or commencement
of proceedings by or against any such third party under any bankruptcy or
insolvency law; or (k) the Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement or if any person
who has subordinated such indebtedness or obligations terminates or in any ****
way limits his subordination agreement; or (l) there shall be a change in the
record or beneficial ownership of an aggregate of more than ***** of the
outstanding shares of stock of the Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of the Borrower in
effect on the date hereof, without the prior written consent of Silicon ******;
or (m) a material adverse change occurs in the business, operations, or
financial or other condition of the Borrower, or a material impairment occurs
in the prospect of payment of the Obligations, or there is a material
impairment of the value or priority of Silicon's security interest in the
Collateral; or (n) the Borrower shall generally not pay its debts as they
become due; or the Borrower shall conceal, remove or transfer any part of its
property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law. Silicon may cease making any
Loans hereunder during any of the above cure periods, and thereafter if an
Event of Default has occurred.

* 10

** 20

*** 45

**** material

***** 25%

****** which will not be unreasonably withheld, and other than in connection
with a public offering of the stock of the Borrower

6.2 Remedies. Upon the occurrence of any Event of Default, and at any
time thereafter, * Silicon, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by the Borrower), may do any one
or more of the following: (a) Cease making Loans and cease extending letters of
credit or other credit facilities to or for the benefit of the Borrower under
this Agreement or any other document or agreement; (b) Accelerate and declare
all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose the
Borrower hereby authorizes Silicon without judicial process to enter onto any of
the Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof without
charge for so long as Silicon deems it reasonably necessary in order to complete
the enforcement of its rights under this Agreement or any other agreement;
provided, however, that should Silicon seek to take possession of any or all of
the Collateral by Court process, the Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Silicon retain possession of and not
dispose of any such Collateral until after trial or final judgment; (d) Require
the Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and the Borrower, and to remove the Collateral to such locations as
Silicon may deem advisable; (e) Require Borrower to deliver to Silicon, in kind,
all checks and other payments received with respect to all accounts and general
intangibles, together with any necessary endorsements, within one day after the
date received by the Borrower; (f) Complete the processing, manufacturing or
repair of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, Silicon shall have the right to use the
Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all other
property without charge; (g) Sell, lease or otherwise dispose of any of the
Collateral in its condition at the time Silicon obtains possession of it or
after further manufacturing, processing or repair, at any one or more public
and/or private sales, in lots or in bulk, for cash, exchange or other property,
or on credit, and to adjourn any such sale from time to time without notice
other than oral announcement at the time scheduled for sale. Silicon shall have
the right to conduct such disposition on the Borrower's premises without charge,
for such time or times as Silicon deems reasonable, or on Silicon's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
Silicon may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under applicable
law, at any private disposition. Any sale or other disposition of Collateral
shall not relieve the Borrower of any liability the Borrower may have if any
Collateral is defective as to title or physical condition or otherwise at the
time of sale; (h) Demand payment of, and collect any accounts and general
intangibles comprising Collateral and, in connection therewith, the Borrower
irrevocably authorizes Silicon to

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Silicon Valley Bank Loan and Security Agreement

endorse or sign the Borrower's name on all collections, receipts, instruments
and other documents, to take possession of and open mail addressed to the
Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant
extensions of time to pay, compromise claims and settle accounts and the like
for less than face value; (i) Offset against any sums in any of Borrower's
general, special or other deposit accounts with Silicon; and (j) Demand and
receive possession of any of the Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs,
liabilities and obligations incurred by Silicon with respect to the foregoing
shall be added to and become part of the Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate applicable
to any of the Obligations. Without limiting any of Silicon's rights and
remedies, from and after the occurrence of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional **
percent per annum.

*, EXCEPT AS SET FORTH IN THE COLLATERAL AGREEMENT
** FOUR

6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The
Borrower and Silicon agree that a sale or other disposition (collectively,
"sale") of any Collateral which complies with the following standards will
conclusively be deemed to be commercially reasonable: (i) Notice of the sale is
given to the Borrower at least seven days prior to the sale, and, in the case
of a public sale, notice of the sale is published at least seven days before
the sale in a newspaper of general circulation in the county where the sale is
to be conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) With respect
to any sale of any of the Collateral, Silicon may (but is not obligated to)
direct any prospective purchaser to ascertain directly from the Borrower any
and all information concerning the same. Silicon may employ other methods of
noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.

6.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise: (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute
discretion, deem advisable in order to perfect and maintain Silicon's security
interest in the Collateral, or in order to exercise a right of the Borrower or
Silicon, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements; (b) Execute
on behalf of the Borrower any document exercising, transferring or assigning
any option to purchase, sell or otherwise dispose of or to lease (as lessor or
lessee) any real or personal property which is part of Silicon's Collateral or
in which Silicon has an interest; (c) Execute on behalf of the Borrower, any
invoices relating to any account, any draft against any account debtor and any
notice to any account debtor, any proof of claim in bankruptcy, any Notice of
Lien, claim of mechanic's, materialman's or other lien, or assignment or
satisfaction of mechanic's, materialman's or other lien; (d) Take control in
any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of the Borrower upon any instruments, or documents, evidence
of payment or Collateral that may come into Silicon's possession; (e) Endorse
all checks and other forms of remittances received by Silicon; (f) Pay, contest
or settle any lien, charge, encumbrance, security interest and adverse claim in
or to any of the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (g) Grant extensions of time to
pay, compromise claims and settle accounts and general intangibles for less
than face value and execute all releases and other documents in connection
therewith; (h) Pay any sums required on account of the Borrower's taxes or to
secure the release of any liens therefor, or both; (i) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (j) Instruct any third party having custody or control
of any books or records belonging to, or relating to, the Borrower to give
Silicon the same rights of access and other rights with respect thereto as
Silicon has under this Agreement; and (k) Take any action or pay any sum
required of the Borrower pursuant to this Agreement and any other present or
future agreements. Silicon shall exercise the foregoing powers in a
commercially reasonable manner. Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
In no event shall Silicon's rights under the foregoing power of attorney or any
of Silicon's other rights under this Agreement be deemed to indicate that
Silicon is in control of the business, management or properties of the
Borrower.

6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of
any sale of the Collateral shall be applied by Silicon first to the costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due
upon any of the Obligations, and third to the principal of the Obligations, in
such order as Silicon shall determine in its sole discretion. Any surplus
shall be paid to the Borrower or other persons legally entitled thereto; the
Borrower shall remain liable to Silicon for any deficiency.

-7-
<PAGE> 8

Silicon Valley Bank Loan and Security Agreement

If, Silicon, in its sole discretion, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale or
other disposition of Collateral, Silicon shall have the option, exercisable at
any time, in its sole discretion, of either reducing the Obligations by the
principal amount of purchase price or deferring the reduction of the
Obligations until the actual receipt by Silicon of the cash therefor.

6.6 Remedies Cumulative. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the California Uniform Commercial Code and under
all other applicable laws, and under any other instrument or agreement now or
in the future entered into between Silicon and the Borrower, and all of such
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Silicon of one or more of its rights or remedies shall not be
deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.

7. GENERAL PROVISIONS.

7.1 Crediting Payments. Payments shall not be applied to the
Obligations until received by Silicon in immediately available federal funds,
and any wire transfer or other payment so received after 12:00 noon Pacific
time shall be deemed to have been received by Silicon as of the opening of
business on the next business day.

7.2 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower
at the addresses shown in the heading to this Agreement, or at any other
address designated in writing by one party to the other party. All notices
shall be deemed to have been given upon delivery in the case of notices
personally delivered to the Borrower or to Silicon, or at the expiration of two
business days following the deposit thereof in the United States mail, with
postage prepaid.

7.3 Severability. Should any provision of this Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in full
force and effect.

7.4 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.
There are no oral understandings, representations or agreements between the
parties which are not set forth in this Agreement or in other written
agreements signed by the parties in connection herewith.

7.5 Waivers. The failure of Silicon at any time or times to require
the Borrower to strictly comply with any of the provisions of this Agreement or
any other present or future agreement between the Borrower and Silicon shall
not waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto. None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any
act or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Borrower.
The Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, general
intangible, document or guaranty at any time held by Silicon on which the
Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.

7.6 Strike-out [No Liability for Ordinary Negligence. Neither Silicon,
nor any of its directors, officers, employees, agents, attorneys or any other
person affiliated with or representing Silicon shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred or
suffered by the Borrower or any other party through the ordinary negligence of
Silicon, or any of its directors, officers, employees, agents, attorneys or any
other person affiliated with or representing Silicon.] End Strike-out

7.7 Amendment. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.

7.8 Time of Essence. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.

7.9 Attorneys Fees and Costs. The Borrower shall reimburse Silicon for
all reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Silicon,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following: prepare
and negotiate this Agreement and the documents relating to this Agreement;
obtain legal advice in connection with this Agreement; enforce, or seek to
enforce, any of its rights; prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of all Collateral or

-8-
<PAGE> 9

Silicon Valley Bank Loan and Security Agreement

any of the Borrower's books and records; protect, obtain possession of, lease,
dispose of, or otherwise enforce Silicon's security interest in, the
Collateral; and otherwise represent Silicon in any litigation relating to the
Borrower. In satisfying Borrower's obligation hereunder to reimburse Silicon
for attorneys fees, Borrower may, for convenience, issue checks directly to
Silicon's attorneys, Levy, Small & Lallas, but Borrower acknowledges and
agrees that Levy, Small & Lallas is representing only Silicon and not
Borrower in connection with this Agreement. If either Silicon or the Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. All attorneys' fees and costs to which
Silicon may be entitled pursuant to this Paragraph shall immediately become
part of the Borrower's Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations.

7.10 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of the parties hereto; provided,'
however, that the Borrower may not assign or transfer any of its rights under
this Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall
release the Borrower from its liability for the Obligations.

7.11 JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than
one person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

7.12 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used
in this Agreement for convenience. The Borrower acknowledges that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been
fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed
strictly against Silicon or the Borrower under any rule of construction or
otherwise.

7.13 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall
be litigated in courts located within California, and that the exclusive venue
therefor shall be Orange County; (ii) consents to the jurisdiction and venue of
any such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (iii)
waives any and all rights the Borrower may have to object to the jurisdiction
of any such court, or to transfer or change the venue of any such action or
proceeding.

7.14 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY
CONDUCT, ACTS OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH SILICON OR THE BORROWER. THIS WAIVER OF THE RIGHT TO JURY
TRIAL APPLIES TO ALL CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
COMMON LAW CLAIMS, STATUTORY CLAIMS AND ALL OTHER CLAIMS AND CAUSES OF ACTION
OF EVERY KIND. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING JURY TRIAL
WAIVER CONSTITUTES A MATERIAL INDUCEMENT TO THE OTHER PARTY TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS JURY
TRIAL WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING ITS CONSULTATION WITH ITS LEGAL COUNSEL.

Borrower:

VISION SOLUTIONS, INC.

By [SIGNATURE]
-----------------------------
President or Vice President

By [SIGNATURE]
-----------------------------
Secretary or Ass't Secretary

Silicon:

SILICON VALLEY BANK

By
-----------------------------
Title
---------------------------

-9-
<PAGE> 10
[LOGO] SILICON VALLEY BANK

SCHEDULE TO

LOAN AND SECURITY AGREEMENT

BORROWER: VISION SOLUTIONS, INC.
ADDRESS: 2600 MICHELSON DRIVE, SUITE 1100
IRVINE, CALIFORNIA 92612

DATE: DECEMBER 10, 1996

THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.

CREDIT LIMIT
(Section 1.1): PRIOR TO THE CONVERSION (AS DEFINED BELOW), IF ANY:

An amount not to exceed the lesser of (I) $1,500,000 or
(II) an amount (the "Accounts Loans") up to 80% of the Net
Amount of Borrower's accounts, which Silicon in its
discretion deems eligible for borrowing.

"Net Amount" of an account means the gross amount of the
account, minus all applicable sales, use, excise and other
similar taxes and minus all discounts, credits and
allowances of any nature granted or claimed.

AFTER THE CONVERSION, IF ANY:

(I) An amount (the "Accounts Loans") not to exceed the
lesser of (a) $1,500,000 less the principal amount of the
Term Loan, if any, outstanding from time to time, or (b) up
to 80% of the Net Amount of Borrower's accounts, which
Silicon in its discretion deems eligible for borrowing.
"Net Amount" of an account means the gross amount of the
account, minus all applicable sales, use, excise and other
similar taxes and minus all discounts, credits and
allowances of any nature granted or claimed.

PLUS
----

(II) The amount of the Term Loan (as defined below)
outstanding from time to time, provided that the Term Loan
is not a revolving credit facility and repayment of amounts
relating to the Term Loan do not entitle the Borrower to
reborrow any such amounts under the Term Loan.

Without limiting the fact that the determination of which
accounts are eligible for borrowing is a matter of
Silicon's discretion, the following will not be deemed
eligible for borrowing: (a) accounts outstanding for more
than 90 days from the invoice date; (b) accounts subject to
any

-1-

<PAGE> 11
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT

contingencies, or arising from a consignment, guaranteed
sale, bill and hold, sale on approval or other transaction
in which payment by the account debtor is conditional; (c)
accounts owing from the United States or any department,
agency or instrumentality of the United States or any
state, city or municipality; (d) accounts owing from an
account debtor whose chief executive office or principal
place of business is outside the United States (unless the
account is pre-approved by Silicon in its discretion, or
backed by a letter of credit satisfactory to Silicon, or
FCIA insured satisfactory to Silicon, or the account arises
from goods shipped or services rendered to a branch or
office of the account debtor in the United States) *; (e)
accounts owing from one account debtor to the extent they
exceed 25% of the total eligible accounts outstanding; (f)
accounts owing from an affiliate of Borrower; and (g)
accounts owing from an account debtor to whom Borrower is
or may be liable for goods purchased from, or services
received from, such account debtor or otherwise (to the
extent of the amount owing to such account debtor). In
addition, if more than 50% of the accounts owing from an
account debtor are outstanding more than 90 days from the
invoice date or are otherwise not eligible for borrowing,
then all accounts owing from that account debtor will be
deemed ineligible for borrowing.

*PROVIDED THAT FOREIGN DEBTORS THAT ARE FOREIGN OFFICES OF
IBM ARE NOT CONSIDERED INELIGIBLE BY VIRTUE OF SUCH FOREIGN
LOCATION

CONVERSION;
TERM LOAN If, and only if, within 12 months of the date hereof, (A)
Borrower satisfies the Debt Service Ratio (defined below in
the Section entitled "Financial Covenants") or the
Liquidity Ratio (defined below in the Section entitled
"Financial Covenants") as compliance therewith is more
completely set forth in the Section entitled "Financial
Covenants" below, and (B) no Event of Default, and no event
which with notice or passage of time would constitute an
Event of Default, has occurred, then Borrower may, at
Borrower's election, convert an amount of the Accounts
Loans represented by the Eligible Equipment Loan Amount (as
defined below) to a term loan (such term loan is the "Term
Loan" and such conversion is referred to herein as the
"Conversion").

If Borrower elects the Term Loan option as set forth above,
Borrower shall repay the Term Loan in Thirty-Six (36) equal
monthly payments of principal, commencing on the last day
of the month in which the Conversion occurs and continuing
on the last day of each succeeding month until the earlier
of (a) the expiration of 36 months, or (b) the date this
Agreement terminates by its terms or is terminated, as
provided in Section 5 of this Agreement. On the final
payment date, the entire remaining principal balance of the
Term Loan, all accrued and unpaid interest thereon and all
Obligations relating thereto shall be paid in full.

Interest on the Term Loan shall be payable monthly as
provided in Section 1.2 of this Agreement.

The term "Eligible Equipment Loan Amount" means 100% of the
invoice amounts of equipment purchases by Borrower which
are satisfactory to Silicon in its reasonable discretion,
provided that only 25% of the invoice amount of software
purchases, reasonably satisfactory to Silicon, shall be
eligible to considered part of the Eligible Equipment Loan
Amount. At the time that such purchases are

-2-

<PAGE> 12
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT

being made, Borrower shall present the related invoices to
Silicon for approval by Silicon if Borrower proposes that
such purchases are to be included in the amount of the Term
Loan.

INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to
time, plus .75% per annum. Interest shall be calculated on
the basis of a 360-day year for the actual number of days
elapsed. "Prime Rate" means the rate announced from time to
time by Silicon as its "prime rate;" it is a base rate upon
which other rates charged by Silicon are based, and it is
not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on
each date there is a change in the Prime Rate.

LOAN ORIGINATION FEE
(Section 1.3): $7,500. (Any Commitment Fee previously paid by the Borrower
in connection with this loan shall be credited against this
Fee.) The amount payable by Borrower in connection with the
initial accounts receivable audit of Borrower only shall be
deemed to be included in this fee.

LETTER OF CREDIT
SUBLIMIT
(Section 1.4): $250,000

MATURITY DATE
(Section 5.1):

DECEMBER 9, 1997, provided that the Term Loan shall have a
Maturity Date as is set forth above.

SUBSIDIARIES OF BORROWER
(Section 3.1): NONE

PRIOR NAMES OF BORROWER
(Section 3.2): MIDRANGE INFORMATION SYSTEMS AND MIDRANGE INFORMATION
SYSTEMS, INC.

PRESENT TRADE NAMES
OF BORROWER
(Section 3.2): NONE

PRIOR TRADE NAMES
OF BORROWER
(Section 3.2): NONE

OTHER LOCATIONS AND
ADDRESSES
(Section 3.3): 28 EXECUTIVE PARK, SUITE 200, IRVINE, CA 92614

MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE

NEGATIVE COVENANTS-
EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent, Borrower may do
the following, provided that, after giving effect thereto,
no Event of Default has occurred and no event has occurred
which, with notice or passage of time or both, would
constitute an Event of Default, and provided that the
following are done in compliance with all applicable laws,
rules and regulations: (i) repurchase shares of Borrower's
stock pursuant to any employee stock purchase or benefit
plan, provided that the total amount paid by Borrower for
such stock does not exceed the amount therefor set forth in
Section 4.6 of the Loan Agreement.

-3-

<PAGE> 13
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT

(Section 4.1): Borrower shall comply with all of the following covenants.
Compliance shall be determined as of the end of each month,
except as otherwise specifically provided below:

QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.50 to 1.

TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not less
than $2,000,000.

DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.50 to 1.

PROFITABILITY Borrower shall not incur cumulative losses (after taxes) on
a fiscal year to date basis for the 1996 fiscal year in
excess of $750,000 at any time; and Borrower shall not
incur cumulative losses (after taxes) on a fiscal year to
date basis for the 1997 fiscal year in excess of $500,000
at any time. For purposed hereof, losses above shall also
include any period to period increases in the product
development/intangible account as reflected on the
Borrower's balance sheet. Further, for purposes hereof,
capitalized software shall be considered an expense of
Borrower.

DEBT SERVICE RATIO/
LIQUIDITY RATIO Borrower shall either maintain the Debt Service Ratio as
set forth below or the Liquidity Ratio as set forth below
at all times that the Term Loan is outstanding:

Debt Service Ratio: Borrower shall maintain a quarterly
Debt Service Ratio (as referred to below) relating to the
then immediately preceding four fiscal quarters of not less
than 1.50 to 1, which Borrower shall maintain for at least
two consecutive fiscal quarters.

Liquidity Coverage Ratio: Borrower shall maintain a
Liquidity Coverage Ratio of 2.0 to 1 on a monthly basis.

DEFINITIONS: "Current assets," and "current liabilities" shall have the
meanings ascribed to them in accordance with generally
accepted accounting principles.

"Tangible net worth" means the excess of total assets over
total liabilities, determined in accordance with generally
accepted accounting principles, excluding however all
assets which would be classified as intangible assets under
generally accepted accounting principles, including without
limitation goodwill, licenses, patents, trademarks, trade
names, copyrights, capitalized software and organizational
costs, licenses and franchises.

"Quick Assets" means cash on hand or on deposit in banks,
readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-1" by Standard
& Poor's Corporation (or a similar rating by a similar
rating organization), certificates of deposit and banker's
acceptances, and accounts receivable (net of allowance for
doubtful accounts).

"Liquidity Quick Assets" means cash on hand or on deposit
in banks, readily marketable securities issued by the
United States, readily

-4-

<PAGE> 14
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT

marketable commercial paper rated "A-1" by Standard &
Poor's Corporation (or a similar rating by a similar rating
organization), certificates of deposit and banker's
acceptances, plus the amount of the Borrower's accounts
eligible for borrowing pursuant to the terms and conditions
of this Agreement minus the aggregate amount of the Loans
and Letters of Credit outstanding.

"Debt Service Ratio" means the ratio of (a) net income of
Borrower before interest, taxes, depreciation and other
non-cash amortization expenses and other non-cash expenses
of the Borrower, determined in accordance with generally
accepted accounting principles, consistently applied, to
(b) the amount of Borrower's obligations relating to
payment of interest and current maturities of principal on
Borrower's outstanding long term indebtedness, determined
in accordance with generally accepted accounting
principles, consistently applied.

DEFERRED REVENUES: For purposes of the above quick asset ratio, deferred
revenues shall not be counted as current liabilities. For
purposes of the above debt to tangible net worth ratio,
deferred revenues shall not be counted in determining total
liabilities but shall be counted in determining tangible
net worth for purposes of such ratio. For all other
purposes deferred revenues shall be counted as liabilities
in accordance with generally accepted accounting
principles.

SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing covenants do
not include indebtedness which is subordinated to the
indebtedness to Silicon under a subordination agreement in
form specified by Silicon or by language in the instrument
evidencing the indebtedness which is acceptable to Silicon.

OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all of the
following additional covenants:

1. BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with Silicon.

2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING. Within
30 days after the end of each month, Borrower shall provide
Silicon with a Borrowing Base Certificate in such form as
Silicon shall specify, and an aged listing of Borrower's
accounts receivable.

3. INDEBTEDNESS. Without limiting any of the foregoing
terms or provisions of this Agreement, Borrower shall not
in the future incur indebtedness for borrowed money, except
for (i) indebtedness to Silicon, and (ii) indebtedness
incurred in the future for the purchase price of or lease
of equipment in an aggregate amount not exceeding $500,000
at any time outstanding.

-5-

<PAGE> 15
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT

4. PATENT APPLICATIONS. Borrower shall make all appropriate
filings with the United States Patent and Trademark Office
with respect to the software products set forth on the
Borrower's representations and warranties form within 90
days of the date hereof.

BORROWER:

VISION SOLUTIONS, INC.

BY /s/ ????????
---------------------------------------------
PRESIDENT OR VICE PRESIDENT

BY /s/ ????????
---------------------------------------------
SECRETARY OR ASS'T SECRETARY

SILICON:

SILICON VALLEY BANK

BY
-------------------------------------------
TITLE
-----------------------------------------

-6-

<PAGE> 1
EXHIBIT 10.7

STANDARD SUBLEASE

American Industrial Real Estate Association

[LOGO]

1. Parties. This Sublease, dated, for reference purposes only, August 7,
1996, is made by and between Red Robin International, Incorporated (herein
called "Sublessor") and Vision Solutions Incorporated (herein called
"Sublessee").

2. Premises. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real properly situated in the County
of Orange State of California, commonly known as 28 Executive Park, Suite 200,
Irvine, California 92714 and described as that certain 17,003 rentable square
feet located on the second (2nd) floor suite 200 of 28 Executive Park, Irvine,
California. Said real property, including the land and all improvements
thereon, is hereinafter called the "Premises".

3. Term.

3.1 Term. The term of this Sublease shall be for fourteen (14)
months commencing on November 1, 1996 and ending on December 31, 1997 unless
sooner terminated pursuant to any provision hereof.

3.2 Delay in Commencement. Notwithstanding said commencement date,
if for any reason Sublessor cannot deliver possession of the Premises to
Sublessee on said date. Sublessor shall not be subject to any liability
therefore, nor shall such failure affect the validity of this Lease or the
obligations of Sublessee hereunder or extend the term hereof, but in such case
Sublessee shall not be obligated to pay rent until possession of the Premises
is tendered to Sublessee; provided, however, that if Sublessor shall not have
delivered possession of the Premises within sixty (60) days from said
commencement date. Sublessee may, at Sublessee's option, by notice in writing
to Sublessor within ten (10) days thereafter, cancel this Sublease, in which
event the parties shall be discharged from all obligations thereunder. If
Sublessee occupies the Premises prior to said commencement date, such occupancy
shall be subject to all provisions hereof, such occupancy shall not advance the
termination date and Sublessee shall pay rent for such period at the initial
monthly rates set forth below.

4. Rent. Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $13,177.32, in advance, on the 1st day of each month of the
term hereof. Sublessee shall pay Sublessor upon the execution hereof $13,177.32
as rent for the 1st month, November 1996. Rent for any period during the term
hereof which is for less than one month shall be a prorata portion of the
monthly installment. Rent shall be payable in lawful money of the United States
to Sublessor at
<PAGE> 2
the address stated herein or to such other persons or at such other places as
Sublessor may designate in writing.

5. Security Deposit. Sublessee shall deposit with Sublessor upon
execution hereof $13,177.00 as security for Sublessee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease. Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of said deposit. Sublessee shall within ten (10) days after written
demand therefore deposit cash with Sublessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Sublessee's failure to
do so shall be a material breach of this Sublease Sublessor shall not be
required to keep said deposit separate from its general accounts. If Sublessee
performs all of Sublessee's obligations hereunder, said deposit, or so much
thereof as has not theretofore been applied to Sublessor, shall be returned,
without payment of interest or other increment for its use to Sublessee (or at
Sublessor's. No trust relationship is created herein between Sublessor and
Sublessee with respect to said Security Deposit.

6. Use.

6.1 Use The Premises shall be sued and occupied only for general
office and for no other purposes.

6.2 Compliance with Law.

(a) Sublessor warrants to Sublessee that the Premises, in
its existing state, but without regard to the use for which Sublessee will use
the Premises, does not violate any applicable building code regulation or
ordinance at the time that this Sublease is executed. In the event that its
determined that this warranty has been violated, then it shall be the
obligation of the Sublessor, after written notice from Sublessee, to promptly,
at Sublessor's sole cost and expense, rectify any such violation. In the event
that Sublessee does not give to Sublessor written notice of the violation of
this warranty within 1 year from the commencement of the term of this Sublease,
if shall be conclusively deemed that such violation did not exist and the
correction of the same shall be the obligation of the Sublessee.

(b) Except as provided in paragraph 6.2(a). Sublessee
shall, at Sublessee's expense, comply promptly with all applicable statutes,
ordinances, rules regulations, orders, restrictions of record, and requirements
in effect during the term or any part of the term hereof regulation the use by
Sublessee of the Premises. Sublessee shall not use of permit the use of the
premises in any manner that will tend to create waste or a nuisance or, if
there shall be more than one tenant of the building containing the Premises,
which shall end to disturb such other tenants.
<PAGE> 3
6.3 Condition of Premises. Except as provided in paragraph 6.2(a)
Sublessee hereby accepts the Premises in their condition existing as of the
date of the execution hereof, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and accepts this Sublease subject thereto and to all
matters disclosed thereby and by any exhibits attached hereto Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Premises for the
conduct of Sublessee's business.

7. Master Lease.

7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as the "Master Lease", a copy of which is attached
hereto marked Exhibit 1, date June 27, 1951 wherein The Irvine Company is the
lessor hereinafter referred to as the "Master Lessor"

7.2 This Sublease is and shall be at all times subject and
subordinate to the Master Lease.

7.3 The terms, conditions and respective obligations of Sublessor
and Sublessee to each other under this Sublease shall be the terms and
conditions of the Master Lease except for those provisions of the Master Lease
which are directly contradicted by this Sublease in which event the terms of
this Sublease document shall control over the Master Lease. Therefore, for the
purposes of this Sublease, wherever in the Master Lease the word "Lessor" is
used it shall be deemed to mean the Sublessor herein and wherever in the Master
Lease the word "Lessee" is used it shall be deemed to mean the Sublessee
herein.

7.4 During the term of this Sublease and for all periods
subsequent for obligations which have arisen prior to the termination of this
Sublease. Sublessee does hereby expressly assume and agree to perform and
comply with, for the benefit of Sublessor and Master Lessor each and every
obligations of Sublessor under the Master Lease except for the following
paragraphs which are excluded therefrom: Article I Paragraphs 6, 9. Article II
Section 3.1, 4.1. Sublessee shall have no rights or obligations under section
22.8 and Exhibits X and Y.

7.5 The obligations that Sublessee has assumed under paragraph 7.4
hereof are hereinafter referred to as the "Sublessee's Assumed Obligations".
The obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".

7.6 Sublessee shall hold Sublessor free and harmless of and from
all liability, judgments, costs, damages, claims or demands, including
reasonable attorneys fees, arising out of Sublessee's failure to comply with or
perform Sublessee's Assumed Obligations.

7.7 Sublessor agrees to maintain the Master Lease during the
entire term of this Sublease, subject, however, to any earlier termination of
the master Lease without the fault of the Sublessor, and to
<PAGE> 4
comply with or perform Sublessor's Remaining Obligations and to hold Sublessee
free and harmless of and from all liability, judgments, costs, damages, claims
or demands arising out of Sublessor's failure to comply with or perform
Sublessor's Remaining Obligations.

7.8 Sublessor represents to Sublessee that the Master Lease is in
full force and effect and that no default exists on the part of any party to
the Master Lease.

8. Assignment of Sublease and Default.

8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease and all rentals and income arising
therefrom, subject however to terms of Paragraph 8.2 hereof.

8.2 Master Lessor, by executing this document, agrees that until a
default shall occur in the performance of Sublessor's Obligations under the
Master Lease, that Sublessor may receive, collect and enjoy the rents accruing
under this Sublease. However, if Sublessor shall default in the performance of
its obligations to Master Lessor then Master Lessor shall not, by reason of
this assignment of the Subleases nor by reason of the collection of the rents
from the Sublessee, be deemed liable to Sublessee for any failure of the
Sublessor to perform and comply with Sublessor's Remaining Obligations.

8.3 Sublessor hereby irrevocable authorizes and directs Sublessee,
upon receipt of any written notice from the Master Lessor stating that a
default exists in the performance of Sublessor's obligations under the Master
Lease, to pay to Master Lessor the rents due and to become due under the
Sublease. Sublessor agrees that Sublessee shall have the right to rely upon any
such statement and request from Master Lessor, and that Sublessee shall pay
such rents to Master Lessor without any obligation or right to inquire as to
whether such default exists and notwithstanding any notice from or claim from
Sublessor to the contrary and Sublessor shall have not right or, claim against
Sublessee for any such rents so paid by Sublessee.

8.4 No changes or modifications shall be made to this Sublease
without the consent of Master Lessor.

9. Consent of Master Lessor.

9.1 In the event that the mater Lease requires that Sublessor
obtain the consent of Master Lessor to any subletting by Sublessor then this
Sublease shall not be effective unless, within 10 days of the date hereof,
Master Lessor signs this Sublease thereby giving its consent to this
Subletting.

9.2 In the event that the obligations of the Sublessor under the
Master Lease have been guaranteed by third parties then this Sublease, nor the
Master Lessor's consent, shall not be effective unless, within 10 days of the
date hereof, said guarantors sign this Sublease thereby giving guarantors
consent to this Sublease and the terms thereof.
<PAGE> 5
9.3 In the event that Master Lessor does give such consent then:

(a) Such consent will not release Sublessor of its
obligations or after the primary liability of Sublessor to pay the rent and
performed and comply with all of the obligations of Sublessor to be performed
under the Master Lease.

(b) The acceptance of rent by Master Lessor from
Sublessee or any one else liable under the Master Lease shall not be deemed a
waiver by Master Lessor of any provisions of the Master Lease.

(d) In the event of any default of Sublessor under the
Master Lease, Master Lessor may proceed directly against Sublessor, any
guarantors or any one else liable under the Master Lease or this Sublease
without first exhausting Master Lease's remedies against any other person or
entity liable thereon to Master Lessor.

(e) Master Lessor may consent to subsequent sublettings
and assignments of the Master Lease or this Sublease or any amendments or
modifications thereto without notifying Sublessor nor any one else liable under
the master Lease and without obtaining their consent and such action shall not
relieve such persons from liability.

(f) In the event that Sublessor shall default in its
obligations under the Master Lease, then Master Lessor, at its option and
without being obligated to do so, may require Sublessee to attorn to Master
Lessor in which event Master Lessor shall undertake the obligations of
Sublessor under this Sublease from the time of the exercise of said option to
termination of this Sublease but Master Lessor shall not be liable for any
prepaid rents nor any security deposit paid by Sublessee, nor shall Master
Lessor be liable for any other defaults of the Sublessor under the Sublease.

9.4 The signatures of the Master Lessor and any Guarantors of
Sublessor at the end of this document shall constitute their consent to the
terms of this sublease.

9.5 Master Lessor acknowledges that, to the best of Master
Lessor's knowledge, no default presently exists under the Master Lease of
obligations to be performed by Sublessor and that the Master Lease is in full
force and effect.

9.6 In the event that Sublessor defaults under its obligations to
be performed under the Master Lease by Sublessor, Master Lessor agrees to
deliver to Sublessee a copy of any such notice of default. Sublessee shall have
the right to cure any default of Sublessor described in any notice of default
within ten days after service of such notice of default on Sublessee. If such
default is cured by Sublessee then Sublessee shall have the right of
reimbursement and offset from and against Sublessor.
<PAGE> 6
10. Brokers Fee.

10.1 Upon execution hereof by all parties, Sublessor shall pay to
Signature Business Services a licensed real estate broker, (herein called
"Broker"), a fee as set forth in a separate agreement between Sublessor and
Broker, or in the event there is no separate agreement between Sublessor and
Broker, the sum of $xxxxxxxxxx for brokerage services rendered by Broker to
Sublessor in this transaction.

10.3 Master Lessor agrees, by its consent to this Sublease, that if
Sublessee shall exercise any option or right of fist refusal granted to
Sublessee by Master Lessor in connection with this Sublease, or any option or
right substantially similar thereto, either to extend the Master Lease, to
purchase the Premises or any part thereof, or to lease or purchase adjacent
property which Master Lessor may own or in which Master Lessor has an interest,
or if Broker is the procuring cause of any other lease or sale entered into
between Sublessee and Master Lessor pertaining to the Premises, any part
thereof, or any adjacent property which Master Lessor owns or in which it has
an interest, then as to any of said transactions Master Lessor shall pay to
Broker a fee, in cash, in accordance with the schedule of Broker in effect at
the time of its consent to this Sublease.

10.4 Any fee due from Master Lessor hereunder shall be due and
payable upon the exercise of any option to extend or renew, as to any extension
or renewal; upon the execution of any new lease, as to a new lease transaction
or the exercise of a right of first refusal to lease; or at the close of
escrow, as to the exercise of any option to purchase or other, sale
transaction.

10.5 Any transferee of Master Lessor's interest in the Master
Lease, by accepting an assignment thereof, shall be deemed to have assumed the
respective obligations of Master Lessor under this Paragraph 10. Broker shall
be deemed to be a third-party beneficiary of this paragraph 10.

11. Attorney's fees. If any party herein brings an action to enforce the
terms hereof or to declare rights hereunder, the prevailing party in any such
action, on trial and appeal, shall be entitled to his reasonable attorney's
fees to be paid by the losing party as fixed by the Court.

12. Additional Provisions. [If there are no additional provisions draw a
line from this point to the next printed word after the space left here. If
there are addition provisions place the same here.]

12.1 Tenant Improvements. Sublessor will sublease the space on an
"as is" basis, however Sublessor shall touch up the painted walls as necessary
and professionally clean the carpet and premises prior to Sublessee's
occupancy.

12.2 Signage. Subject to Mater Lessor's approval, Sublessor
transfers its signage rights to Sublessee per Article V Section 5.2 signs.
<PAGE> 7
12.3 Signage Removal. Sublessor will remove its signage from 28
Executive Park per the Master Lease Article V Section 5.2 signs within sixty
(60) days after occupancy of Sublessee.

12.4 Rent. Sublessee will pay no additional rent above base rent,
(such as operating expense pass throughs) excepting their base rent as stated
in paragraph 4.

If this Sublease has been filled in it has been prepared for submission to your
attorney for his approval. No representation or recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency,
legal effect, or tax consequences of this Sublease or the transaction relating
thereto.

Executed at Red Robin International, Incorporated
----------------
on By /s/
------------------------ -------------------------------------------
address James P. McGloskey, Chief Financial Officer
------------------- By /s/
-------------------------------------------
Michael J. Snyder, President
- --------------------------- "Sublessor" (Corporate Seal)

Executed at Vision Solutions Incorporated
----------------
on By /s/
------------------------ -------------------------------------------
address By
-------------------- -------------------------------------------
"Sublessee" (Corporate Seal)

Executed at The Irvine Company
---------------
on By
------------------------ -------------------------------------------
address By
-------------------- -------------------------------------------
"Master Lessor" (Corporate Seal)

Executed at
---------------
on By
------------------------ -------------------------------------------
address By
------------------- -------------------------------------------
"Guarantors"

Note: These forms are often modified to meet changing requirements of law
and needs of the industry. Always write or call to make sure you are utilizing
the most current form; AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So.
Figueroa St., M-1, Los Angeles, CA 90071, (213) 687-8777
<PAGE> 8

OFFICE SPACE LEASE

BETWEEN

IRVINE OFFICE COMPANY

AND

RED ROBIN INTERNATIONAL, INC.
-----------------------------
<PAGE> 9
INDEX TO LEASE

Page
<S> <C> <C>
ARTICLE I. BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II. PREMISES
Section 2.1 Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 Acceptance of Premises . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Building Name and Address . . . . . . . . . . . . . . . . . . . . 2

ARTICLE III. TERM
Section 3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Delay in Possession . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE IV. RENT AND OPERATING EXPENSES
Section 4.1 Basic Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.2 Operating Expense Increase . . . . . . . . . . . . . . . . . . . 3

ARTICLE V. USES
Section 5.1 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.2 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE VI. LANDLORD SERVICES
Section 6.1 Utilities and Services . . . . . . . . . . . . . . . . . . . . . 4
Section 6.2 Operation and Maintenance of Common Facilities . . . . . . . . . 4
Section 6.3 Use of Common Facilities . . . . . . . . . . . . . . . . . . . . 5
Section 6.4 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.5 Changes and Additions by Landlord . . . . . . . . . . . . . . . . 5

ARTICLE VII. MAINTAINING THE PREMISES
Section 7.1 Tenant's Maintenance and Repair . . . . . . . . . . . . . . . . . 5
Section 7.2 Landlord's Maintenance and Repair . . . . . . . . . . . . . . . . 5
Section 7.3 Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7.4 Mechanics' Liens . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.5 Entry and Inspection . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY . . . . . . . . . . . 6

ARTICLE IX. ASSIGNMENT AND SUBLETTING
Section 9.1 Rights of Parties . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 9.2 Effect of Transfer . . . . . . . . . . . . . . . . . . . . . . . 7
Section 9.3 Sublease Requirements . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE X. INSURANCE AND INDEMNITY
Section 10.1 Tenant's Insurance . . . . . . . . . . . . . . . . . . . . . . . 7
Section 10.2 Landlord's Insurance . . . . . . . . . . . . . . . . . . . . . . 8
Section 10.3 Tenant's Indemnity . . . . . . . . . . . . . . . . . . . . . . . 8
Section 10.4 Landlord's Indemnity . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE XI. DAMAGE OR DESTRUCTION
Section 11.1 Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 11.2 Lease Governs . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 10

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE XII. EMINENT DOMAIN
Section 12.1 Total or Partial Taking . . . . . . . . . . . . . . . . . . . . . 9
Section 12.2 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 12.3 Taking of Parking Area . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE
Section 13.1 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 13.2 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE XIV. DEFAULTS AND REMEDIES
Section 14.1 Tenant's Defaults . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 14.2 Landlord's Remedies . . . . . . . . . . . . . . . . . . . . . . . 10
Section 14.3 Late Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 14.4 Right of Landlord to Perform . . . . . . . . . . . . . . . . . . 11
Section 14.5 Default by Landlord . . . . . . . . . . . . . . . . . . . . . . . 11
Section 14.6 Expenses and Legal Fees . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE XV. END OF TERM
Section 15.1 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 15.2 Merger on Termination . . . . . . . . . . . . . . . . . . . . . . 12
Section 15.3 Surrender of Premises; Removal of Property . . . . . . . . . . . 12

ARTICLE XVI. PAYMENTS AND NOTICES . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE XVII. RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE XVIII. BROKER'S COMMISSION . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST . . . . . . . . . . . . . . . . . 13

ARTICLE XX. INTERPRETATION
Section 20.1 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.3 Joint and Several liability . . . . . . . . . . . . . . . . . . . 13
Section 20.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.5 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.6 Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.8 Waiver and Cumulative Remedies . . . . . . . . . . . . . . . . . 13
Section 20.9 Inability to Perform . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.11 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 20.12 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE XXI. EXECUTION AND RECORDING
Section 21.1 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 21.2 Corporate and Partnership Authority . . . . . . . . . . . . . . . 14
Section 21.3 Execution of Lease; No Option or Offer . . . . . . . . . . . . . 14
Section 21.4 Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 21.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE XXII. MISCELLANEOUS
Section 22.1 Nondisclosure of Lease Terms . . . . . . . . . . . . . . . 14
Section 22.2 Representations by Tenant . . . . . . . . . . . . . . . . . 14
Section 22.3 Changes Requested by Lender . . . . . . . . . . . . . . . . 14
Section 22.4 Mortgages Protection . . . . . . . . . . . . . . . . . . . 14
Section 22.5 Covenants and Conditions . . . . . . . . . . . . . . . . . 14
Section 22.6 Disclosure Statement . . . . . . . . . . . . . . . . . . . 14
Section 22.7 Attachments . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 22.8 Reimbursement for Existing Leases . . . . . . . . . . . . . 15

EXHIBIT A Floor Plan of the Premises
EXHIBIT B Utilities and Services
EXHIBIT C Parking
EXHIBIT D Tenant's insurance
EXHIBIT E Rules and Regulations
EXHIBIT X Work Letter
</TABLE>
<PAGE> 12
OFFICE SPACE LEASE

THIS LEASE is made as of the 27th day of June, 1991, by and between The
Irvine Company, a Michigan corporation, dba Irvine Office Company, hereafter
called "Landlord," and RED ROBIN INTERNATIONAL, INC., a Nevada corporation,
hereinafter called "Tenant."

ARTICLE I. BASIC LEASE PROVISIONS

1. Tenant's Trade Name: N/A
--------------------------------------------------
2. Premises: Suite No. 200 (the Premises are more particularly described
in Section 2.1).

Address of Office Building: 28 Executive Park, Irvine, CA 92714
------------------------------------------
Project Description (if applicable): Executive Park I and III
--------------------------------
3. Use of Premises: General office and for no other use.
----------------------------------------------------
4. Estimated Commencement Date: January 1, 1992
-----------------------------------------
5. Lease Term: Seventy-Two (72) months, plus such additional days as
may be required to cause this Lease to terminate on the final day of
the calendar month.

6. Basic Rent: Twenty-Two Thousand Three Hundred Fifty-Nine Dollars
($22,359.00) per month, based on $1.315 per rentable square foot.

Date of First C.P.I. Adjustment to Basic Rent (Section 4.3): N/A
---------

Other Rental Adjustments:

Commencing on the first day of the thirty-seventh month of the Lease
Term the Basic Rent shall be Twenty-Four Thousand Fifty-Nine Dollars
($24,059.00) per month, based on $1.415 per rentable square foot.

7. Property Tax Base: The Property Taxes per rentable square foot
actually incurred by Landlord during its fiscal year ending June 30,
1992, as reasonable extrapolated to a fully-assessed building at 95%
occupancy.

Building Cost Base: The Building Costs per rentable square foot
actually incurred by Landlord during its fiscal year ending June 30,
1992, as reasonable extrapolated to 95% building occupancy.

Expense Recovery Period: Every 12 month period during the Term (or
portion thereof for the first and last lease years) commencing July 1
and ending June 30
<PAGE> 13
8. Floor Area of Premises: approximately 17,003 rentable square feet

9. Security Deposit: $ None
---------------------------------------------------
10. Broker(s): Lee & Associates
---------------------------------------------------------
11. Plan Approval Date: N/A
------------------------------------------------
12. Address for Payments and Notices:

LANDLORD TENANT
The Irvine Company Inc. Red Robin International, Inc.
c/o Prentiss Properties Limited, Inc. 28 Executive Park, Suite 200
36 Executive Park, Suite 140 Irvine, CA 92714
Irvine, CA 92714
Attn: Property Manager

with a copy of notices to:

IRVINE OFFICE COMPANY
P.O. Box 1
Newport Beach, CA 92658-8904
Attn: Vice President, Asset Management
<PAGE> 14
ARTICLE II. PREMISES

SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant
rents from Landlord the premises shown in Exhibit A (the "premises"),
containing approximately the floor area set forth in Item 8 of the Basic Lease
Provisions and known by the suite number identified in Item 2 of the Basic
Lease Provisions. The Premises are located in the office building identified in
Item 2 of the Basic Lease a portion of the project described in Item 2 (the
"Project").

ARTICLE II. PREMISES

SECTION 2.1. LEASED PREMISES. (Continued)

(b) Right of First Offer. Provided Tenant is not then in
default hereunder, and further provided that Tenant has not assigned or sublet
its interest in this Lease, Landlord hereby grants Tenant the continuing right
("First Right") to lease any space which may become available for lease on the
third (3rd) floor of the Office Building ("First Right Space") in accordance
with and subject to the provisions of this Section 2.1(b). At any time after
the date of this Lease, but prior to leasing the First Right Space, or any
portion thereof, to any other party, Landlord shall give Tenant written notice
of the basic economic terms including but not limited to the Basic Rent, term,
Operating Expense Allowance, and tenant improvement allowance (collectively,
the "Economic Terms"), upon which Landlord is willing to lease such particular
First Right Space to Tenant or to a third party. Within five (5) days after
receipt of such notice, Tenant must give Landlord written notice pursuant to
which Tenant shall elect to (i) lease all, but not less than all, of such First
Right Space specified in Landlord's notice upon such Economic Terms and the
same non-Economic Terms as set forth in this Lease; (ii) refuse to lease such
First Right Space, specifying that such refusal is not based upon the Economic
Terms, but upon tenant's lack of Right Space upon any terms it deems
appropriate; or (iii) refuse to lease such First Right Space, specifying that
such refusal is based upon said Economic Terms, in which event Tenant shall
also specify revised Economic the event that Tenant does not so respond in
writing to Landlord's notice above. In the event Tenant gives Landlord notice
pursuant to clause (iii) above, Landlord may elect to either (x) lease such
First Right Space to Tenant upon such revised Economic Terms and the same other
non-Economic Terms as set forth in this lease, or (y) lease such First Right
Space to any third party than those Economic Terms proposed by Tenant. In the
event that Landlord shall not enter into a lease for such First Right Space, or
a portion thereof, with a third party within one hundred eighty (180) days
following Landlord's notice described above, then prior to leasing the First
Right Space to any third party, Landlord shall repeat the procedures set forth
in this Section 2.1(b). In the event that Landlord leases the First Right
Space, or any portion thereof, to a third party in accordance with the
provisions of this Section 2.1(b), and the First Right Space, or any portion
thereof, shall again become available for releasing, then prior to Landlord
entering into any such new lease with a third party for the First Right Space,
Landlord shall repeat the
<PAGE> 15
procedures specified above in this Section 2.1(b). Notwithstanding the
foregoing, it is understood that Tenant's First Right shall be subject to any
extension or expansion rights granted by Landlord to any third party tenant now
or hereafter occupying the First Right Space be deemed available for leasing
until the existing tenant thereof shall have vacated the first Right Space.
Tenant's rights under this Section 2.1(b) shall belong solely to Red Robin
International, Inc., and may not be assigned or transferred by it. Any
attempted assignment or transfer shall be void and of no force or effect.

SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that
neither Landlord nor any representative of Landlord has made any representation
or warranty with respect to the Premises or the Office Building or the
suitability or fitness of either for any purpose, except as set forth in this
Lease. The taking of possession or use of the Premises by Tenant for any
purpose other than construction shall conclusively establish that the Premises
and the Office 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. The
list shall be limited to any items required to be accomplished by Landlord
under the Work Letter (if any) attached as Exhibit X, and shall be delivered to
Landlord within thirty (30) days after the term ("Term" of this Lease commences
as provided in Article III below. If there is no Work Letter, or if no items
are required of Landlord under the Word Letter, by taking possession of the
Premises Tenant accepts the improvements in their existing condition, and
waives any right or claim against Landlord arising out of the condition of the
Premises. 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.

SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize
any name selected by Landlord from time to time for the Office Building and/or
the Project as nay part of Tenant's corporate or trade name. Landlord shall
have the right to change the number of the Office building or the name of the
Project without liability to Tenant, except that Landlord shall reimburse
Tenant for any resulting stationery reprinting charges.

ARTICLE III. TERM

SECTION 3.1(a) GENERAL. The Term shall be for the period shown in
Item 5 of the Basic Lease Provisions. The Term shall commence ("Commencement
Date") on the earlier of (a) subject to the provisions of Section 3.2, the
Estimated Commencement Date as set forth in Item 4 of the Basic Lease
Provisions, or (b) the date Tenant acquires possession or commences use of the
Premises for any purpose other than construction. 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 that form
shall not affect the validity of landlord's determination of those dates.
<PAGE> 16
SECTION 3.1 GENERAL. (Continued)

(b) Right to Extend this Lease. Provided that Tenant is not in
default under any provision of this Lease, either at the time of exercise of
the extension right granted herein or at the time of the commencement of such
extension, and provided further that Tenant is occupying the entire Premises
and has not assigned or sublet any of its interest in this Lease, Tenant may
extend the Term of this lease for one(1) period of sixty (60) months. Tenant
shall exercise its right to extend the Term by and only by (I) delivering to
Landlord, not less than one hundred fifty (150) days or more than two hundred
ten (210) days prior to the expiration date of the Term, Tenant's written
notice of its commitment to extend (the "Commitment Notice"); and (ii)
returning to Landlord, within fifteen (15) days after receipt, an executed
amendment to this Lease (to be prepared by landlord upon receipt of the
Commitment Notice) setting forth the Basic Rent and other charges payable
during the extension term. The Basic Rent payable under the Lease during any
extension of the Term shall be at ninety-five percent (95%) of the rate
Landlord is then receiving for leases of comparable and similarly improved
space within the Project on the date of the Commitment Notice, as reasonably
determined by Landlord. If Tenant fails to timely comply with any of the
provisions of this paragraph, Tenant's right to extend the Term shall be
extinguished and the Lease shall automatically terminated as of the expiration
date of the Term, without any extension and without any liability to Landlord.
Any attempt to assign or transfer any right or interest created by this
paragraph shall be void from its inception. Tenant shall have no other right to
extend the Term beyond the single sixty (60) month extension created by this
paragraph. Unless agreed to in a writing signed by Landlord and Tenant, any
extension o the Term, whether created by an amendment to this Lease or by a
holdover of the Premises by Tenant, or otherwise, shall be deemed a part of,
and not in addition to, any duly exercised extension period permitted by this
paragraph.

(c) Right to Terminate. Provided Tenant is not in default under any
provision of this Lease, Tenant shall have a one-time right to terminate this
Lease effective as of the expiration of the thirty-sixth (36th) month of the
Lease Term by giving Landlord not less than six (6) months prior written notice
of such termination. Should Tenant exercise its Right to Terminate as set forth
herein, Tenant shall pay to Landlord, concurrently with such exercise, the sum
of Two Hundred Fifty Thousand Dollars ($250,000.00) as a obligation hereunder
existing as of the date thereof or otherwise attributable to Tenant's occupancy
of the Premises.

Section 3.2. DELAY IN POSSESSION. In the event Landlord is unable
to deliver the Premises to Tenant by September 1, 1991 so that Tenant can
commence the construction of its Tenant Improvements pursuant to Exhibit X,
then to the extent the completion of such Tenant Improvements is delayed beyond
the Estimated Commencement date as the result thereof, the Commencement Date of
this Lease shall also be extended by the period of such resulting delay.
<PAGE> 17

ARTICLE IV. RENT AND OPERATING EXPENSES

SECTION 4.1.(a) BASIC RENT. From and after the Commencement Date,
Tenant shall pay to Landlord without deduction or offset a Basic Rent for the
Premises in the total amount shown (including subsequent adjustments, if any)
in Item 6 of the Basic Lease Provisions. Any rental adjustment shown in Item 6
shall be deemed to occur on the specified monthly anniversary of the
Commencement Date, whether or not that date occurs at the end of a calendar
month. The rent shall be due and payable in advance commencing on the
Commencement Date (as prorated for any partial month) and continuing
thereafter on the first day of each successive calendar month of the Term. No
demand, notice or invoice shall be required. An installment of rent in the
amount of one (1) full month's Basic Rent at the initial rate specified in Item
6 of the Basic Lease Provisions shall be delivered to Landlord concurrently
with Tenant's execution of this Lease and shall be applied against the Basic
Rent first due hereunder.

SECTION 4.1. BASIC RENT. (Continued)

(b) Reimbursements by Landlord. In consideration of the execution of
this Lease by Tenant, Landlord shall reimburse to Tenant the expenses incurred
by Tenant in connection with Tenant's move to the Premises, which expenses
shall be deemed to equal the sum of forty Thousand Dollars ($40,000.00). The
reimbursement shall be paid by Landlord within fifteen (15) days following the
Commencement Date of this Lease.

SECTION 4.2. OPERATING EXPENSE INCREASE.

(a) Commencing as of the first day of the thirteenth month of
the Lease term, Tenant shall reimburse Landlord, as additional rent, for
Tenant's proportionate shares of "Building Costs" and "Property Taxes," as
those terms are defined below, incurred by Landlord in the operation of the
Office Building and Project. Property-Taxes and Building costs are mutually
exclusive and may be billed separately or in combination as determined by
Landlord. Tenant's proportionate share of Property Taxes shall equal the
product of the rentable floor area of the Premises multiplied by the difference
of (I) Property Taxes per rentable square foot less (ii) the Property Tax Base
set forth in Item 7 of the Basic Lease provisions. Tenant's proportionate share
of Building Costs shall equal product of the rentable floor area of the
Premises multiplied by the difference of (I) Building Costs per rentable square
foot less (ii) the building Cost Base set forth in Item 7 of the Basic Lease
Provisions, Tenant acknowledges landlord's rights to make changes or additions
to the Office Building and/or Project from time to time pursuant to Section 6.5
below, in which event the total rentable square footage within the Office
Building and/or Project may be adjusted. For convenience of reference, Property
Taxes and Building costs may sometimes be collectively referred to as
"Operating Expenses."
<PAGE> 18
(b) Commencing prior to the start of the first full "Expense
Recovery Period" of the Lease (as set forth in Item 7 of the Basic Lease
Provisions), and prior to the start of each full or partial Expense Recovery
Period thereafter, Landlord shall give Tenant a written estimate of the amount
of Tenant's proportionate shares of Building Costs and Property Taxes for the
Expense Recovery Period or portion thereof. Commencing as of the first day of
the thirteenth month of the Lease Term, Tenant shall pay the estimated amounts
to Landlord in equal monthly installments, in advance, with Basic Rent. If
Landlord has not furnished its written estimate for any Expense Recovery Period
by the time set forth above, Tenant shall continue to pay cost reimbursements
at the rates established for the prior Expense Recovery Period, if any;
provided that when the new estimate is delivered to Tenant, Tenet shall, at the
next monthly payment date, pay any accrued cost reimbursements based upon the
new estimate.

(c) Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a statement showing
in reasonable detail the actual or prorated Property Taxes and Building Costs
incurred by Landlord during the period, and the parties shall within thirty
(30) days thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments, if any, to Tenant's actual proportional shares as shown by
the annual statement. Any amount due Tenant shall be promptly refunded to
Tenant, and nay deficiency shall be paid by Tenant together with the next
installment. If Tenant has not made estimated payments during the Expense
Recovery Period, any amount owing by Tenant pursuant to subsection (a) above
shall be paid to Landlord in accordance with Article XVI. If actual property
Taxes or building Costs allocable to Tenant during any Expense Recovery Period
are less than the Property Tax base or the Building Cost Base, respectively,
Landlord shall not be required to pay the differential to Tenant. Should Tenant
fail to object in writing to Landlord's determination of actual Operating
Expenses within sixty (60) days following delivery of landlord's expense
statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties.

(d) Even though the Lease has terminated and the Tenant has
vacated the Premises, when the final determination is made of Tenant's share of
Property Taxes and Building Costs for the Expense Recovery Period in which the
Lease terminates (which share shall be appropriately prorated based on the
percentage of such Expense Recovery Period that this Lease was in effect),
Tenant shall upon notice pay the entire increase due over the estimated
expenses paid. Conversely, any overpayment made in the event expenses decrease
shall be rebated by Landlord to Tenant.

<PAGE> 19
months by an amount equal to Tenant's proportionate share of the increase.
Landlord shall give Tenant written notice of the amount or estimated amount of
the increase, the month in which the increase will become effective, Tenant's
monthly share thereof and the months for which the payments are due. Tenant
shall pay the increase to Landlord as a part of Tenant's monthly payments of
estimated expenses as provided in paragraph (b) above, commencing with the
month in which effective.

(f) The term "Building Costs" shall include all expenses of
operation and maintenance of the Office Building and the Project, together with
all appurtenant Common facilities (as defined in Section 6.2), and shall
include the following charges by way of illustration but not limitation: water
and sewer charges; insurance premiums or reasonable premium equivalents should
Landlord elect to self-insure any risk that Landlord is authorized to insure
hereunder; license, permit, and inspection fees; heat; light; power; janitorial
services; air conditioning; supplies; materials; equipment; tools; amortization
of capital investments reasonable intended to produce a reduction in operating
charges or energy conservation; amortization of capital investments necessary
to bring the Office Building into compliance with applicable laws and building
codes enacted subsequent to the completion of construction of the Office
Building; labor; reasonably allocated wages and salaries, fringe benefits, and
payroll taxes for administrative and other personnel directly applicable to the
Office Building and/or Project, including both Landlord's personnel and outside
personnel, but exclusive of personnel above the level of building manager; any
expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2 and Exhibits
B and C below; and a reasonable overhead/management fee. It is understood that
Building Costs shall include competitive charges for direct services provided
by any subsidiary or division of Landlord. The term "Property Taxes" as used
herein shall include the following: (I) all real estate taxes or personal
property taxes, as such property taxes may be reassessed from time to time; and
(ii) other taxes, documentary transfer fees, charges and assessments which are
levied with respect to this Lease or to the Office Building and/or the Project,
and any improvements, fixtures and equipment and other property of Landlord
located in the Office Building and/or the Project, except that general net
income and franchise taxes imposed against Landlord shall be excluded; and
(iii) any tax, surcharge or assessment which shall be levied in addition to or
in lieu of real estate or personal property taxes, other than taxes covered by
Article VIII; and (iv) costs and expenses incurred in contesting the amount or
validity of any Property Tax by appropriate proceedings. A copy of Landlord's
unaudited statement of expenses shall be made available to Tenant upon request.
The Building Cots may be extrapolated by Landlord to reflect at least
ninety-five percent (95%) occupancy of the rentable area of the Office
Building.

<PAGE> 20
ARTICLE IV. RENT AND OPERATION EXPENSES

SECTION 4.2 OPERATING EXPENSE INCREASE. (Continued)

(g) Notwithstanding the foregoing, Operating Expenses
shall exclude the following items:

(1) Costs associated with the operation of the
business of the ownership or entity which constitutes "Landlord", as
distinguished from the costs of building operations, including, but not limited
to, partnership accounting and legal matters, costs of defending any lawsuits
with any mortgagee (except as the actions of Tenant may be in issued), costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord's
interest in the building, costs of any disputes between Landlord's interest in
the building, costs of any disputes between Landlord and its employees (if any)
not engaged in building operation, disputes of Landlord with building
management, or outside fees paid in connection with disputes with other
tenants;

(2) Costs incurred in connection with the
original construction of the Office Building or in connection with any major
change in the Office Building, including but not limited to the addition or
deletion of floors;

(3) Costs of alterations or improvements to the
Premises or the premises of other tenants;

(4) Depreciation, interest and principal
payments on mortgages, another debt costs, if any;

(5) Expenses directly resulting from the
negligence of Landlord, its against, servants or employees;

(6) Legal fees, space planners' fees, real estate
brokers' leasing commissions, and advertising expenses incurred in connection
with the original development or original leasing of the Office Building or
future leasing of the Office Building;

(7) Costs for which Landlord is reimbursed by
its insurance carrier or any tenant's insurance carrier;

(8) Any bad debt loss, rent loss, or reserves
for bad debts or rent loss;

(9) The expense of extraordinary services
provided to other tenants in the Office Building;

(10) The wages of any employee who does not
devote substantially all of his or her time to the Office Building;

(11) Fines, penalties and interest;

(12) Amounts paid as ground rental by Landlord;

(13) Any building system maintenance contracts,
earthquake or any other type of insurance, unless such maintenance costs and/or
insurance coverage was carried during the base year or, in the alternative, the
base year Operating Expenses have been "grossed- up" to include what such
maintenance and/or insurance coverage would have cost had it been carried
during the base year;
<PAGE> 21
(14) Any recalculation of or additional Operating
Expenses actually incurred more than two (2) years prior to the year in which
Landlord proposes that such costs be included.

(h) It is understood that Operating Expenses shall be
reduce by all cash discounts, trade discounts, or quantity discounts received
by Landlord or Landlord's managing agent in the purchase of any goods,
utilities or services in connection with the operation of the Office Building.
Landlord shall make payments for goods, utilities and services in a timely
manner to obtain the maximum possible discount. If capital times which are
customarily purchased by landlords of first class office buildings in Orange
County are leased, rather than purchased, by Landlord, the decision by Landlord
to lease the time in question shall not serve to increase Tenant's
proportionate share of Operating Expenses beyond that which would have applied
had the item in question been purchased. In the calculation of any expenses
hereunder, it is understood that no expense shall be charged more than once.
Landlord shall use its best efforts to effect an equitable proration of bills
for services rendered to the Office Building and to any other property owned by
Landlord. Landlord agrees to keep books and records showing the Operating
Expenses in accordance with a system of accounts and accounting practices
consistently maintained on a year-to-year basis.

ARTICLE V. USES

SECTION 5.1. USE. Tenant shall use the Premises only or the
purposes stated in Item 3 of the Basic Lease Provisions. The parties agree that
any contrary use shall be deemed to cause material and irreparable harm to
Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. Tenant shall not do or permit anything to be done in or
amount the Premises which will in any way interfere with the rights of other
occupants of the Office Building or the Project, or use or allow the Premises
to be used for any improper, immoral, unlawful or objectionable purpose, nor
shall Tenant permit any nuisance or commit any waste in the Premises or the
Project. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any insurance policy(ies) covering the
Office Building, the Project and/or their contents, and shall comply with all
applicable insurance underwriters rules and the requirements of the Pacific
Fire Rating Bureau or any other organization performing a similar function.
Tenant shall comply at its expense with all present and future laws, ordinances
and requirements of all governmental authorities that pertain to Tenant or its
use of the Premises, including without limitation all federal and state
occupational health and safety requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall not generate, handle, store or dispose of hazardous or
toxic materials, as such materials may be identified in any federal,
<PAGE> 22
state or local law or regulation, in the premises or Project without the prior
written consent of Landlord, which consent may be refused or conditioned by
Landlord in its discretion. Tenant agrees that it shall promptly complete and
deliver to Landlord any disclosure form regarding hazardous materials that my
be required by any governmental agency. Tenant shall promptly upon demand
reimburse Landlord for any additional insurance premium charged by reason of
Tenant's failure to comply with the provision of this Section, and shall
indemnify Landlord from any liability and/or expense resulting from Tenant's
noncompliance.

SECTION 5.2.(a) SIGNS. Tenant, upon obtaining the approval of
Landlord in writing, may affix a sign (restricted solely to Tenant's name as
set forth in item 1 of the Basic Lease Provisions or such other name as
Landlord may consent to in writing) adjacent to the entry door of the Premises
and shall maintain the sign in good condition and repair during the Term. The
sign shall conform to the criteria for signs established by Landlord. Tenant
shall not place or allow to be placed any other sign, decoration or advertising
matter of any kind that is visible from the exterior of the Premises. Any
violating sign or decoration may be immediately removed by Landlord at Tenant's
expense without notice and without the removal constituting a breach of this
Lease or entitling Tenant to claim damages.

ARTICLE V. USES

SECTION 5.2 SIGNS. (Continued)

(b) Non-Exclusive Primary and Secondary Signage. Tenant shall have
the right to install non-exclusive 24 inch high primary and standard secondary
signage on the exterior of the Office Building. The signs shall consist only of
the name "Red Robin International." The type, location and design of such
signage shall be subject to the approval of Landlord and shall be subject to
the Executive park sign criteria. Installation, insurance, and maintenance of
such signage shall be at Tenant's sole cost and expense. Except for the
foregoing, no sign, advertisement or notice visible from the exterior of the
Premises shall be inscribed, painted or affixed by Tenant on any part of the
Premises without the prior consent of Landlord. Tenant's signage right shall
belong solely to Red Robin International, Inc., a Nevada corporation and may
not be transferred or assigned without Landlord's prior written consent, which
may be withheld by Landlord in Landlord's sole discretion. In the event Tenant,
exclusive of any subtenant(s), ceases to occupy the Premises, then Tenant
shall, within thirty (30) days following notice from Landlord, remove the
primary and secondary signage at Tenant's expense. Tenant shall also remove
such signage promptly following the expiration or earlier termination of this
Lease. Any such removal shall be at Tenant's sole expense, and Tenant shall
bear the cost of any resulting repairs to the Office Building that are
reasonably necessary due to the removal.
<PAGE> 23
ARTICLE VI. LANDLORD SERVICES

SECTION 6.1. UTILITIES AND SERVICES. Landlord shall furnish to the
Premises the utilities and services described in Exhibit B, subject to the
conditions and payment obligations and standards set forth in this Lease.
Landlord shall not be liable for any failure to furnish any services or
utilities when the failure is the result of any accident or other cause beyond
Landlord's reasonable control, nor shall Landlord be liable for damage to
Tenant's equipment resulting from power surges. Landlord's failure to furnish
any services or utilities shall not entitle Tenant to any damages, relieve
Tenant of the obligation to pay rent or constitute a constructive or other
eviction of Tenant, except that Landlord shall diligently attempt to restore
the service or utility promptly, provided that if the Premises are rendered
unusable for more than five (5) consecutive business days as the result of
Landlord's failure to furnish a required service or utility, then rent
hereunder shall abate from and after the sixth business day until the service
or utility is restored. Tenant shall comply with all rules and regulations
which Landlord may reasonably establish for the provision of services and
utilities, and shall cooperate with all reasonable conservation practices
established by Landlord. Landlord shall at all reasonable times have free
access to all electrical and mechanical installations of Landlord.

SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON FACILITIES.
During the Term, Landlord shall operate all Common Facilities within the Office
Building and the Project. The term "Common Facilities" shall mean all areas
within the exterior boundaries of the Office Building and other buildings in
the Project which are not held for exclusive use by persons entitled to occupy
space, and all-other appurtenant areas and improvements provided by Landlord
for the common use of Landlord and tenants and their respective employees and
invitees, including without limitation parking area and structures, driveways,
sidewalks, landscaped and planted areas, hallways and interior stairwells not
located within the premises of any tenant, common entrances and lobbies,
elevators, and restrooms not located within the premises of any tenant.

SECTION 6.3. USE OF COMMON FACILITIES. The occupancy by Tenant of
the Premises shall include the use of the Common Facilities in common with
Landlord and with all others for whose conveniences and use the Common
Facilities may be provided by landlord, subject, however, to compliance with
all rules and regulations as are prescribed from time to time by Landlord.
Landlord shall operate and maintain the Common Facilities in the manner
Landlord may determine to be appropriate. Landlord shall at all times during
the term have exclusive control of the Common Facilities, any may restrain nay
use or occupancy, except as authorized by Landlord's rules and regulations.
Tenant shall keep the Common Facilities clear of any obstruction or
unauthorized use related to Tenant's operations. Nothing in this Lease shall be
deemed to impose liability upon Landlord for any damage to or loss of the
property of, or for any injury to, Tenant, its invitees or employees. Landlord
may temporarily close any portion of the Common Facilities for repairs,
remodeling and/or alterations, to prevent a public dedication or the accrual of
prescriptive rights, or for any other reason deemed sufficient by Landlord.
<PAGE> 24
SECTION 6.4. PARKING. Tenant shall have the parking rights set
forth in Exhibit C to this Lease.

SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves
the right to make alterations or additions to the Office Building or the
Project, or to the attendant fixtures, equipment and Common Facilities.
Landlord may at any time relocate or remove any of the various buildings,
parking areas, and other Common facilities, and may add buildings and areas to
the Project from time to time. No change shall entitle Tenant to any abatement
of rent or other claim against Landlord, provided that the change does not
deprive Tenant of reasonable access to or use of the Premises.

ARTICLE VII. MAINTAINING THE PREMISES

SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. When and if need,
Tenant at its sole expense shall make all repairs necessary to keep the
Premises in the condition as existed on the Commencement Date (or on any later
date that the improvements may have been installed), excepting ordinary wear
and tear. All repairs shall be at least equal in quality to the original work,
shall be made only at the time or times approved by Landlord. Any contractor
utilized by Tenant shall be subject to Landlord's standard requirements for
contractors, as modified from time to time. Landlord may impose reasonable
restrictions and requirements with respect to repairs, as provided in Section
7.3, and the provisions of Section 7.4 shall apply to all repairs.
Alternatively, if Tenant fails to make a necessary repair within thirty (30)
days following notice from Landlord, then Landlord may elect to make any such
repair on behalf of Tenant and at Tenant's expense, and Tenant shall promptly
reimburse Landlord for all costs incurred upon submission of an invoice.

SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR.

(a) Subject to Section 7.1 and Article XI, Landlord shall
provide service, maintenance and repair with respect to any air conditioning,
ventilating or heating equipment which serves the Premises and shall maintain
in good repair the roof, foundations, footings, the exterior surface of the
exterior walls of the Office Building, and the structural, electrical and
mechanical systems, except that Tenant at its expense shall make all repairs
which Landlord reasonably necessary as a result of the act or negligence of
Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function, provided the
cost thereof is competitive with third party rates. Landlord need not make any
other improvements or repairs except as specifically required under this Lease,
and nothing contained in this Section shall limit Landlord's
<PAGE> 25
right to reimbursement from Tenant for maintenance, repair costs and
replacement costs as provided elsewhere in this Lease. Tenant understands that
it shall not make repairs at Landlord's expense or by rental offset, provided
that in the event Landlord defaults, after the notice and cure period specified
in Section 14.5, in its obligation to make any necessary repair to the interior
of the Premises that is the responsibility of Landlord hereunder, and further
provided that such repair would not affect the mechanical or electrical systems
of the office Building, then Tenant may make such repair and offset the
reasonable cost thereof against the rent next due hereunder, subject to
Landlord's right to contest same in an unlawful detainer proceeding or
otherwise.

(b) Except as provided in Sections 11.1 and 12.1 below, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant's business arising from the making of any
repairs, alterations or improvements to any portion of the Office building,
including repairs to the Premises, nor shall nay related activity by Landlord
constitute an actual or constructive eviction; provided, however, that in
making repairs, alterations or improvements, Landlord shall interfere as little
as reasonably practicable with the conduct of Tenant's business in the
Premises.

SECTION 7.3. ALTERATIONS. Tenant shall make no alterations,
additions or improvements to the Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Landlord may
impose, as a condition to its consent, a requirement that all work be covered
by a lien and completion bond satisfactory to Landlord and requirements as to
the manner, time, and contractor form performance of the work. Tenant shall
obtain all required permits for the work and shall perform the work in
compliance with all applicable laws, regulations and ordinances. Under no
circumstances shall Tenant make any improvement which incorporates
asbestos-containing construction materials into the Premises. Any request for
Landlord's consent shall be made in writing and shall contain architectural
plans describing the work in detail reasonably satisfactory to Landlord. Unless
Landlord otherwise agrees in writing, all alterations, additions or
improvements affixed to the Premises (excluding moveable trade fixtures and
furniture) shall become the property of Landlord and shall be surrendered with
the Premises at the end of the Term, except that Landlord may, by notice to
Tenant given at the time of Landlord's consent to the alteration or
improvement, require Tenant to remove by the Expiration Date, or sooner
termination date of this Lease, all or any alterations, decorations, fixtures,
additions, improvements and the like installed either by Tenant or by Landlord
at Tenant's request and to repair any damage to the Premises arising from that
removal. Landlord may require Tenant to remove an improvement provided as part
of the initial build-out pursuant to Exhibit X, if any, if and only if the
improvement is a non-building standard item and Tenant is notified of the
requirement prior to the build- out. Except as otherwise provided in this Lease
or in any Exhibit to this Lease, should Landlord make any alteration or
improvement to the Premises for Tenant, Landlord shall be entitled to prompt
reimbursement from Tenant for all Costs incurred.
<PAGE> 26
SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free
from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly cause any such lien to be released by posting a bond in accordance with
California civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord's attorneys' fees, shall be reimbursed by Tenant
promptly following Landlord's demand, together with interest from the date of
payment by Landlord at the maximum rate permitted by law until paid. Tenant
shall give Landlord no less than twenty (20) day's prior notice in writing
before commencing construction of any kind on the Premises so that Landlord may
post and maintain notices of nonresponsibility on the Premises.

SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all times,
upon not less than 24 hours prior written notice (except in emergencies or to
supply regular janitorial services), have the right to enter the Premises to
inspect them, to supply services in accordance with this Lease, to protect the
interest of Landlord in the Premises, and to submit the premises to prospective
or actual purchasers or encumbrance holders (or, during the last ninety (90)
days of the Term or when an uncured Tenant default exists, to prospective
tenants), all without being deemed to have caused an eviction of Tenant and
without abatement of rent except as provided elsewhere in this Lease. Landlord
shall at all times have and retain a key which unlocks all of the doors in 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 the doors
in an emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord shall not under any circumstances be deemed to be
a forcible or unlawful entry into, or a detainer of, the Premises, or any
eviction of Tenant from the Premise.

ARTICLE VIII. TAXES ASSESSMENTS ON TENANT'S PROPERTY

Tenant shall be liable for and shall pay, at least ten (10) days
before delinquency, all taxes and assessments levied against all personal
property of Tenant located in the Premises. When possible Tenant shall cause
its personal property to be assessed and billed separately from the real
property to which the Premises form a part. If any taxes on Tenant's personal
property are levied against Landlord or increased by the inclusion of a value
placed upon the personal property of Tenant and if Landlord pays the taxes
based upon the increased assessment, Tenant shall pay to Landlord the taxes so
levied against Landlord or the proportion of the taxes resulting from the
increase in the assessment. In calculating what portion of any tax bill which
is
<PAGE> 27
assessed against Landlord separately, or Landlord and Tenant jointly, is
attributable to Tenant's fixtures and personal property, Landlord's reasonable
determination shall be conclusive.

ARTICLE IX. ASSIGNMENT AND SUBLETTING

SECTION 9.1. RIGHTS OF PARTIES.

(a) Notwithstanding any provision of this Lease to the
contrary, Tenant will not, either voluntarily or by operation of law, sign,
sublet, encumber, or otherwise transfer all or any part of Tenant's interest in
this Lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1.(C); provided that
Tenant may, without the consent of Landlord but with prior written notice to
Landlord, assign this Lease or any interest therein, or sublet the Premises or
any portion thereof, to (I) any subsidiary or any parent or any subsidiary of
any parent of Tenant, (ii) any corporation with which Tenant may merge or
consolidate, or (iii) any corporation acquiring all or substantially all of the
assets and/or stock of Tenant. No assignment (whether voluntary, involuntary or
by operation of law) and no subletting shall be valid or effective without
Landlord's prior written consent and, at Landlord's election, shall constitute
a material default of this Lease. Landlord shall not be deemed to have given
its consent to any assignment or subletting by any other course of action,
including its acceptance of any name for listing in the Office Building
directory. To the extent not prohibited by provisions of the Bankruptcy Code,
11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"), including Section
365(f)(1), Tenant on behalf of itself and its creditors, administrators and
assigns waives the applicability of Section 365(e) of the Bankruptcy Code
unless the proposed assignee of the Trustee for the estate of the bankrupt
meets Landlord's standard for consent as set forth in Section 9.1(C) of this
Lease. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy code, any and alimonies or other considerations to
be delivered in connection with the assignment shall be 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 person or entity to which this Lease is assigned pursuant
to the provisions of the Bankruptcy Code shall be deemed to have assumed all o
the obligations arising under this Lease on and after the date of the
assignment, and shall upon demand execute and deliver to Landlord an instrument
confirming that assumption.

(b) If Tenant or any guarantor of Tenant ("Tenant's
Guarantor") is a corporation, or is an unincorporated association or
partnership, the transfer of any stock or interest in the corporation,
association or partnership which results in a change in the voting control of
Tenant or Tenant's Guarantor, if any, shall be deemed an assignment within the
meaning and provisions of this Article. In addition, any change in the status
of the entity, such as, but not limited to, the withdrawal of a general
partner, shall be deemed an assignment within the meaning of this Article.
<PAGE> 28
(c) If Tenant desires to transfer an interest in this Lease,
it shall first notify Landlord of its desire and shall submit in writing to
Landlord: (i) the name and address of the proposed transferee; (ii) the nature
of any proposed subtenant's or assignee's business to be carried on in the
Premises; (iii) the terms and provisions of any proposed sublease or
assignment; and (iv) any other information requested by Landlord and reasonably
related to the transfer. Except as provided in Subsection (d) of this Section,
Landlord shall not unreasonably withhold its consent, provided: (1) the use of
the Premises will be consistent with the provisions of this Lease and with
Landlord's commitment to other tenants of the Office Building and Project; (3)
at Landlord's election, insurance requirements shall be brought into conformity
with Landlord's then current leasing practice; (4) any proposed subtenant or
assignee demonstrates that it is financially responsible by submission to
Landlord of all reasonable information as Landlord may request concerning the
proposed subtenant or assignee; (5) any proposed subtenant or assignee
demonstrates to Landlord's reasonable satisfaction an record of successful
experience in business; (6) the proposed assignee or subtenant is not an
existing tenant of the Office Building or Project; and (7) the proposed
transfer will not impose additional burdens or adverse tax effects on Landlord.
If Landlord consents to the proposed transfer, Tenant may within ninety (90)
days after the date of the consent effect the transfer upon the terms described
in the information furnished to landlord; provided that any material change in
the terms shall be subject to landlord's consent as set forth in this Section.
Landlord shall approve or disapprove any requested transfer within ten 910)
business days following receipt of Tenant's written request and the information
set forth above.

(d) Notwithstanding the provisions if Subsection (C) above, in
lieu of consenting to a proposed assignment or subletting, Landlord may elect
to (I) sublease the Premises (or the portion proposed to be subleased), or take
an assignment of Tenant's interest in this Lease, upon the same terms as
offered to the proposed subtenant or assignee (excluding terms relating to the
purchase of personal property, the use of Tenant's name or the continuation of
Tenant's business), or (ii) terminate this Lease as to the portion of the
Premises proposed to be subleased or assigned with a proportionate abatement in
the rent payable under this Lease, effective on the date that the proposed
sublease or assignment would have become effective. Landlord may thereafter, at
its option, assign or re-let any space so recaptured to any third party,
including without limitation the proposed transferee of Tenant.

(e) Tenant shall pay to Landlord a transfer fee of Two Hundred
Fifty Dollars ($250.00) if and when any transfer requested by Tenant is
approved.

SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment
(other than an assignment to Landlord), even with the consent of Landlord,
shall relive Tenant of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant
<PAGE> 29
shall indemnify and hold Landlord harmless, as provided in Section 10.3, for
any act or omission by an assignee or subtenant other than Landlord. Each
assignee, shall be deemed to assume all obligations of Tenant under this Lease
and shall be liable jointly and severally with Tenant for the payment of all
rent, and for the due performance of all of Tenant's obligations, under this
Lease. No transfer shall be binding on Landlord unless any document
memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord and executed consent to
transfer instrument prepared by Landlord and consistent with the requirements
of this Article. The acceptance by Landlord of any payment due under this Lease
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any transfer. Consent by Landlord
to one or more transfers shall not operate as a waiver or estoppel to the
future enforcement by Landlord of its rights under this Lease.

SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and
conditions shall apply to any subletting by Tenant of all or any part of the
Premises and shall be included in each sublease:

(a) Tenant hereby irrevocably assigns to Landlord all of
Tenant's interest in all rentals and income arising from any sublease of the
Premises, and Landlord may collect such rent and income and apply same toward
Tenant's obligations under this Lease; provided, however, that until a default
occurs in the performance of Tenant's obligations under this Lease, Tenant
shall have the right to receive and collect the sublease rentals. Landlord
shall not, by reason of this assignment or the collection of sublease rentals,
be deemed liable to the subtenant for the performance of any of Tenant's
obligations under the sublease. Tenant hereby irrevocably authorizes and
directs any subtenant, upon receipt of a written notice from Landlord stating
that an uncured default exists in the performance of Tenant's obligations under
this Lease, to pay to Landlord all sums then and thereafter due under the
sublease. Tenant agrees that the subtenant may rely on that notice without any
duty of further inquiry and notwithstanding any notice or claim by Tenant to
the contrary. Tenant shall have no right or claim against the subtenant or
Landlord for any rentals so paid to Landlord.

(b) In the event of the termination of this Lease, Landlord
may, at its sole option, take over Tenant's entire interest in any sublease
and, upon notice from Landlord, the subtenant shall attorn to Landlord. In no
event, however, shall Landlord be liable for any previous act or omission by
Tenant under the sublease or for the return of any advance rental payment or
deposits under the sublease that have not been actually delivered to Landlord,
nor shall Landlord by bound by any sublease modification executed without
Landlord's consent or for any advance rental payment by the subtenant in excess
of one month's rent. The general provisions of this Lease, including without
limitation those pertaining to insurance and indemnification, shall be deemed
incorporated by reference into the sublease despite the termination of this
Lease.

(c) Tenant agrees that Landlord may, at its sole option,
authorize a subtenant of the Premises to cure a default by Tenant under this
Lease. Should Landlord accept such cure, the subtenant shall have a right of
reimbursement and offset from and against Tenant under the applicable sublease.

<PAGE> 30
ARTICLE X. INSURANCE AND INDEMNITY

SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and
expense, shall provide and maintain in effect the insurance described in
Exhibit D. Evidence of that insurance must be delivered to Landlord prior to
the Commencement Date.

SECTION 10.2. LANDLORD'S INSURANCE. Landlord shall provide the
following types of insurance, with or without deductible and in amounts and
coverages as may be determined by Landlord in its discretion: "all risk"
property insurance, subject to standard exclusions, covering the Office
Building in an amount of at least eighty percent (80%) of its replacement
value, and such other risks as Landlord or its mortgagees may from time to time
deem appropriate, including leasehold improvements made by Landlord, and
comprehensive public liability coverage. Landlord shall not be required to
carry insurance of any kind on Tenant's property, including leasehold
improvements, trade fixtures, furnishings, equipment, plate glass, signs and
all other times of personal property, and shall not be obligated to repair or
replace that property should damage occur. All proceeds of insurance maintained
by Landlord upon the Office Building and Project shall be the property of
Landlord, whether or not Landlord is obligated to or elects to make any
repairs.

SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted
by law, Tenant shall defend, indemnify and hold harmless Landlord, its agents,
and any and all affiliates of Landlord, including, without limitation, any
corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant's
use or occupancy of the Premises, the Office Building or the Common Facilities,
or form the conduct of its business, or from any activity, work, or thing done,
permitted or suffered by Tenant or its agents, employees, invitees or licensees
in or about the Premises, the Office Building or the Common Facilities, or from
any against in the performance of any obligation on Tenant's part to be
performed under this Lease, or from any act or negligence of Tenant or its
agents, employees, visitors, patrons, guests, invitees or licensees. Landlord
may, at its option, require Tenant to assume Landlord's defense in any action
covered by this Section through counsel satisfactory to Landlord.

SECTION 10.4. LANDLORD'S INDEMNITY. Landlord shall indemnify and
save Tenant harmless from any and all liabilities or damages to the extent
they are attributable to a breach on the part of Landlord in the performance
of any of its obligations under this Lease or to the negligence or will full
misconduct of Landlord, its agents or employees in or about the Premises, If
Tenant is served as a party defendant in any action or proceeding covered by
this Section, attorneys selected by Landlord or Landlord's insurance carrier
shall defend Tenant, without charge, and Tenant shall promptly notify Landlord
immediately upon said service being effected.
<PAGE> 31
ARTICLE XI. DAMAGE OR DESTRUCTION

SECTION 11.1. RESTORATION.

(a) If the Office Building of which the premises are a
part is damaged, Landlord shall repair that damage as soon as reasonably
possible, at its expense, unless: (i) landlord reasonably determines that the
cost of repair would exceed ten percent (10) of the full replacement cost of
the Office Building ("Replacement Cost") and the damage is not covered by
Landlord's fire and extend coverage insurance e(or by a normal extended
coverage policy should Landlord fail to carry that insurance); or (ii) Landlord
reasonably determines that the cost of repair would exceed twenty-five percent
(25%) of the Replacement Cost; or (iii) Landlord reasonably determines that the
cost of repair would exceed ten percent (10%) of the Replacement Cost and the
damage occurs during the final twelve (12) months of the Term. Should Landlord
elect not to repair the damage for one of the preceding reasons, Landlord shall
so notify Tenant in writing within sixty (60) days after the damage occurs and
this Lease shall terminate as of the date of that notice.

(b) Unless Landlord elects to terminate this Lease in
accordance with subsection (a) above, this Lease shall continue in effect for
the remainder of the Term; provided that if the damage is so extensive as to
reasonably prevent Tenant's substantial use and enjoyment of the premises for
more than six (6) months, then Tenant may elect to terminate this Lease by
written notice to Landlord within the sixty (60) day period stated in
subsection (a).

(c) Commencing on the date of any damage to the Office
Building, and ending on the sooner of the date the damage is repaired or the
date this Lease is terminated, the rental to be paid under this Lease shall be
abated in the same proportion that the floor area of the premises that is
rendered unusable by the damage from time to time bears to the total floor area
of the Premises.

(d) Notwithstanding the provisions of subsections (a),
(b) and (C) of this Section, the cost of any repairs shall be borne by Tenant,
and Tenant shall not be entitled to rental abatement or termination rights, if
the damage is due to the fault or neglect of Tenant or its employees,
subtenants, or representatives. In addition, the provisions of this Section
shall be deemed to require Landlord to repair any improvements or fixtures that
Tenant is obligated to repair or insure pursuant to any other provision of this
Lease.

SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of
this Lease, including without limitation Section 11.1, shall govern any damage
or destruction and shall accordingly supersede any contrary statute or rule of
law.

<PAGE> 32
ARTICLE XII. EMINENT DOMAIN

SECTION 12.1. TOTAL OR PARTIAL TAKING. If all of a material portion of
the Premises is taken by any lawful authority by exercise of the right of
eminent domain in, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority In the event title to a portion of the Office
building or Project, other than the Premises, is taken or sold in lieu of
taking, and if Landlord elects to restore the Office Building in such a way as
to enter the Premises materially, either party may terminate this Lease, by
written notice to the other party, effective on the date of vesting of title In
the event neither party has elected to terminate this Lease as provided above,
then Landlord shall promptly, after receipt of a sufficient condemnation award,
proceed to restore the Premises to substantially their condition prior to the
taking, and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the event
of a taking, Landlord shall be entitled to the entire event of the condemnation
award without deduction for any state or interest of Tenant; provided that
nothing in this Section shall be deemed to give Landlord any interest in, or
prevent Tenant from seeking any award against the taking authority for, the
taking of personal property end fixtures belonging to Tenant or for relocation
or business interruption expenses recoverable from the taking authority.

SECTION 12.2 TEMPORARY TAKING. No temporary taking of the Premises
shall terminate this Lease or give Tenant any right to abatement of rent, and
any award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.

Section 12.3 TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Office Building: provided that if
Landlord falls to make that substitution within thirty (30) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord If this Lease is not to terminate by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.
<PAGE> 33
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE

SECTION 13.1 Subordination.

(a) At the option of Landlord, this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust, if
any, which may hereafter effect the Office Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the event
of termination of any such ground or underlying lease, or the foreclosure of any
such mortgage or deed of trust, to which Tenant has subordinated this Lease
pursuant to this Section. In the event of a termination or foreclosure, Tenant
shall become a Tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
execute any instrument reasonably required by Landlord's successor for that
purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments that may be required from time to time to subordinate
this Lease pursuant to this Section. In the event of a termination or
foreclosure Tenant shall become a tenant of and attorn to the
successor-in-interest to Landlord upon the same terms and conditions as are
contained in this Lease, and shall execute any instrument reasonably required by
landlords successor for that purpose. Tenant shall also, upon written request of
Landlord, execute and deliver all instruments as may be required from time to
time to subordinate the rights of Tenant under this Lease to any ground or
underlying lease or to the lien of any mortgage or deed of trust, or, if
requested by Landlord, to subordinate, in whole or in part, any ground or
underlying lease or the lien of any mortgage or deed of trust to this Lease.

(b) Failure of Tenant to execute any statements or instruments
necessary or desirable to effectuate the provisions of this Article, within ten
(10) days after written request by Landlord, shall constitute a default upon
this Lease. In that event, Landlord, In addition to any other rights or remedies
it might have, shall have the right, by written notice to Tenant, to terminate
this Lease as of a date not less than twenty (20) days after the date of
Landlord's notice Landlord's election to terminate shall not relieve Tenant of
any liability for its default.

SECTION 13.2 ESTOPPEL CERTIFICATE

(a) Tenant shall, at any time upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord, in
any form that Landlord may reasonably require, a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of the modification and certifying that this Lease,
os modified, is in full force and effect) and the dates to which the rental,
additional rent and other charges have been paid in advance, if any, and (ii)
acknowledging that, to Tenant's knowledge, there are no uncured defaults on the
part of Landlord, or specifying each default if any are claimed, end (iii)
setting forth all further information that Landlord may reasonably require.
Tenant's statement may be relied upon by any prospective purchaser or
encumbrances of all or any portion of the Office Building or Project.
<PAGE> 34
(b) Tenant's failure to deliver any estoppel statement within
the provided time shall constitute a default under this Lease and shall be
conclusive upon Tenant that (1) this Lease is in full force end effect without
modification except as may be represented by Landlord, (11) there are no
uncured defaults in Landlord's performance, and (iii) not more then one month's
rental has been paid in advance.

ARTICLE XIV. DEFAULTS AND REMEDIES

SECTION 14.1 TENANT DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:

(a) The failure by Tenant to make any payment of rent or
additional rent required to be made by Tenant as and when due where the failure
continues for period of three (3) days after written notice from Landlord to
Tenant; provided however that any such notice shall be in lieu of and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended For purposes of these default and remedies
provisions the term "additional rent" shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease.

(b) Assignment sublease encumbrance or other transfer of the
Lease by Tenant either voluntarily or by operation of law whether by judgment
execution transfer by intestacy or testacy or other means without the prior
written consent of landlord.

(c) The discovery by Landlord that any financial statement
provided by Tenant, or by any affiliate, successor or guarantor of Tenant, was
materially false.

(d) The failure or inability by Tenant to observe or perform
any of the express or implied covenants or provisions of this Lease to be
observed or performed by Tenant other thin as specified in any other subsection
of this Section where the failure continues for a period of thirty 130) days
after written notice from Landlord to Tenant provided however that any such
notice shall be in lieu of and not in addition to any notice required under
California Code of Civil Procedure Section 1161 and 1161(a) as amended However
if the nature of the failure is such that more than thirty (30) days are
reasonably required for its cure then Tenant shall not be deemed to be in
default if Tenant commences the cure within thirty (30) days and thereafter
diligently pursues the cure to completion.

(e) (i) The making by Tenant of any general assignment for the
benefit of creditors (ii) the filing by or against Tenant of a petition to have
Tenant adjudged Chapter 7 debtor under the bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any taw
relating to bankruptcy (unless in the case of e petition filed against Tenant
the same is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to substantially possession of substantially all of
Tenant's asset located at the Premises or of Tenant's interest in this Lease if
possession is not restored to Tenant within thirty (30) days; (iv) the
attachment
<PAGE> 35
execution or other judicial seizure of substantially all of Tenant's assets
located et the Premises or of Tenant's interest in this Lease where the seizure
is not discharged within thirty (30) days or (v) Tenant's convening of meeting
of its creditors for the purpose of effecting a moratorium upon or composition
of Its debts Landlord shall not be deemed to have knowledge of any event
described in this subsection unless notification in writing is received by
Landlord nor shall there be any presumption attributable to Landlord of
Tenant's insolvency. In the event that any provision of this subsection is
contrary to applicable law the provision shall be of no force or effect.

SECTION 14.2. LANDLORD'S REMEDIES.

(a) In the event of any default by Tenant or In the event
of the abandonment of the Premises by Tenant then in addition to any other
remedies available to Landlord, Landlord may exercise the following remedies:

(i) Landlord may terminate Tenant's right to
possession of the Premises by any lawful means in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Premises to
Landlord Such termination shall not effect any accrued obligations of Tenant
under this Lease. Upon termination Landlord shall have the right to reenter the
Premises and remove all persons and property Landlord shall also be entitled to
recover from Tenant:

(1) The worth at the time of award of the
unpaid rent end additional rent which had been earned at the time of
termination;

(2) The worth at the time of award of the
amount by which the unpaid rent and addition to rent which would have been
earned after termination until the time of award exceeds the amount of such
toss that Tenant proves could have been reasonably avoided;

(3) The worth at the time of award of the
amount by which the unpaid rent and additional rent for the balance of the Term
after the time of award exceeds the amount of such loss that Tenant proves
could be reasonably avoided;

(4) Any other amount necessary to compensate
Landlord or all the detriment approximately 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 from Tenant's default, including, but not
limited to, the cost of recovering possession of the Premises, commission and
other expenses of relating, including necessary repair, the unamortized
portion of any tenant improvements and brokerage commissions funded by
Landlord in connection with this lease, reasonable attorney's fees, and
any other reasonable costs; and

(5) At Landlord's election, all other
amounts in addition to or in lieu of the foregoing as may be permitted by law.
The term "rent" as used in this Lease shall be deemed to mean the Basic Rent
and all other sums required to be paid by tenant to Landlord pursuant to the
<PAGE> 36
terms of this Lease. Any sum, other than Basic Rent, shall be computed on the
basis of the average monthly amount accruing during the twenty-four (24) month
period immediately prior to default, except that if it becomes necessary to
compute such rental before the twenty-four (24) month period has occurred, then
the computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the "worth at the
time of award" shall be computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subparagraph (3) above, the "worth at the
time of award" shall be computed by discounting the amount at the discount rate
of the Federal reserve Bank of San Francisco at that time of award plus one
percent (1%).

(ii) Landlord may elect not to terminated Tenant's right
to possession of the Premises, in which event Landlord may continue to enforce
all of its rights and remedies under this Lease, including the right to collect
all rent as it becomes due. Efforts by the Landlord to maintain, preserve or
relet
<PAGE> 37
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this subsection (ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.

(b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any default by Tenant unless and until the default is cured by
Tenant. The various rights and remedies reserved to Landlord in this Lease or
otherwise shall be cumulative and, except as otherwise provided by California
Law, Landlord may pursue any or all of its rights and remedies at the same time.

(c) No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord's right to recover the balance of the rent or pursue any other remedy
available to it. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys to the Premises prior to the termination of this Lease, and
the delivery of the keys to any employee shall not operate as a termination of
the Lease or a surrender of the Premises.

SECTION 14.3. LATE PAYMENTS.

(a) Any rent due under this Lease that is not paid to Landlord within
five (5) days following receipt of written notice that the same is due shall
bear interest at the maximum rate permitted by law from the date due until fully
paid. The payment of interest shall not cure any default by Tenant under this
Lease. In addition, Tenant acknowledges that the late payment by Tenant to
Landlord of rent will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult and impracticable
to ascertain. Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any ground lease,
<PAGE> 38
mortgage or trust deed covering the Premises. Accordingly, if any rent due from
Tenant shall not be received by Landlord or Landlord's designee within five (5)
days following the receipt of written notice that the same is due, then Tenant
shall pay to Landlord, in addition to the interest provided above, a late
charge in the amount of one hundred dollars ($100.00) for each delinquent
payment. Acceptance of a late charge by Landlord shall not constitute a waiver
of Tenant's default with respect to the overdue amount, nor shall it prevent
Landlord from exercising any of its other rights and remedies.

(b) Following each second consecutive installment of rent that is not
paid within five (5) days following notice of nonpayment from Landlord, Landlord
shall have the option (i) to require that Tenant increase the amount, if any, of
the Security Deposit by one hundred percent (100%). Should Tenant deliver to
Landlord, at any time during the Term, two (2) or more insufficient checks, the
Landlord may require that all monies then and thereafter due from Tenant be paid
to Landlord by cashier's check.

SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off. If
Tenant fails to pay any sum of money, other than rent, or fails to perform any
other act on its part to be performed under this Lease, and the failure
continues beyond any applicable grace period set forth in Section 14.1, then in
addition to any other available remedies, Landlord may, at its election make the
payment or perform the other act on Tenant's part. Landlord's election to make
the payment or perform the act on Tenant's part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts. Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the maximum rate permitted by law
from the date of the payment by Landlord. Landlord shall have the same rights
and remedies if Tenant fails to pay those amounts as Landlord would have in the
event of a default by Tenant in the payment of rent.

SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation i such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.

SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant
bring any action in connection with this Lease, the prevailing party shall be
entitled to recover as a part of the action its reasonable attorneys' fees, and
all other costs. The prevailing party for the purpose of this paragraph shall be
determined by the truer of the facts.
<PAGE> 39
ARTICLE XV. END OF TERM

SECTION 15.1 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, or 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
monthly rental shall be one hundred twenty percent (120%) of the total monthly
rental for the month immediately preceding the date of termination. 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 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.

SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear and repairs which are Landlord's obligation
excepted, and shall, without expense to Landlord, remove or cause to be removed
from the Premises all personal property and debris, except for any items that
Landlord may by written authorization allow to remain. Tenant shall repair all
damage to the Premises resulting from the removal, which repair shall include
the patching and filling of holes and repair of structural damage, provided that
Landlord may instead elect to repair any structural damage at Tenant's expense.
If Tenant shall fail to comply with the provisions of this Section, Landlord may
effect the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If requested by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an instrument in writing
releasing and quitclaiming to Landlord all right, title and interest of Tenant
in the Premises.

ARTICLE XVI. PAYMENTS AND NOTICES

All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease
<PAGE> 40
expressly provides otherwise, as for example in the payment of rent pursuant to
Section 4.1, all payments shall be due and payable within five (5) days after
demand. All payments requiring proration shall be prorated on the basis of a
thirty (30) day month and a three hundred sixty (360) day year. Any notice,
election, demand, consent, approval or other communication to be given or other
document to be delivered by either party to the other may be delivered in
person or by courier to the other party, or may be deposited in the United
States mail, duly registered or certified, postage prepaid, return receipt
requested, and addressed to the other party at the address set forth in Item 12
of the Basic Lease Provisions, or if to Tenant, at that address or, from and
after the Commencement Date, at the Premises (whether or not Tenant has
departed from, abandoned or vacated the Premises). Either party may, by written
notice to the other, served in the manner provided in this Article, designate a
different address. If any notice or other document is sent by mail, it shall be
deemed served or delivered twenty-four (24) hours after mailing. If more than
one person or entity is named as Tenant under this Lease, service of any notice
upon any one of them shall be deemed as service upon all of them.

ARTICLE XVII. RULES AND REGULATIONS

Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Office Building, Project and Common
Facilities. Landlord shall not be liable to Tenant for any violation of the
Rules and Regulations or the breach of any covenant or condition in any lease by
any other tenant. One or more waivers by Landlord of any breach of the Rules
and Regulations by Tenant or by any other tenant(s) shall not be a waiver of any
subsequent breach of that rule or any other. Tenant's failure to keep and
observe the Rules and Regulations shall constitute a default under this Lease.
In the case of any conflict between the Rules and Regulations and this Lease,
this Lease shall be controlling.

ARTICLE XVIII. BROKER'S COMMISSION

The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease. If Tenant fails to take possession of the Premises or
if this Lease otherwise terminates prior to the Expiration Date as the result of
failure of performance by Tenant, Landlord shall be entitled to recover from
Tenant the unamortized portion of any brokerage commission funded by Landlord in
addition to any other damages to which Landlord may be entitled.
<PAGE> 41
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.
<PAGE> 42
SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenant's reasonable control.

SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Office Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.

SECTION 20.11. QUIET ENJOYMENT. 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
claiming by or through Landlord.

SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

ARTICLE XXI. EXECUTION AND RECORDING

SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership, and that this Lease is binding upon the corporation or partnership
in accordance with its terms. Tenant shall, at Landlord's request, deliver a
certified copy of its board of directors' resolution or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.
<PAGE> 43
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact
executed and delivered this Lease to Tenant, it being intended that this Lease
shall only become effective upon execution by Landlord and delivery of a fully
executed counterpart to Tenant.

SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.

SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.

ARTICLE XXII. MISCELLANEOUS

SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Office Building or Project, either
directly or indirectly, without the prior written consent of Landlord, provided,
however, that Tenant may disclose the terms to prospective subtenants or
assignees under this Lease.

SECTION 22.2. REPRESENTATIONS BY TENANT. The application, financial
statements and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared, certified
and submitted to Landlord as an inducement and consideration to Landlord to
enter into this Lease. The application and statements are represented and
warranted by Tenant to be correct and to accurately and fully reflect Tenant's
true financial condition as of the date of execution of this Lease by Tenant.
Tenant shall during the Term promptly furnish Landlord with annual financial
statements reflecting Tenant's financial condition upon written request from
Landlord.

SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining
financing for the Office Building, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not materially increase the obligations of Tenant or materially and adversely
affect the leasehold interest created by this Lease.
<PAGE> 44
SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder or to terminate this Lease shall result in such a release or
termination unless (a) Tenant has given notice by registered or certified mail
to any beneficiary of a deed of trust or mortgage covering the Office Building
whose address has been furnished to Tenant and (b) such beneficiary is afforded
a reasonable opportunity (but not to exceed six months) to cure the default by
Landlord, including, if necessary to effect the cure, time to obtain possession
of the Office Building by power of sale or judicial foreclosure provided that
such foreclosure remedy is diligently pursued.

SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this Lease
shall be construed to be conditions as well as covenants as though the words
specifically expressing or imparting covenants and conditions were used in each
separate provision.

SECTION 22.6. DISCLOSURE STATEMENT. Tenant acknowledges that it has read,
understands and, if applicable, shall comply with the provisions of Exhibit F to
this Lease, if that Exhibit is attached.
<PAGE> 45
SECTION 22.7. ATTACHMENTS. In addition to all of the Exhibits
referred to above, attached are the following documents which also constitute a
part of this Lease:

SECTION 22.8. REIMBURSEMENT FOR EXISTING LEASES. Landlord and
Tenant are currently parties to an office space lease dated November 13, 1989
for premises located at 9 Executive Circle, Suite 290, Irvine, California,
which lease shall expire on June 30, 1992. Tenant is also currently subleasing
a portion of the first floor at 9 Executive Circle from Harbor Bank, a
California corporation under a sublease agreement dated April 9, 1987, which
sublease shall expire on May 14, 1992. Tenant represents that a true and
correct copy of said sublease agreement and all amendments thereto are attached
hereto as Exhibit Y. The aforementioned lease and sublease shall collectively
be referred to herein as the "Existing Leases". Tenant hereby represents that
the monthly basic rent payable under the Existing Lease is $25,132.00 plus
operating expenses of $-0- per month. Landlord and Tenant agree that
concurrently with the Commencement Date hereof, the parties hereto shall have
the following rights and obligations with respect to the Existing Leases.

(a) Except as may otherwise be provided herein, Landlord
shall promptly reimburse Tenant for any basic rent and operating expense
(including property tax) reimbursements which Tenant is required to pay under
the Existing Leases net of any receipts from subtenants, and which accrue from
and after the Commencement date of this Lease.

(b) Tenant hereby represents that it has not, and agrees
that from and after the date hereof it shall not, exercise any rights, options
or elections which Tenant has or may have under the existing Leases, including,
without limitation any options to extend or renew the term of the Existing
Leases or otherwise to affect the obligations, including rental obligations, of
Tenant thereunder, nor shall Tenant enter into any amendment of the Existing
Leases without Landlord's prior written consent.
<PAGE> 46
(c) Upon request by Landlord, Tenant shall cooperate in
effecting either a sublease(s) or a "buy-out" of the Existing Leases, provided
that Tenant is not required to incur any additional cost as the result thereof.

LANDLORD: TENANT:

THE IRVINE COMPANY, a Michigan corporation, RED ROBIN INTERNATIONAL, INC.
dba IRVINE OFFICE COMPANY -----------------------------
a Nevada corporation
-----------------------------

By /s/ By /s/
---------------------------------------- --------------------------
Michael T. Lutton, President Title President
Irvine Office Company -----------------------

By /s/ By /s/
---------------------------------------- --------------------------
Richard A. Jones Title Vice Secretary
Vice President, Operation -----------------------
- ------------------------------------
Irvine Office Company

[LEGAL APPROVAL STAMP]
<PAGE> 47

[EXECUTIVE PARK BUILDING 28 FLOOR 2 MAP]

EXHIBIT "A"
<PAGE> 48

EXHIBIT B

UTILITIES AND SERVICES

The following standards for utilities and services shall be in effect
at the Office Building. Landlord reserves the right to adopt nondiscriminatory
modifications and additions to these standards. In the case of any conflict
between these standards and the Lease, the Lease shall be controlling. subject
to all of the provisions of the Lease, including but not limited to the
restrictions contained in Section 6.1, the following shall apply:

1. Landlord shall furnish to the Premises during the hours of
8:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on
Saturday, generally recognized national holidays and Sundays excepted,
reasonable air conditioning, heating and ventilation services. Subject to the
provisions set forth below, Landlord shall also furnish the Office Building
with elevator service (if applicable), reasonable amounts of electric current
for normal lighting by Landlord's standard overhead fluorescent and
incandescent fixtures and for fractional horsepower office machines, and water
for lavatory and drinking purposes. Tenant will not, without the prior written
consent of Landlord, consume electricity in the Premises at a level in excess
of 3 watts per square foot or otherwise increase the amount of electricity, gas
or water usually furnished or supplied for use of the Premises as general
office space; nor shall Tenant connect any apparatus, machine or device with
water pipes or electric current (except through existing electrical outlets in
the Premises) for the purpose of using electric current or water. This
paragraph shall at all times be subject to applicable governmental regulations.

2. Upon written request from Tenant delivered to Landlord at
least 24 hours prior to the period for which service is requested, but during
normal business hours, Landlord will provide any of the foregoing building
services to Tenant at such times when such services are not otherwise
available. Tenant agrees to pay Landlord for those afterhour services at rates
that Landlord may establish from time to time. In addition, Landlord may impose
a reasonable charge for any excessive use of any utilities or services or for
any substantial recurrent use of the Premises at any time other than generally
recognized business hours of generally recognized business days. If Tenant
requires electric current in excess of that which Landlord is obligated to
furnish under this Exhibit B, Tenant shall first obtain the consent of
Landlord, and Landlord may cause an electric current meter to be installed in
the Premises to measure the amount of electric current consumed. The cost of
installation, maintenance and repair of the meter shall be paid for by Tenant,
and Tenant shall reimburse Landlord promptly upon demand for all electric
current consumed. The cost of installation, maintenance and repair of the meter
shall be paid for by Tenant, and Tenant shall reimburse Landlord promptly upon
demand for all electric current consumed for any special power use as shown by
the meter. The reimbursement shall be at the rates charged for electrical power
by the local public utility furnishing the current, plus any additional expense
incurred in keeping account of the electric current consumed.
<PAGE> 49
3. If any lights, machines or equipment (including without
limitation electronic data processing machines) are used by Tenant in the
Premises which materially affect the temperature otherwise maintained by the
air conditioning system, or generate substantially more heat in the Premises
than would be generated by the building standard lights and usual fractional
horsepower office equipment, Landlord shall have the right at its election to
install or modify any machinery and equipment to the extent Landlord reasonably
deems necessary to restore temperature balance. The cost of installation, and
any additional cost of operation and maintenance, shall be paid by Tenant to
Landlord promptly upon demand.

4. Landlord shall furnish water for drinking, personal hygiene
and lavatory purposes only. If Tenant requires or uses water for any purposes
in addition to ordinary drinking, cleaning and lavatory purposes, Landlord may,
in its discretion, install a water meter to measure Tenant's water consumption.
Tenant shall pay Landlord for the cost of the meter and the cost of its
installation, and for consumption throughout the duration of Tenant's
occupancy. Tenant shall keep the meter and installed equipment in good working
order and repair at Tenant's own cost and expense, in default of which Landlord
may cause the meter to be replaced or repaired at Tenant's expense. Tenant
agrees to pay for water consumed, as shown on the meter and when bills are
rendered, and on Tenant's default in making that payment Landlord may pay the
charges on behalf of Tenant. Any costs or expenses or payments made by Landlord
for any of the reasons or purposes stated above shall be deemed to be
additional rent payable by Tenant to Landlord upon demand.

5. In the event that any utility service to the Premises is
separately metered or billed to Tenant, Tenant shall pay all charges for that
utility service to the Premises and the cost of furnishing the utility to
tenant suites shall be excluded from the Operating Expenses as to which
reimbursement from Tenant is required in the Lease. If any utility charges are
not paid when due Landlord may pay them, and any amounts paid by Landlord shall
immediately become due to Landlord from Tenant as additional rent. If Landlord
elects to furnish any utility service to the Premises, Tenant shall purchase
its requirements of that utility from Landlord as long as the rates charged by
Landlord do not exceed those which Tenant would be required to pay if the
utility service were furnished it directly by a public utility.

6. Landlord shall provide janitorial services, Monday through
Friday, in accordance with the specifications attached hereto as Exhibit B-1
and window washing as reasonably required; provided, however, that Tenant shall
pay for any additional or unusual janitorial services required by reason of any
nonstandard improvements in the Premises, including without limitation wall
coverings and floor coverings installed by or for Tenant, or by reason of any
use of Premises other than exclusively as offices. The cleaning services
provided by Landlord shall also exclude refrigerators, eating utensils (plates,
drinking containers and silverware), and interior glass partitions. Tenant
shall pay to Landlord the cost of removal of any of Tenant's refuse and
rubbish, to the extent that they exceed the refuse and rubbish usually
attendant with general office usage.

7. Tenant shall have access to the Office Building 24 hours per
day, 7 days per week, 52 weeks per year; provided that Landlord may install
access control systems as it deems advisable for the Office Building. Such
systems may, but need not, include full or part-time lobby supervision, the use
of a sign-in sign-out log, a card identification access system, building
parking and access pass system, closing hours procedures, access control
stations, fire stairwell exit door alarm system, electronic guard system,
mobile paging system, elevator control system or any other access controls. In
the event that Landlord elects to provide any or all of those services,
Landlord may discontinue providing them at any time with or without notice.
Landlord may impose a reasonable charge for access control cards and/or keys
issued to Tenant. Landlord shall have no liability to Tenant for the provision
by Landlord of improper access control services, for any breakdown in service,
or for the failure by Landlord to provide access control services. Tenant
further acknowledges that Landlord's access systems may be temporarily
inoperative during building emergency and system repair periods. Tenant agrees
to assume responsibility for compliance by its employees with any regulations
established by Landlord with respect to any card key access or any other system
of building access as Landlord may establish. Tenant shall be liable to
Landlord for any loss or damage resulting from its or its employees use/misuse
of any access system.
<PAGE> 50

<PAGE> 51
EXHIBIT B-1

JANITORIAL SPECIFICATIONS

Landlord shall use best efforts to provide cleaning services in
accordance with the following specifications:

I. OFFICE SPACE

A. DAILY
(1) Empty trash
(2) General carpet vacuuming
(3) General dusting of furniture and window ledges (if
clear) (4) Spot clean carpet (5) Damp and dry mop
hard surface floors (6) Spot clean doors, walls, and
interior partition glass (7) Clean lunch room tables and
countertops (if clear)

B. WEEKLY
(1) Thorough vacuuming (i.e., under furniture)
(2) Dust lower furniture surfaces
(3) Dust areas over 6 feet high
(4) Damp wipe interior doors and vinyl furniture

C. MONTHLY
(1) Detail vacuuming (edges, covers)
(2) Vacuum drapes
(3) Dust miniblinds
(4) Clean vents

II. RESTROOMS

A. DAILY
(1) Clean/sanitize sinks, toilets, urinals
(2) Clean mirrors and stainless steel
(3) Sweep/disinfect floors
(4) Spot clean walls
(5) Damp wipe partitions
(6) Empty trash
(7) Replenish paper supplies, soap, etc.

B. WEEKLY
(1) Dust tops of partitions
(2) Flush floor drains

C. MONTHLY
(1) Scrub/refinish floors
(2) Clean vents
<PAGE> 52
III. PUBLIC AREAS

A. DAILY
(1) Vacuum/sweep as needed
(2) Spot clean carpet
(3) Spot clean lobby doors
(4) Dust interior signage
(5) Wipe clean lobby directories
(6) Clean elevator cabs

B. WEEKLY
(1) Clean lobby doors
(2) Dust tops of door frames

C. MONTHLY
(1) Refinish lobby doors (where necessary)
(2) Clean vents

IV. WINDOWS

Windows to be cleaned, inside and out, two (2) times per year.
<PAGE> 53
EXHIBIT C

PARKING

The following parking regulations shall be in effect at the Office
Building. Landlord reserves the right to adopt reasonable, nondiscriminatory
modifications and additions to the regulations by written notice to Tenant. In
the case of any conflict between these regulations and the Lease, the Lease
shall be controlling.

1. Landlord agrees to maintain, or cause to be maintained, an
automobile parking area ("Parking Area") in reasonable proximity to the Office
Building for the benefit and use of the visitors and patrons and, except as
otherwise provided, employees of Tenant, and other tenant and occupants of the
Office Building. The Parking Area shall include, whether in a surface parking
area or a parking structure, the automobile parking stalls, driveways,
entrances, exits, sidewalks and attendant pedestrian passageways and other
areas designated for parking. Landlord shall have the right and privilege of
determining the nature and extent of the automobile Parking Area, whether it
shall be surface, underground or other structure, and of making such changes to
the Parking Area from time to time which in its opinion are desirable and for
the best interests of all persons using the Parking Area. Landlord shall keep
the Parking Area in a neat, clean and orderly condition, and shall repair any
damage to its facilities. Nothing contained in this Lease shall be deemed to
create liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for
any injury to Tenant, its visitors or employees, unless ultimately determined
to be caused by the sole negligence or willful misconduct of Landlord, its
agents, servants and employees. Unless otherwise instructed by Landlord, every
parker shall park and lock his or her own motor vehicle. Landlord shall also
have the right to establish, and from time to time amend, and to enforce
against all users of the Parking Area all reasonable rules and regulations
(including the designation of areas for employee parking) as Landlord may deem
necessary and advisable for the proper and efficient operation and maintenance
of the Parking Area.

2. Landlord may, if it deems advisable in its sole discretion,
charge for parking and may establish for the Parking Area a system or systems
of permit parking for Tenant, its employees and its visitors, which may
include, but not be limited to, a system of charges against nonvalidated
parking, verification of users, a set of regulations governing different
parking locations, and an allotment of reserved or nonreserved parking spaces
based upon the charges paid and the identity of users. It is understood that
Landlord shall not have any obligation to cite improperly parked vehicles or
otherwise attempt to enforce reserved parking rules during hours when parking
attendants are not present at the Parking Area. Tenant shall comply with such
system in its use (and in the use of its visitors, patrons and employees) of
the Parking Area, provided, however, that the system and rules and regulations
shall apply to all persons entitled to the use of the Parking Area, and all
charges to Tenant for use of the Parking Area shall be no greater than
Landlord's then current scheduled charge for parking.
<PAGE> 54
3. Tenant shall furnish Landlord with a list of its employees'
names and of Tenant's and its employees' vehicle license numbers within fifteen
915) days after taking possession of the Premises, and Tenant shall thereafter
notify Landlord in writing of any change in that list within five (5) days
after the change occurs. Tenant agrees to acquaint its employees with these
regulations and assumes responsibility for compliance by its employees with
these parking provisions, and shall be liable to Landlord for all unpaid
parking charges incurred by its employees. Any amount due from Tenant shall be
deemed additional rent; failure to pay shall constitute a breach of the Lease.
If Tenant or its employees park in other than designated parking areas, if any
such areas have been so designated by Landlord, then Landlord may charge
Tenant, as additional rent, Ten Dollars ($10.00) per day for each day or
partial day each vehicle is parked in any part of the Parking Area (or other
portion of the Common Facilities) other than that designated. Tenant authorizes
Landlord to tow away from the Office Building any vehicle belonging to Tenant
or Tenant's employees parked in violation of these provisions, and/or to attach
violation stickers or notices to those vehicles. In the event Landlord elects
or is required to limit or control parking by tenants, employees, visitors or
invitees of the Office Building, whether by validation of parking tickets,
parking meters or any other method of assessment, Tenant agrees to participate
in the validation or assessment program under reasonable rules and regulations
as are established by Landlord and/or any applicable governmental agency.

4. Landlord may establish an identification system for vehicles
of Tenant and its employees which may consist of stickers, magnetic parking
cards or other identification devices supplied by Landlord. All identification
devices shall remain the property of Landlord, shall be displayed as required
by Landlord or upon request and may not be mutilated or obliterated in any
manner. Those devices shall not be transferable and any such device in the
possession of an unauthorized holder shall be void and may be confiscated.
Landlord may impose a deposit fee for identification devices and a replacement
charge for devices which are lost or stolen. Each identification device shall
be returned to Landlord promptly following the Expiration Date or sooner
Termination of this Lease. Loss or theft of parking identification devices
shall be reported to Landlord or its Parking Area operator immediately and a
written report of the loss filed if requested by Landlord or its Parking Area
operator. Deposits for identification devices shall be forfeited if the
identification devices are lost, but shall be returned, without interest, at
the time the holder ceases using the Parking Area and surrenders the device to
Landlord or its Parking Area operator.

5. Persons using the Parking Area shall observe all directional
signs and arrows and any posted speed limits. All vehicles shall be parked
entirely within painted stalls, and no vehicles shall be parked in areas which
are posted or marked as "no parking" or on or in ramps, driveways and aisles.
Only one vehicle may be parked in a parking space. In no event shall Tenant
interfere with the use and enjoyment of the Parking Area by other tenants of
the Office Building or their employees or invitees.
<PAGE> 55
6. Parking Areas shall be used only for parking vehicles.
Washing, waxing, cleaning or servicing of vehicles, or the storage of vehicles
for twenty-four hour periods, in the Parking Area (other than emergency
services) by any parker or his or her agents or employees is prohibited unless
otherwise authorized by Landlord. Tenant shall have no right to install any
fixtures, equipment or personal property (other than vehicles) in the Parking
Area, nor shall Tenant make any alteration to the Parking Area.

7. It is understood that the employees of Tenant and the other
tenants of Landlord within the office Building and Project shall not be
permitted to park their automobiles in the portions of the Parking Area which
may from time to time be designed for patrons of the office Building and/or
Project and that Landlord shall at all times have the right to establish rules
and regulations for employee parking. Landlord shall furnish for employees of
Tenant, either within or reasonably close to the Parking Area, eighteen (18)
reserved and fifty-one (51) unreserved parking spaces. The eighteen reserved
spaces shall be situated under the office Building in the locations shown in
Exhibit C-1, and shall be appropriately labeled for the benefit of Tenant.
Employees shall pay to Landlord or its agents for the use of employee parking
spaces the amounts as landlord shall from time to time determine. Landlord may
authorize persons other than those described above, including occupants of
other buildings, to utilize the Parking Area. In the event of the use of the
parking Area by other persons, those persons shall pay for that use in
accordance with the terms established above; provided, however, Landlord may
allow those persons to use the parking Area on weekends, holidays, and at other
non-office hours without payment. Notwithstanding the foregoing, provided
Tenant is not in default under the Lease, the monthly stall charge for the
parking spaces allotted herein to Tenant's employees shall be waived during the
initial seventy-two (72) month Lease Term.

8. Notwithstanding the foregoing paragraph 1 though 7, Landlord shall
be entitled to pass on to Tenant its proportionate share of any charges or
parking surcharge levied by any governmental agency. The foregoing parking
provisions are further subject to any governmental regulations which
limit parking or otherwise seek to encourage the use of carpools, public transit
or other alternative transportation forms.

9. Should any parking spaces be allotted by Landlord to Tenant, either
on a reserved or nonreserved basis, Tenant shall not assign or sublet any of
those spaces, either voluntarily or by operation of law, without the prior
written consent of Landlord.

EXHIBIT C
Page 1 of 2
<PAGE> 56

EXHIBIT C-1

[MAP]
<PAGE> 57
EXHIBIT D

TENANT'S INSURANCE

The following standards for Tenant's insurance shall be in effect at
the Office Building. Landlord reserves the right to adopt reasonable
nondiscriminatory modifications and additions to those standards. Tenant agrees
to obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.

1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) comprehensive
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in, on or about the Premises, including but not limited
to personal injury, nonowned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold, served or consumed within the Premises), and
cross liability and severability of interest clauses, which policy(ies) shall
be written on an "occurrence" basis and for not less than $1,000,000 combined
single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, and subject
to such increases in amounts as Landlord may determine from time to time; (ii)
workers' compensation insurance coverage as required by law, together with
employers' liability insurance coverage; (iii) with respect to improvements,
alterations, and the like required or permitted to be made by Tenant under this
Lease, builder's all-risk insurance, in amounts satisfactory to Landlord; (iv)
insurance against fire, vandalism, malicious mischief and such other
additional perils as may be included in a standard "all risk" form in general
use in Orange County, California, insuring Tenant's leasehold improvements,
trade fixtures, furnishings, equipment and items of personal property of
Tenant's leasehold improvements, trade fixtures, furnishings, equipment and
items of personal property of Tenant located in the Premises, in an amount
equal to not less than ninety percent (90%) of their actual replacement cost
(with replacement cost endorsement); and (v) business interruption insurance in
amounts satisfactory to Landlord. In no event shall the limits of any policy be
considered as limiting the liability of Tenant under this Lease.

2. All policies of insurance required to be carried by Tenant pursuant
to this Exhibit D shall be written by responsible insurance companies
authorized to do business in the State of California and with a Best's
policyholder rating of not less than "A" subject to final acceptance and
approval by Landlord. Any insurance required of Tenant may be furnished by
Tenant under any blanket policy carried by it or under a separate policy. A
true and exact copy of each paid up policy evidencing the insurance
(appropriately authenticated by the insurer) or a certificate of insurance,
certifying that the policy has been issued, provides the coverage required by
this Exhibit D and contains the required provisions, shall be delivered to
Landlord prior to the date Tenant is given the right of possession of the
Premises. Property evidence of the renewal of any insurance coverage shall also
be delivered to Landlord not less than thirty (30) days prior to the expiration
of the coverage. Landlord may at any time, and from time to time, inspect
and/or copy any and all insurance policies required by this Lease.

3. Each policy evidencing insurance required to be carried by Tenant
pursuant to this Exhibit D shall contain the following provisions and/or
clauses satisfactory to landlord: (i) a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant; (ii) a
provision including Landlord and any other parties in interest designated by
landlord as an additional insured, except as to workers compensation insurance;
(iii) a waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors and representatives which arises or might arise
by reason of any payment under the policy or by reason of any act or omission
of Landlord, its agents, employees, contractors or representatives; and (iv) a
provision that the insurer will not cancel or change the coverage provided by
the policy without first giving Landlord thirty (30) days prior written notice.

4. In the event that Tenant fails to procure, maintain and/or pay for,
at the times and for the durations specified in this Exhibit D, any insurance
required by this Exhibit D, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord's written demand to Tenant.

EXHIBIT D
Page 1 of 1
<PAGE> 58
EXHIBIT E

RULES AND REGULATIONS

The following Rules and Regulations shall be in effect at the Office
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions at any time. In the case of any conflict between
these regulations and the Lease, the Lease shall be controlling.

1. Except with the prior written consent of landlord, Tenant shall not
sell, or permit the retail sale of, newspapers, magazines, periodicals, or
theatre tickets, in or from the Premises, nor shall Tenant carry on, or permit
or allow any employee or other person to carry on, the business of
stenography, typewriting or any similar business in or from the Premises for
the service or accommodations of occupants of any other portion of the Office
Building. Tenant shall not allow the Premises to be utilized for any
manufacturing of any kind, or the business of a public barber shop, beauty
parlor, or a manicuring and chiropodist business, or any business other than
that specifically provided for in the Lease.

2. The sidewalks, halls, passages, elevators, stairways, and other
common areas shall not be obstructed by Tenant or used by it for storage or for
any purpose other than for ingress to and egress from the Premises. The halls,
passages, entrances, elevators, 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 to those areas of all persons whose presence, in the
judgment of landlord, shall be prejudicial to the safety, character, reputation
and interests of the Office Building and its tenants. Nothing contained in this
Lease shall be construed to prevent 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
those persons are engaged in illegal activities. Neither Tenant nor any
employee or contractor of Tenant shall go upon the roof of the Office Building
without the prior written consent of Landlord.

3. The sashes, sash doors, windows, glass lights, solar film and/or
screen, and any lights or skylights that reflect or admit light into the halls
or other places of the Office 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 shall be thrown in those facilities, and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by Tenant.

4. No sign, advertisement or notice visible from the exterior of the
Premises shall be inscribed, painted or affixed by Tenant on any part of the
Office Building or the Premises without the prior written consent of Landlord.
If Landlord shall have given its consent at any time, whether before or after
the execution of this Lease, that consent shall in no way operate as a waiver
or release of any of the provisions 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 any
subsequent sign, advertisement or notice. If Landlord, by a notice in writing
to Tenant, shall object to any curtain, blind, tinting, shade or screen
attached to, or hung in, or used in connection with, any window or door of the
Premises, the use of that curtain, blind, tinting, shade or screen shall be
immediately discontinued by Tenant. No awnings shall be permitted on any part
of the Premises.

5. Tenant shall not do or permit anything to be done in the Premises,
or bring or keep anything in the Premises, which shall in any way increase the
rate of fire insurance on the Office Building, or on the property kept in the
Office Building, 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 Office
Building, or any portion of the Office Building or its contents, or with any
rules and ordinances established by the Board of Health or other governmental
authority.

6. The installation and location of any unusually heavy equipment in
the Premises, including without limitation file storage units, safes and
electronic data processing equipment, shall require the prior written approval
of landlord. Landlord may restrict the weight and position of any equipment
that may exceed the weight load limits for the structure of the office
Building, and may further require, at Tenant's expense, the reinforcement of
any flooring on which such equipment may be placed and/or an engineering study
to be performed to determine whether the equipment may safely be installed in
the office Building and the necessity of any reinforcement. The moving of large
or heavy objects shall occur only between those hours as may be designated by,
and only upon previous written notice to, Landlord, and the persons employed to
move those objects in or out of the Office Building must be reasonably
acceptable to Landlord. No freight, furniture or bulky matter of any
description shall be received into or moved out of the lobby of the Office
Building or carried into the elevators during normal business hours (i.e.,
Monday through Friday, 8:00 a.m. to 6:00 p.m.) unless approved in writing by
Landlord.

7. 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 Office Building for
that purpose. Tenant shall not cause unnecessary labor by reason of Tenant's
carelessness and indifference in the preservation of good order and
cleanliness.

9. No cooking shall be done or permitted by Tenant on the Premises,
except pursuant to the normal use of a microwave oven and coffee maker for the
benefit of Tenant's employees and invitees, nor shall the Premises be used for
the storage of merchandise or for lodging.

EXHIBIT E
Page 1 of 2
<PAGE> 59
10. Tenant shall not use or keep in the Office Building any kerosene,
gasoline, or inflammable fluid or any other illuminating material, or use any
method of heating other than that supplied by landlord.

11. 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 otherwise shall be made without directions from
Landlord.

12. Upon the termination of its tenancy, Tenant shall deliver to
Landlord all the keys to office, rooms and toilet rooms and all access cards
which shall have been furnished to Tenant or which Tenant shall have had made.
In the event of the loss of any keys or cards so furnished, Tenant shall pay
Landlord for those items.

13. Tenant shall not affix any floor covering 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 floor covering shall be
subject to approval by Landlord. The expense of repairing any damage resulting
from a violation of this rule shall be born by Tenant.

14. On Saturdays, Sundays and legal holidays, and on other days
between the hours of 6:00 p.m. and 8:00 a.m., access to the office Building, or
to the halls, corridors, elevators or stairways in the Office Building, or to
the Premises, may be refused unless the person seeking access complies with any
access control system that Landlord may establish. Landlord shall in no case be
liable for damages for the admission to or exclusion from the office Building
of any person whom Landlord has the right to exclude under Rules 2 or 19 of
this Exhibit. In case of invasion, mob, riot, public excitement, or other
commotion, or in the event of any other situation reasonably requiring the
evacuation of the Office Building, Landlord reserves the right at its election
and without liability to Tenant to prevent access to the Office Building by
closing the doors or otherwise, for the safety of the tenants and protection of
property in the Office Building.

15. Tenant shall see that the doors of the Premises are closed and
securely locked before leaving the Office Building and shall observe strict
care not to leave windows open, if applicable, when it rains. 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
Office Building, and for any default or carelessness Tenant shall make good all
injuries sustained by other tenants or occupants of the Office Building or
Landlord.

16. Tenant shall not alter any lock or install a new or additional
lock or any bolt on any door of the Premises without the prior written consent
of Landlord. If Landlord gives its consent, Tenant shall in each case promptly
furnish Landlord with a key for any new or altered lock.

17. 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 that to be provided by Landlord under the
Lease except in accordance with Exhibit B.

18. Tenant shall furnish and utilize masonite or plastic floor mats so
as to minimize carpet damage resulting from the use of rollers on chairs.

19. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person. In the event any such person
is a guest or invitee of Tenant, Tenant shall notify Landlord in advance of
each desired entry, and Landlord shall authorize the person so designated to
enter the Premises, provided that in the sole and absolute discretionary
judgment of Landlord, such person will not be involved in general solicitation
activities, or the proselytizing, petitioning, or disturbance of other tenants
or their customers or invitees, or engaged in or likely to engage in conduct
which may in the Landlord's opinion distract from the use of the Premises for
its intended purpose. Notwithstanding the foregoing, Landlord reserves the
absolute right and discretion to limit or prevent access to the Office
Buildings by any food or beverage vendor, whether or not invited by Tenant, and
Landlord may condition such access upon the vendor's execution of an entry
permit agreement which may contain provisions for insurance coverage and/or
the payment of a fee to Landlord.

20. Landlord may from time to time grant tenants individual and
temporary variances from these Rules, provided that any variance does not have
a material adverse effect on the use and enjoyment of the Premises by Tenant.

EXHIBIT E
Page 2 of 2
<PAGE> 60
EXHIBIT X

WORK LETTER

Tenant Improvements
-------------------

Tenant shall employ its own architect and contractors in constructing
the Tenant Improvements, provided that Tenant allows Landlord's approved
contractor to bid on the Tenant Improvements. The Tenant Improvements shall be
undertaken and prosecuted in accordance with the following requirements:

(1) Concurrently with sign-off by Tenant, the space plans,
construction drawings and specifications for all improvements and finishes,
together with any changes thereto, shall be submitted to Landlord (with samples
as required) for Landlord's written approval, which approval will not
unreasonably be withheld provided that such improvements are aesthetically
consistent from the exterior of the Premises with building standard
improvements;

(2) Tenant shall use the electrical and mechanical engineers and
subcontractors designated by Landlord;

(3) Tenant shall deliver to Landlord a copy of the final application
for permit and issued permit for the construction work;

(4) Tenant's general contractor and each of its subcontractors shall
comply with Landlord's requirements as generally imposed on third party
contractors, including without limitation all insurance coverage requirements
and the obligation to furnish appropriate certificates of insurance to Landlord
prior to commencement of construction;

(5) A construction schedule shall be provided to Landlord prior to
commencement of the construction work, and weekly updates shall be supplied
during the progress of the work;

(6) Tenant shall give Landlord ten (10) days prior written notice of
the commencement of construction so that Landlord may cause an appropriate
notice of non-responsibility to be posted;

(7) Tenant and its general contractor shall attend weekly job meetings
with Landlord's construction manager for the Project;

(8) Upon completion of the work, Tenant shall cause to be provided to
Landlord (i) as-build drawings of the Premises signed by Tenant's architect,
(ii) a final punchlist signed by Tenant, (iii) final and unconditional lien
waivers from all contractors and subcontractors, and (iv) a duly recorded
Notice of Completion of the improvement work (collectively, the "Close-out
Package");

(9) The work shall be prosecuted at all times in accordance with all
state, federal and local laws, regulations and ordinances, including without
limitation all OSHA and other safety laws;

(10) Tenant's contractor shall be responsible for obtaining the
certificate of occupancy for the Premises, a copy of which shall be delivered
to Landlord; and

(11) All of the provisions of this Lease shall apply to any activity of
Tenant, its agents and contractors, in the Premises prior to the Commencement
Date, except for the obligation of Tenant to pay rent.

Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any work performed by Tenant, nor shall Landlord be
responsible for repairing any defective condition therein. In no event shall
Tenant's failure to complete the work extend the Commencement Date beyond
January 1, 1992 except as provided in Section 3.2 of the Lease.

EXHIBIT X
Page 1 of 2
<PAGE> 61
Landlord shall provide to Tenant a tenant improvement allowance in the
amount of Three Hundred Eighty-Five Thousand Six Hundred Dollars ($385,600.00)
(the "Landlord's Contribution"), with any excess cost to be borne solely by
Tenant. It is understood, however, that Landlord's management agent for the
Project shall be entitled to a supervision/administrative fee of Fifteen
Thousand Dollars ($15,000.00) for architectural and construction costs
(exclusive of the sum spent for furniture, furnishings and trade fixtures),
which fee shall be paid from the Landlord's Contribution. The Landlord's
Contribution shall, without limitation, also be utilized to fund space planning
costs and plan check and permit fees.

Landlord shall fund the Landlord's Contribution as and when costs
totalling the amount of the Landlord's Contribution (less the
supervision/administrative fee described above) are incurred, and a payment
request therefor is submitted by Tenant. Such payment request shall include a
copy of all supporting invoices, lien waivers (in the form prescribed by the
California Civil Code), and pertinent back-up. Landlord shall fund the payment
request within thirty (30) days following receipt of the application and
supporting materials; provided that a ten percent (10%) retention shall be
held on payment to the architect, contractor and subcontractors until Landlord
received the complete Close-out Package.

EXHIBIT X
Page 2 of 2

<PAGE> 1
EXHIBIT 10.8

11/8/95

AGREEMENT OF SUBLEASE

between

Citicorp North America, Inc., Sublandlord

and

Midrange Information Systems, Inc., and
EPC International, Subtenant

Premises:

2600 Michelson Drive, Eleventh Floor
Irvine, CA 92715
<PAGE> 2

TABLE OF CONTENTS

1. Subleasing of Premises . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3. Fixed Rent and Additional Rent . . . . . . . . . . . . . . . . . . . . 2

4. Subordination to and Incorporation of the Lease . . . . . . . . . . . 4

5. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

6. Covenants with Respect to the Lease . . . . . . . . . . . . . . . . . 5

7. Services, Repairs, and Alterations . . . . . . . . . . . . . . . . . . 6

8. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

9. Termination of Lease . . . . . . . . . . . . . . . . . . . . . . . . . 7

10. Sublease, Not Assignment . . . . . . . . . . . . . . . . . . . . . . . 8

11. Damage, Destruction, Fire and Other Casualty;
Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

12. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

14. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

15. Condition of the Premises . . . . . . . . . . . . . . . . . . . . . . 9

16. Consent of Landlord to This Sublease . . . . . . . . . . . . . . . . . 9

17. Assignment, Subletting and Mortgaging . . . . . . . . . . . . . . . . 10

18. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

19. Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

20. Signage; Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

(i)
<PAGE> 3

AGREEMENT OF SUBLEASE (this "Sublease"), made as of the day of
November, 1995, between Midrange Information Systems, Inc. and EPC
International, having an office at 2600 Michelson Drive, Irvine, California,
92714 (collectively, "Subtenant", and Citicorp North America Inc., a Delaware
Corporation, having an office address c/o Corporate Realty Services 725 S.
Figueroa, 2nd Floor, Los Angeles, California 90017 ("Sublandlord").

WITNESSETH:

WHEREAS, by that certain Lease (the "Lease"), dated as of March 22, 1988,
between Dean Witter Inc. ("Landlord"), as landlord, and Sublandlord, as tenant,
Landlord leased to Sublandlord the eleventh (11) floor (the "Demised Premises")
as more particularly described in the Lease and located at the building (the
"Building") known as 2600 Michelson Drive, Irvine, California 92714, and

WHEREAS, Sublandlord desires to sublease to Subtenant the entire Demised
Premises (the "Premises") and Subtenant desires to hire the Premises from
Sublandlord on the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, it
is mutually agreed as follows:

1. Subleasing of Premises. Sublandlord hereby subleases to Subtenant,
and Subtenant hereby hires from Sublandlord, the Premises, upon and subject to
the terms and conditions hereinafter set forth.

2. Term.

2.1 The term (the "Term") of this Sublease shall commence on November
27, 1995 (the "Commencement Date") and shall terminate on June 30, 1998 (the
"Expiration Date"), or on such earlier date upon which the Term shall expire or
be canceled or terminated pursuant to any of the conditions or covenants of
this Sublease or pursuant to law.

2.2 If Sublandlord is unable or fails to deliver possession of the
Premises on the Commencement Date (i) Sublandlord shall not be subject to any
liability for failure to give possession, (ii) Subtenant waives the right to
recover any damages which may result from such failure to give possession, and
(iii) the Commencement Date shall be postponed until five (5) days after the
date of notice given to Subtenant stating that the Premises are ready for
delivery to Subtenant. If the Commencement Date shall be postponed as provided
in this Section 2.2, then promptly following the Commencement Date, Sublandlord
and Subtenant shall execute an agreement confirming the Commencement Date.
<PAGE> 4
3. Fixed Rent and Additional Rent.

3.1 Subtenant shall pay to Sublandlord, commencing on November 27, 1995
(the "Rent Commencement Date"), in currency which at the time of payment is
legal tender for public and private debts in the United States of America, as
fixed rent ("Fixed Rent") during the Term, three (3) business days prior to the
first (1st) day of each month during the Term, for the period commencing on the
Rent Commencement Date and ending on the Expiration Date, the sum of One
Hundred Sixty Three Thousand Six Hundred Seventy Eight Dollars ($163,678) per
annum payable in equal monthly installments of Thirteen Thousand Six Hundred
Forty Dollars ($13,640.). The installment of Fixed Rent for the first full
calendar month of the Term following the Rent Commencement Date shall be due
and payable on the execution of this Sublease. The Rent Commencement Date
shall be deferred by the number of days after November 27, 1995 that delivery
of possession of the Premises may be delayed, if any. If the Rent Commencement
Date shall occur on a date other than the first day of any calendar month, the
Fixed Rent payable hereunder for such month shall be prorated on a per-diem
basis and shall be paid three (3) days prior to the first day of the first full
month following the Rent Commencement Date.

3.2 If Subtenant shall fail to pay when due any installment of Fixed
Rent, additional rent or other costs, charges and sums payable by Subtenant
hereunder (such additional rent or other costs, charges and sums, together with
Fixed Rent, hereinafter collectively referred to as the "Rental"), Subtenant
shall pay to Sublandlord, in addition to such installment of Fixed Rent or
Rental, as the case may be, as a late charge and as additional rent, a sum
equal to interest at the Applicable Rate (hereinafter defined) per annum on the
amount unpaid, commencing from the date such payment was due to and including
the date of payment. The "Applicable Rate" shall be the rate equal to the
lesser of (a) two (2) percentage points above the then current rate publicly
announced by Citibank, N.A. or its successor as "Alternate Base Rate II" (or
such other term as may be used by Citibank, N.A. from time to time for the rate
presently referred to as "Alternate Base Rate II") or (b) the maximum rate
permitted by applicable law.

3.3 All Fixed Rent and other Rental shall constitute rent under this
Sublease, and shall be payable to Sublandlord at its address as set forth in
Article 13 hereof, unless Sublandlord shall otherwise so direct in writing.

3.4 Subtenant shall promptly pay the Rental as and when the same shall
become due and payable without set-off, offset or deduction of any kind
whatsoever, except as expressly set forth herein, and, in the event of
Subtenant's failure to pay the same when due (subject to grace periods provided
herein), Sublandlord shall have all of the rights and remedies provided for
herein or at law or

2
<PAGE> 5
in equity, in the case of non- payment of rent.

3.5 Sublandlord's failure during the Term to prepare and deliver any
statements or bills required to be delivered to Subtenant hereunder, or
Sublandlord's failure to make a demand under this Sublease shall not in any way
be deemed to be a waiver of, or cause Sublandlord to forfeit or surrender its
rights to collect any Rental which may have become due pursuant to this
Sublease during the Term. Subtenant's liability for Rental due under this
Sublease accruing during the Term, and Sublandlord's obligation to refund
overpayments of or adjustments to Rental paid to it by Subtenant, shall survive
the expiration or sooner termination of this Sublease.

4. Subordination to and Incorporation of the Lease.

4.1 This Sublease is in all respects subject and subordinate to the
terms and conditions of the Lease and to all matters to which the Lease is
subject and subordinate. Sublandlord represents that a true and complete copy
of the Lease has been furnished by Sublandlord to Subtenant. Subtenant shall
indemnify Sublandlord for, and shall hold it harmless from and defend it
against, any and all losses, damages, penalties, liabilities, costs and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements, which may be sustained or incurred by Sublandlord by reason of
Subtenant's failure to keep, observe or perform any of the terms, provisions,
covenants, conditions and obligations on Sublandlord's part to be kept,
observed or performed under the Lease to the extent same shall have been
incorporated herein, or otherwise arising out of or with respect to Subtenant's
use and occupancy of the Premises from and after the Commencement Date.

4.2 Except as otherwise expressly provide in, or otherwise inconsistent
with, this Sublease, or to the extent not applicable to the Premises, the
terms, provisions, covenants, stipulations, conditions, rights, obligations,
remedies and agreements contained in the Lease are incorporated in this
Sublease by reference, and are made a part hereof as if herein set forth at
length, Sublandlord being substituted for the "Landlord" under the Lease,
Subtenant being substituted for the "Tenant" under the Lease, and Premises
being substituted for "Premises" under the Lease.

5. Use. Subtenant shall use and occupy the Premises for general and
executive offices and for no other purpose.

3
<PAGE> 6
6. Covenants with Respect to the Lease.

6.1 Subtenant shall not do anything that would constitute a default
under the Lease or omit to do anything that Subtenant is obligated to do under
the terms of this Sublease so as to cause there to be a default under the
Lease.

6.2 The time limits set forth in the Lease for the giving of notices,
making demands, performance of any act, condition or covenant, or the exercise
of any right, remedy or option, are changed for the purpose of this Sublease,
by lengthening or shortening the same in each instance, as appropriate, so that
notices may be given, demands made, or any act, condition or covenant
performed, or any right, remedy or option hereunder exercised, by Sublandlord
or Subtenant, as the case may be (and each party covenants that it will do so)
within three (3) days prior to the expiration of the time limit, taking into
account the maximum grace period, if any, relating thereto contained in the
Lease. Each party shall promptly deliver to the other party copies of all
notices, requests or demands which relate to the Premises or the use or
occupancy thereof after receipt of same from Landlord.

7. Services, Repairs, and Alterations.

7.1 Notwithstanding anything to the contrary contained in this Sublease
or in the Lease, Sublandlord shall not be required to provide any of the
services that Landlord has agreed to provide pursuant to the Lease (or required
by law), or furnish the electricity to the Premises that Landlord has agreed to
furnish pursuant to the Lease (or required by law), or make any of the repairs
or restorations that Landlord has agreed to make pursuant to the Lease (or
required by law), or comply with any laws or requirements of any governmental
authorities, or take any other action that Landlord has agreed to provide,
furnish, make, comply with, or take, or cause to be provided, furnished, made,
complied with or taken under the Lease, but Sublandlord agrees to use all
diligent efforts, at Subtenant's sole cost and expense, to obtain the same from
Landlord (provided, however, that Sublandlord shall not be obligated to use
such efforts or take any action which might give rise to a default under the
Lease), and Subtenant shall rely upon, and look solely to, Landlord for the
provision, furnishing or making thereof or compliance therewith. If Landlord
shall default in the performance of any of its obligations under the Lease,
Sublandlord shall, upon request and at the expense of Subtenant, timely
institute and diligently prosecute any action or proceeding which Subtenant, in
its reasonable judgment, deems meritorious, in order to have Landlord make such
repairs, furnish such electricity, provide such services or comply with any
other obligation of Landlord under the Lease or as required by law. Subtenant
shall defend, indemnify and hold harmless Sublandlord from and against any and
all such claims arising from or in connection with such request, action or
proceeding. This indemnity and hold harmless

4
<PAGE> 7
agreement shall include indemnity from and against any and all liability,
fines, suits, demands, costs and expenses of any kind or nature, including,
without limitation, reasonable attorneys' fees and disbursements, incurred in
connection with any such claim, action or proceeding brought thereon.
Subtenant shall not make any claim against Sublandlord for any damage which may
arise, nor shall Subtenant's obligations hereunder be diminished, by reason of
(i) the failure of Landlord to keep, observe or perform any of its obligations
pursuant to the Lease, unless such failure is due to Sublandlord's negligence
or misconduct, or (ii) the acts or omissions of Landlord, its agents,
contractors, servants, employees, invitees or licensees. The provisions of
this Section 7.1 shall survive the expiration or earlier termination of the
Term hereof.

7.2 Subtenant shall not make or allow to be made any alterations,
changes, additions or improvements (collectively, "Alterations") to the
Premises or any part thereof without the prior written consent of Landlord and
Sublandlord. If Landlord and Sublandlord shall consent to any Alterations to
the Premises, such Alterations shall be subject to any terms, covenants,
conditions and agreements which Landlord may prescribe from time to time, which
shall include a requirement that, prior to the commencement of any Alterations
to the Premises, Subtenant deliver to Landlord and Sublandlord written
acknowledgments from all materialmen, contractors, artisans, mechanics,
laborers and any other persons furnishing any labor, services, materials,
supplies or equipment to Subtenant with respect to the Premises that they will
look exclusively to Subtenant for payment of any sums due in connection
therewith and that Landlord and Sublandlord shall have no liability for such
costs. All Alterations to the Premises made or requested by Subtenant shall be
at Subtenant's sole cost and expense. Upon the expiration or sooner
termination of the Term, any Alterations to the Premises, excepting movable
furniture and trade fixtures, shall become the property of Landlord and shall
be surrendered with the Premises, unless Landlord or Sublandlord shall direct
Subtenant to remove any such Alterations, in which event Subtenant shall remove
same at its sole cost and expense and repair in a good and workmanlike manner
any damage to the Premises occasioned by such removal and restore the Premises
to the condition existing prior to such Alterations, normal wear and tear
accepted.

8. Consents.

8.1 Sublandlord agrees that whenever its consent or approval is
required hereunder, or where something must be done to Sublandlord's
satisfaction, it shall not unreasonably withhold or delay such consent or
approval; provided, however, that whenever the consent or approval of Landlord,
the lessor under a superior lease, or the mortgagee under a mortgage, as the
case may be, is also required pursuant to the terms of the Lease, if Landlord,
the lessor under a superior lease, or the mortgagee under a mortgage shall
withhold its consent or approval for any reason whatsoever, Sublandlord shall
not be deemed to be acting unreasonably

5
<PAGE> 8
if it shall also withhold its consent or approval. If Landlord shall withhold
its consent or approval in connection with this Sublease or the Premises in any
instance where, under the Lease, the consent or approval of Landlord may not be
unreasonably withheld, and if Subtenant shall reasonably contend that Landlord
has unreasonably withheld such consent, Sublandlord, upon the request and at
the expense of Subtenant, shall either (i) timely institute and diligently
prosecute any action or proceeding which Subtenant, in its reasonable judgment,
deems meritorious, in order to dispute such action by Landlord, or (ii) permit
Subtenant, to the extent allowable under the Lease, to institute and prosecute
such action or proceeding in the name of Sublandlord, provided that Subtenant
shall keep Sublandlord informed of its actions and shall not take any action
which might give rise to a default under the Lease. Subtenant shall indemnify
Sublandlord and hold it harmless from and against all losses, damages, claims,
liabilities, fines, penalties, suits, demands, costs and expenses, of any
nature, arising from or in connection with any action or proceeding instituted
under this Section 8.1.

8.2 If Subtenant shall request Sublandlord's consent and Sublandlord
has agreed, under the terms of this Sublease, that neither its consent nor its
approval shall be unreasonably withheld, and Sublandlord shall fail or refuse
to give such consent or approval, and Subtenant shall dispute the
reasonableness of Sublandlord's refusal to give its consent or approval, such
dispute shall be finally determined by a court of competent jurisdiction. If
the determination shall be adverse to Sublandlord, Sublandlord, nevertheless,
shall not be liable to Subtenant for a breach of Sublandlord's covenant not to
unreasonably withhold such consent or approval, and Subtenant's sole remedy in
such event shall be the granting of consent or approval by Sublandlord with
respect to such request under this Sublease.

9. Termination of Lease. In the event of a default under the Lease
which results in the termination of the Lease, Subtenant shall, at the option
of Landlord, attorn to and recognize Landlord as landlord hereunder and shall,
promptly upon Landlord's request, execute and deliver all instruments necessary
or appropriate to confirm such attornment and recognition. Subtenant hereby
waives all rights under any present or future law to elect, by reason of the
termination of Lease, to terminate this Sublease or surrender possession of the
Premises. Sublandlord shall not be liable to Subtenant by reason of such
termination of the Lease.

10. Sublease, Not Assignment. Notwithstanding anything contained
herein, this Sublease shall be deemed to be a sublease of the Premises and not
an assignment, in whole or in part, of Sublandlord's interest in the Lease.

11. Damage, Destruction, Fire and Other Casualty; Condemnation.
Notwithstanding any contrary provision of this Sublease or the provisions of
the Lease herein incorporated by reference, Subtenant shall not have the right
to terminate this

6
<PAGE> 9
Sublease as to all or any part of the Premises, or be entitled to an abatement
of Rent or any other item of Rental, by reason of a casualty of condemnation
affecting the Premises unless Sublandlord is entitled to terminate the Lease or
is entitled to a corresponding abatement with respect to its corresponding
obligation under the Lease. If Sublandlord is entitled to terminate the Lease
for all or any portion of the Premises by reason of casualty or condemnation,
Subtenant may terminate this Sublease as to any corresponding part of the
premises by written notice to Sublandlord given at least five (5) days prior to
the date(s) Sublandlord is required to give notice to Landlord of such
termination under the terms of the Lease.

12. No Waivers. Failure by Sublandlord in any instance to insist upon
the strict performance of any one or more of the obligations of Subtenant under
this Sublease, or to exercise any election herein contained, shall in no manner
be or be deemed to be a waiver by Sublandlord of any of Subtenant's defaults or
breaches hereunder or of any of Sublandlord's right and remedies by reason of
such defaults or breaches, or a waiver or relinquishment for the future of the
requirement of strict performance of any and all of Subtenant's obligations
hereunder. Further, no payment by Subtenant or receipt by Sublandlord of a
lesser amount than the correct amount or manner of payment of Rental due
hereunder shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment be deemed to effect or evidence an accord and satisfaction, and
Sublandlord may accept any checks or payments as made without prejudice to
Sublandlord's right to recover the balance or pursue any other remedy in this
Sublease or otherwise provided at law or equity.

13. Notices. Any notice, statement, demand, consent, approval, advice
or other communication required to be given, rendered or made by either party
to the other, pursuant to this Sublease or pursuant to any applicable law or
requirement of public authority (collectively, "communications") shall be in
writing and shall be deemed to have been properly given, rendered or made only
if sent by personal delivery, receipted by the party to whom addressed, or
registered or certified mail, return receipt requested, posted in a United
States post office station in the continental United States, addressed (i) to
Subtenant at its address first above written, Attention: David Peterson and Val
Zwerling and (ii) to Sublandlord, at its address first above written,
Attention: Lease Administrator. Copies of any notices commencing or relating
to any action, suit or proceeding against Sublandlord shall also be sent to
Citicorp/Citibank Real Estate Legal Department, 599 Lexington Avenue New York,
New York 10043. All such communications shall be deemed to have been given,
rendered or made when delivered and receipted by the party to whom addressed,
in the case of personal delivery, or three (3) days after the day so mailed.
Either party may, by notice as aforesaid actually received, designate a
different address or addresses for communications intended for it.

7
<PAGE> 10
14. Brokers. Each party hereto covenants, warrants and represents to
the other party that it has had no dealings, conversations or negotiations with
any brokers other than the Grubb & Ellis Company and the MacArthur Group
(collectively, the "Brokers") concerning the execution and delivery of this
Sublease. Each party hereto agrees to defend, indemnify and hold harmless the
other party against and from any claims for any brokerage commissions and all
costs, expenses and liabilities in connection therewith, including, without
limitation, reasonable attorneys' fees and disbursements, arising out of its
respective representations and warranties contained in this Article 14 being
untrue. Sublandlord shall pay any brokerage commissions due to the Brokers
pursuant to a separate agreement between Sublandlord and the Brokers. The
provisions of this Article 14 shall survive the expiration or earlier
termination of this Sublease.

15. Condition of the Premises. Subtenant represents that it has made
or caused to be made a thorough examination of the Premises and is familiar
with the condition of every part thereof. Subtenant agrees to accept the
Premises in its "as is" condition on the date hereof, reasonable wear and tear
between the date hereof and the Commencement Date excepted. Sublandlord has
not made and does not make any representations or warranties as to the physical
condition of the Premises, the use to which the Premises may be put, or any
other matter or thing affecting or relating to the Premises, except as
specifically set forth in this Sublease. Sublandlord shall have no obligation
whatsoever to alter, improve, decorate or otherwise prepare the Premises for
Subtenant's occupancy, except as follows: Sublandlord shall clean the carpets
and touch up the paint throughout the Premises, as deemed necessary by
Sublandlord in its sole discretion. Sublandlord shall prior to the
Commencement Date cover the internal stairwell connecting the Premises to the
twelfth (12th) floor in a manner consistent with the appearance of the
Premises, in Sublandlord's sole discretion.

16. Consent of Landlord to This Sublease. Sublandlord and Subtenant
each hereby acknowledge and agree that this Sublease is subject to and
conditioned upon Sublandlord obtaining the written consent (the "Consent") of
Landlord as provided in the Lease. Promptly following the execution and
delivery hereof, Sublandlord shall submit this Sublease to Landlord. Subtenant
hereby agrees that it shall cooperate in good faith with Sublandlord and shall
comply with any reasonable requests made of Subtenant by Sublandlord or
Landlord in the procurement of the Consent. In no event shall Sublandlord or
Subtenant be obligated to make any payment to Landlord in order to obtain the
Consent or the consent to any provision hereof, other than as expressly set
forth in the Lease [and any such fees which may be payable pursuant to the
Lease shall be payable by Subtenant and Sublandlord shall have no
responsibility for the payment of same]. This Sublease shall terminate if the
Consent of Landlord as provided under this Article 16 is not obtained by
December 31, 1995 (the "Outside Date"). In the event of such termination any
sums paid upon

8
<PAGE> 11
execution hereof shall be promptly returned and neither party shall have any
further obligation the other. Notwithstanding the foregoing, the Outside Date
may be extended upon written mutual consent of the parties hereto.

17. Assignment, Subletting and Mortgaging.

17.1 Subtenant shall not assign, sell, transfer (whether by operation or
law or otherwise), pledge, mortgage or otherwise encumber this Sublease or any
portion of its interest in the Premises, nor sublet all or any portion of the
premises or permit any other person or entity to use or occupy all or any
portion of the Premises, without the prior written consent of Sublandlord and
Landlord. The granting or withholding of such consent may be exercised by
Sublandlord in its sole discretion.

Subtenant shall pay to Sublandlord all rent, additional rent or other
payments and consideration received by Subtenant in connection with any
subletting in excess of Fixed Rent and additional rent payable by Subtenant to
Sublandlord.

17.2 For the purpose of this Article 17, an assignment or subletting
shall be deemed to have occurred upon: (i) the subletting or assignment to a
subsidiary or affiliate of Subtenant or occupancy by Subtenant's subsidiaries
or affiliates; (ii) the sale or transfer, whether pursuant to a single
transaction or in a series of related or unrelated transactions, including
without limitation by consolidation, merger or reorganization, of a majority of
the voting stock of Subtenant or any beneficial interest therein, if Subtenant
is a corporation, or any sale or other transfer, whether pursuant to one or
more successive transactions, of a majority of the general partnership
interests in Subtenant or any beneficial interest therein, if Subtenant is a
partnership; and (iii) the sale or other transfer, whether pursuant to one or
more successive transactions, of more than fifty (50%) percent, by value, of
the assets of Subtenant used in conducting its business in the Premises.

17.3 If this Sublease be assigned, or if the Premises of any part
thereof be sublet (whether or not Sublandlord and Landlord shall have consented
thereto), Sublandlord, after default by Subtenant in its obligations hereunder,
may collect rent from the assignee or subtenant and apply the net amount
collected to the Rental herein reserved, but no such assignment or subletting
shall be deemed a waiver of the covenant set forth in this Article 17, or the
acceptance of the assignee or subtenant as a tenant, or a release of Subtenant
from the further performance and observance by Subtenant of the covenants,
obligations and agreements on the part of Subtenant to be performed or observed
herein. The consent by Sublandlord or Landlord to an assignment, sale, pledge,
transfer, mortgage or subletting shall not in any way be construed to relieve
Subtenant from obtaining the express consent in writing, to the extent required
by this Sublease or the Lease, of Sublandlord and Landlord to any further
assignment, sale, pledge, transfer, mortgage or subletting.

9
<PAGE> 12
18. Security. Subtenant has deposited with Sublandlord the sum of
Thirteen Thousand Five Hundred Seventy Two Dollars ($13,572.00) as security
(the "Security") for the faithful performance and observance by Subtenant of
the terms, provisions and conditions of this Sublease, including, but not
limited to, the payment of Fixed Rent and all other items of Rental and the
surrender of the Premises to Sublandlord as herein provided. If Subtenant
defaults in respect of any of the terms, provisions and conditions of this
Sublease, Sublandlord may apply or retain the whole or any part of the Security
so deposited, as the case may be, to the extent required for the payment of any
Fixed Rent or any other item of Rental as to which Subtenant is in default or
for any sum which Sublandlord may expend or be required to expend by reason of
Subtenant's default in respect of any of the terms, covenants and conditions of
this Sublease, including, but not limited to, any damages or deficiency in the
reletting of the Premises, whether such damages or deficiency accrue or accrues
before or after summary proceedings or other re-entry by Sublandlord. If
Sublandlord applies or retains any part of the security so deposited,
Subtenant, upon demand, shall deposit with Sublandlord the amount so applied or
retained so that Sublandlord shall have the full deposit on hand at all times
during the Term. If Subtenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this Sublease, the Security,
together with accrued interest thereon, shall be returned to Subtenant after
the Expiration Date and after delivery of possession of the Premises to
Sublandlord in the condition required to be delivered to Landlord under the
Lease, except as otherwise provided herein. Subtenant shall not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and neither Sublandlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance. Sublandlord shall deposit the Security in an interest-bearing
account.

19. Holding Over. If Subtenant retains possession of the Premises or
any part thereof after the expiration or earlier termination of the Term,
Subtenant shall pay Sublandlord a monthly rental equal to the greater of (i)
two (2) times the Fixed Rent and additional rent payable hereunder during the
last month of the Term or (ii) (x) Fixed Rent and additional rent in amounts
equal to the rent Sublandlord is required to pay Landlord pursuant to Article
25 of the Lease; and (y) any and all other amounts Sublandlord is obligated to
pay Landlord pursuant to said Article 25.

20. Signage; Parking. Subtenant shall have the right to maintain
signage in the Building directory and at the Premises, consistent with the
terms of the Lease. Such signage shall be at Subtenant's sole cost and
expense, and is subject to the prior approval of Sublandlord, such approval not
to be unreasonably withheld. Subtenant shall, at Subtenant's sole cost and
expense, obtain directly from Landlord the parking Subtenant requires in
connection with the Premises, and Subtenant shall rely upon, and look solely
to, Landlord for the provision of such parking, at rates to be agreed upon with
Landlord. If Landlord shall default in the performance of its

10
<PAGE> 13
obligations with respect to providing parking to Subtenant, Subtenant shall not
make any claim against Sublandlord for any damage which may arise, nor shall
Subtenant's obligations hereunder be diminished by reason of the failure of
Landlord to provide the such parking, or by reason of the acts or omissions of
Landlord, its agents, contractors, or employees. The provisions of this
Section 20 shall survive the expiration or earlier termination of the Term
hereof.

21. Miscellaneous

21.1 This Sublease contains the entire agreement between the parties and
all prior negotiations and agreements are merged in this Sublease. Any
agreement hereafter made shall be ineffective to change, modify or discharge
this Sublease in whole or in part unless such agreement is in writing and
signed by the parties hereto. No provision of this Sublease shall be deemed to
have been waived by Sublandlord or Subtenant unless such waiver be in writing
and signed by Sublandlord or Subtenant, as the case may be. The covenants and
agreement contained in this Sublease shall bind and inure to the benefit of
Sublandlord and Subtenant and their respective permitted successors and
assigns.

21.2 In the event that any provision of this Sublease shall be held to
be invalid or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Sublease shall be unaffected
thereby.

21.3 The paragraph headings appearing herein are for purpose of
convenience only and are not deemed to be a part of this Sublease.

21.4 Capitalized terms used herein shall have the same meanings as are
ascribed to them in the Lease, unless otherwise expressly defined herein.

21.5 This Sublease is offered to Subtenant for signature with the
express understanding and agreement that this Sublease shall not be binding
upon Sublandlord unless and until Sublandlord shall have executed and delivered
a fully executed copy of this Sublease to Subtenant.

21.6 All insurance policies required to be obtained by Subtenant under
this Sublease or the Lease shall name Landlord and Sublandlord as additional
insured as their interests may appear.

11
<PAGE> 14
21.7 This Sublease shall be governed by, and construed in accordance
with, the laws of the State of California.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
of Sublease as of the day and year first above written.

SUBLANDLORD:

CITICORP NORTH AMERICA, INC.,
A DELAWARE CORPORATION

By: /s/ [Illegible]
-------------------------

Its: Vice President
-------------------------

SUBTENANT:

MIDRANGE INFORMATION SYSTEMS, INC.,
A CALIFORNIA CORPORATION

By: /s/ [Illegible]
-------------------------

Its: President
-------------------------

EPC INTERNATIONAL
A CALIFORNIA CORPORATION

By: /s/ [Illegible]
-------------------------

Its: Managing Director
-------------------------

12
<PAGE> 15

[FLOOR PLAN]
<PAGE> 16
[TDC LOGO]

OFFICE LEASE

Project: 2600 Michelson
Building: Tower
Tenant: Citicorp North America, Inc.

TABLE OF CONTENTS

Article Page
1. FUNDAMENTAL LEASE PROVISIONS . . . . . . . . . . . . . . . . . . 1
2. PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. RENT AND EXPENSE PAYMENTS . . . . . . . . . . . . . . . . . . . 4
6. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. TAXES PAYABLE SOLELY BY TENANT . . . . . . . . . . . . . . . . . 9
8. LATE CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. TENANT IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . 10
11. USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12. SERVICE AND UTILITIES . . . . . . . . . . . . . . . . . . . . . 11
13. ENTRY BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . 12
14. MAINTENANCE AND REPAIR . . . . . . . . . . . . . . . . . . . . . 13
15. ALTERATIONS AND ADDITIONS . . . . . . . . . . . . . . . . . . . 14
16. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
18. DAMAGE AND DESTRUCTION . . . . . . . . . . . . . . . . . . . . . 17
19. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . 18
20. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
21. DEFAULTS BY TENANT . . . . . . . . . . . . . . . . . . . . . . . 19
22. LANDLORD'S REMEDIES . . . . . . . . . . . . . . . . . . . . . . 19
23. DEFAULTS BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . 21
24. COSTS OF SUIT . . . . . . . . . . . . . . . . . . . . . . . . . 21
25. SURRENDER OF PREMISES; HOLDING OVER . . . . . . . . . . . . . . 22
26. SURRENDER OF LEASE . . . . . . . . . . . . . . . . . . . . . . . 22
27. TRANSFER OF LANDLORD'S INTEREST . . . . . . . . . . . . . . . . 22
28. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . 23
29. ATTORNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
30. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . 28
31. ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . 28
33. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . 29
34. WAIVER OF REDEMPTION BY TENANT . . . . . . . . . . . . . . . . . 29
35. WAIVER OF LANDLORD-TENANT'S PROPERTY . . . . . . . . . . . . . . 29
36. RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . 30
37. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
38. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
39. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 30
40. INCORPORATION OF PRIOR AGREEMENTS: AMENDMENTS . . . . . . . . . 33
41. RIGHT OF FIRST OFFER . . . . . . . . . . . . . . . . . . . . . . 33a
42. OPTION TO EXPAND . . . . . . . . . . . . . . . . . . . . . . . . 33a
Exhibits 43. OPTION TO EXPAND . . . . . . . . . . . . . . . . . . 33b
A. Description of Premises
A.1 Description of Project
B. Verification of Term and Basic Rent
C. Construction Provisions
D. Subordination of Lease
D.1 Subordination of Deed of Trust
E. Estoppel Statement
F. Building Rules and Regulations
G. Signage
Parking License Agreement
<PAGE> 17

OFFICE LEASE

This Lease is made as of this 22nd day of March, 1988, by and between
MICHELSON CO., a general partnership ("Landlord") and CITICORP NORTH AMERICA,
INC., a Delaware Corporation ("Tenant").

In consideration of the rents and covenants hereinafter set forth,
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord the
following described Premises, upon the following terms and conditions:

1. FUNDAMENTAL LEASE PROVISIONS

Premises: Project: 2600 Michelson
Building: Tower Suite: 1100 & 1200 Floor: 11 & 12
City: Irvine County: Orange State: CA (Article 2)
Area of Premises: 31,357 square feet of rentable area
which is comprised of 11, 658 rentable square feet on
the 11th floor and 19,699 rentable square feet on the
12th floor.

Term: One Hundred Twenty (120) months. (Article 3)
Target Commencement Date: July 1, 1988

Rental: Basic Rent: One and 66/100 Dollars (Article 4)
($1.66) per square foot of rentable area per month,
payable in equal monthly installments of Fifty-Two
Thousand Fifty-Two and 62/100 Dollars ($52,052.62).
Fixed increases in Basic Rent are as follows: (See
page 1a) (Article 5)

Expenses: Tenant shall pay Tenant's Share of all Direct and (Article 6)
Indirect Costs that exceed Landlord's Monthly Cost
of Forty-Five and 83/100ths Cents ($0.4583) per
month per square foot of rentable area, together
with other items of Expense as set forth in
Article 6. Tenant's Share is Ten and Twenty-Eight
Hundredths percent (10.28%).

Prepaid Tenant shall pay the Basic Rent for the first month
Rent: of the term upon execution of this Lease. (Article 4)

(Article 9)

Address To Landlord: c/o Transpacific Development Company
For 2377 Crenshaw Blvd., Suite 300
Notices: Torrance, CA 90501-3325

To Tenant: (See page 1b), to the Premises. (Article 37)

1
<PAGE> 18

ARTICLE 1 (Continued)
Rental

Fixed increases in Basic Rent are as follows: Commencing in the 13th month of
the Lease term, Basic Rent shall be increased to One and 75/100 Dollars ($1.75)
per square foot of rentable area per month, payable in equal monthly
installments of Fifty-Four Thousand Eight Hundred Seventy-Four and 75/100
Dollars ($54,874.75). Commencing in the 25th month of the Lease term, Basic
Rent shall be increased to One and 79/100 Dollars ($1.79) per square foot of
rentable area per month, payable in equal monthly installments of Fifty-Six
Thousand One Hundred Twenty-Nine and 03/100 Dollars ($56,129.03). Commencing
in the 37th month of the Lease term, Basic Rent shall be increased to One and
88/100 Dollars ($1.88), per square foot of rentable area per month, payable in
equal monthly installments of Fifty-Eight Thousand Nine Hundred Fifty-One and
16/100 Dollars ($58,951.16). Commencing in the 49th month of the Lease term,
Basic Rent shall be increased to One and 98/100 Dollars ($1.98) per square foot
of rentable area per month, payable in equal monthly installments of Sixty-Two
Thousand Eighty-Six and 86/100 Dollars ($62,086.86). Commencing in the 61st
month of the Lease term, Basic Rent shall be increased to Two and 06/100
Dollars ($2.06) per square foot of rentable area per month, payable in equal
monthly installments of Sixty-Four Thousand Five Hundred Ninety-Five and
42/100 Dollars ($64,595.42). Commencing in the 73rd month of the Lease term,
Basic Rent shall be increased to Two and 15/100 Dollars ($2.15) per square foot
of rentable area per month, payable in equal monthly installments of
Sixty-Seven Thousand Four Hundred Seventeen and 55/100 Dollars ($67,417.55).
Commencing in the 85th month of the Lease term, Basic Rent shall be increased
to Two and 23/100 Dollars ($2.23) per square foot of rentable area per month,
payable in equal monthly installments of Sixty-Nine Thousand Nine Hundred
Twenty-Six and 11/100 Dollars ($69,926.11). Commencing in the 97th month of
the Lease term, Basic Rent shall be increased to Two and 31/100 Dollars ($2.31)
per square foot of rentable area per month, payable in equal monthly
installments of Seventy-Two Thousand Four Hundred Thirty-Four and 67/100
Dollars ($72,434.67). Commencing in the 109th month of the Lease term, Basic
Rent shall be increased to Two and 40/100 Dollars ($2.40) per square foot of
rentable area per month, payable in equal monthly installments of Seventy-Five
Thousand Two Hundred Fifty-Six and 80/100 Dollars ($75,256.80).

-1a-
<PAGE> 19
2. PREMISES

(a) The approximate location of the premises leased hereunder (the
"Premises") is shown on the drawing attached hereto as Exhibit A. The Premises
consists of that certain space situated in the building (the "Building")
described in Article 1 hereof. The area of the Premises for all purposes
hereunder is stipulated to be 28,812 square feet of usable area and 31,357
square feet of rentable area. The area of the Building for all purposes
hereunder is stipulated to be 272,261 square feet of usable area and 304,932
square feet of rentable area. As used in this Lease, the following terms have
the meanings indicated:

(i) The term "gross area" or "gross square footage" means the
entire area being measured, including vertical elevator and ventilation shafts,
maintenance, telephone, mechanical and electrical rooms and closets, and all
other public areas measured from the exterior of exterior walls, floors and
ceilings and from the center line of interior demising walls, floors and
ceilings;

(ii) The term "rentable area" or rentable square footage"
means, as to a floor leased entirely by Tenant, the entire area within exterior
Building walls, excluding public stairwells and such vertical shafts but
including all other public areas measured in the same way, and as to a floor
only a portion of which is leased by Tenant, the usable area of the premises
increased by 12%: and

(iii) The term "usable area" or "usable square footage"
means the entire floor area of tenant space being measured, excluding vertical
shafts and all public areas, measured from the exterior walls and the exterior
of interior corridor walls, and the center line of interior demising walls,
floors and ceilings.

If the Premises are being newly constructed, then within thirty (30) days after
the Commencement Date either party may, by written notice to the other given
within such period, require that the area of the Premises and/or of the
Building be remeasured by Landlord's space planner in accordance with the
foregoing, at the expense of the requesting party. If such remeasurement
indicates a variance from the square footage areas specified above, this Lease
shall be amended accordingly.
(b) The Premises are (or when constructed will be) a part of a
business/commercial complex consisting of the Building and other buildings,
landscaping, parking facilities and other improvements described as the
"Project" in Article 1 hereof. The Project is generally shown on the drawing
attached hereto as Exhibit A-1. Landlord may in its sole discretion change the
size, shape, location, number and extent of any or all of the improvements in
the Project without any liability to or consent of Tenant, except that no
change in the size or location of or access to the Premises and no material
change in the number of parking spaces made available to Tenant shall be made
without Tenant's consent, which consent shall not be unreasonably withheld.
Tenant does not rely on the fact nor does Landlord represent that any specific
tenant or number of tenants shall occupy any space in the Project.

(c ) Landlord reserves the right to use the roof and exterior walls of
the Premises, and the area beneath, adjacent to and above the Premises,
together with the right to install, use, maintain and replace equipment,
machinery, pipes, conduits and wiring through the Premises, which serve other
parts of the Project, in a manner and in locations which do not unreasonably
interfere with Tenant's access to and use of the Premises and which do not
materially reduce the number of usable square feet of the Premises. No light,
air or view easement is created by this Lease.

(d) Tenant hereby acknowledges that the Project is being, or may be,
constructed or reconstructed in phases, and that by reason of construction or
reconstruction activities there may be temporary incidents thereof such as dust,
dirt, barricades, detours, equipment or material in the Building or Common
Areas. Tenant hereby agrees that Landlord shall not be liable for any loss or
damage arising from any such incidents of construction or reconstruction unless
such loss or damage was caused by the negligence or willful misconduct of
Landlord, its agents, contractors or employees. Landlord shall use diligent
efforts to prevent any such incidents of construction or reconstruction from
disrupting Tenant's business or materially and adversely affecting Tenant's use
of or access to the Premises.

2
<PAGE> 20
(e) Except as specifically provided in the "Construction Provisions"
describing the construction of leasehold improvements, attached hereto as
Exhibit C, Tenant shall lease the Premises on an "As Is" basis and Landlord
shall have no obligation to improve, remodel, alter or otherwise modify the
Premises prior to Tenant's occupancy except that, during the first twelve (12)
months of the Lease term, Landlord shall promptly repair at its sole cost any
latent defects to the Premises of which Tenant gives Landlord written notice.

3. TERM

(a) COMMENCEMENT DATE. The term of this Lease shall be for the
duration set forth in Article 1 hereof and shall commence on the earlier to
occur of the date which is the first Monday following the earlier of (i) the
date Landlord delivers to Tenant a factually correct written notice stating
that the Premises are "substantially completed" (as hereinafter defined), or
(ii) the date established in the event of a delay as described in Article 10
hereof, or (iii) the date Tenant (or any subtenant) takes possession of,
occupies or commences using any part of the Premises for the conduct of its
business operations. The date on which the term of this Lease commences
pursuant to the foregoing (the "Commencement Date") shall be confirmed by
Landlord and Tenant in the form set forth in Exhibit B attached hereto when
Tenant takes possession of the Premises for the conduct of its business
operations. This Lease shall be a binding contractual agreement effective upon
the date of execution hereof by both Landlord and Tenant, notwithstanding the
later commencement of the term of this Lease.

(b) SUBSTANTIAL COMPLETION. For purposes hereof, the phrase
"substantial completion" means (i) the completion (as determined, in the event
of a dispute, in accordance with AIA standards) of the construction work to be
performed by Landlord pursuant to the "Plans" (as defined in Exhibit C,
"Construction Provisions," attached hereto), except for such items that
constitute minor defects or adjustments which can be completed after occupancy
by Tenant without causing any material interference with Tenant's use of the
Premises (so-called "punch list" items) (ii) Landlord has obtained a
Certificate of Occupancy, or a Temporary Certificate of Occupancy, or the
equivalent, for that portion of the Building that includes all of the Premises,
(iii) The parking spaces alloted to Tenant pursuant to the Parking License
Agreement have been made available for Tenant's use, (iv) Tenant has been given
sufficient prior access to the Premises in order to install its light fixtures,
telephones and communications systems and trade fixtures, (v) Tenant has been
tendered continuous and uninterrupted access to the Premises, (vi) Tenant has
received the non-disturbance agreement signed by Landlord and its Mortgagee, as
required by Article 30, and (vii) All of the Building Systems are operational
to the extent necessary to service the Premises. Notwithstanding the
foregoing, in the event of a dispute between Tenant and Landlord as to the date
of substantial completion of the Premises, Tenant shall nevertheless commence
the payment of Rent hereunder as of the date of Landlord's determination, but
such payment shall be without prejudice to Tenant's right to demand, by written
notice to Landlord, arbitration of such dispute by arbitration conducted in Los
Angeles, California pursuant to the rules then obtaining of the American
Arbitration Association. Except as expressly set forth above, no other dispute
under this Paragraph 3(b) shall be determined by or submitted to arbitration.
The arbitration conducted hereunder shall be conducted in accordance with the
terms and conditions set forth in Article 45 hereof. If, pursuant to such
arbitration, it shall be determined in such proceeding to have been overpaid
with regard to the matter in dispute together with interest at the Agreed Rate.
On or about the date when Landlord has substantially completed all work to be
performed by Landlord in the Premises. Landlord and Tenant shall inspect the
Premises and all punch list items shall be noted in writing on Landlord's punch
list form. In addition, Tenant shall submit a final punch list to Landlord
thirty (30) days after the Commencement Date. As soon thereafter as conditions
permit, Landlord shall complete all such punch list items. If Tenant shall do
any act which would increase Landlord's cost of completing any such punch list
items then Tenant shall pay such increase in Landlord's costs upon its receipt
of invoice therefor from Landlord. Upon Landlord's completion of such punch
list items, Landlord and Tenant shall reinspect the Premises with regard to all
punch list items previously noted and shall indicate on Landlord's punch list
form if such items have been satisfactorily completed. Tenant's failure to
reinspect any such punch list items with fifteen (15) days after Landlord's
written request to do so shall constitute an acceptance by Tenant of such items
as being satisfactorily completed.

(c ) TARGET COMMENCEMENT DATE. The Target Commencement Date shall be
the date identified as such in Article 1 hereof. Landlord shall use due
diligence to complete "Building Standard Work" (as defined in Article 10a)
prior to the Target Commencement Date, but this Lease shall not be void or
voidable nor shall Landlord or its agents have any liability to Tenant by
reason of Landlord's failure to complete Building Standard Work by such date.
If for any reason (except as set forth in Article 10 hereof) substantial
completion of Building Standard Work does not occur within nine (9) months
after the Target Commencement Date, Tenant may, upon ten (10) days' prior
written notice to Landlord, terminate this Lease and the parties hereto shall
thereafter be discharged from all further obligations hereunder. Landlord
shall give Tenant thirty (30) days' advance notice of the date of substantial
completion. Landlord shall use its best efforts to cooperate with Tenant's
move-in schedule and shall allow Tenant to have access to the Premises so that
Tenant may install its furniture, equipment and fixtures at least ten (10) days
prior to the date

3
<PAGE> 21
of completion of all work in the Premises. Subject to the provisions of Article
3(b) (iv), however, Tenant shall not interfere with completion of such work and
shall be responsible for any delays, costs or expenses incurred by Landlord due
to any such interference, and in such event Tenant shall hold Landlord harmless
and indemnify Landlord for any loss or damage to Tenant's furniture, equipment,
fixtures, or merchandise and for injury to any persons arising out of the
performance of such work in the Premises unless caused by the negligence of
Landlord or its agents or contractors.

4. RENT AND EXPENSE PAYMENTS

(a) GENERAL. The "Rent" or "Rental" hereunder is composed of "Basic
Rent" as set forth in Article 1 hereof and adjustments thereto as hereinafter
provided. The term "Expense" hereunder means all costs, expenses, fees,
charges or other amounts required to be paid by Tenant under Article 6. Tenant
agrees to pay to Landlord all Rent and Expenses required under this Lease,
which shall be payable monthly to Landlord (unless expressly provided
otherwise), without deduction or offset except as may be provided otherwise in
this Lease, in lawful money of the United States of America at the office
maintained by Landlord in the Project or at such other place as Landlord may
from time to time designate in writing. Notwithstanding any contrary
provisions of this Lease, all Expenses and all other sums of money or charges
required to be paid pursuant to this Lease shall be deemed rental for the
Premises: and in any statutory notice to pay rent or quit the Premises.
Landlord may include and designate same as rent then past due and owing, if
such be the case. No acceptance by Landlord of partial payment of any Rent or
Expense or other sum due from Tenant shall be deemed a waiver by Landlord of
any of its rights to the full amount due, nor shall any endorsement or
statement on any check or accompanying letter from Tenant be deemed an accord
and satisfaction. Any Rental payments or Expenses or other sums received from
Tenant or any other person shall be conclusively presumed to have been paid on
Tenant's behalf, unless Landlord has been given prior written notice to the
contrary by Tenant. Tenant agrees that the acceptance by Landlord of any such
payment shall not constitute a consent by Landlord or a waiver of any of its
rights under this Lease. Landlord agrees that the payment by Tenant of any Rent
or Expense shall not constitute a consent by Tenant or a waiver of any of its
rights under the Lease. In no event shall the foregoing be construed as
requiring Landlord to accept any Rental or Expense payments or other sums from
any person other than Tenant. If the term hereof ends on a day other than the
last day of a month, then the Rent and Expenses for the month during which the
term ends shall be prorated based on a thirty (30) day month. All prorations of
Rent or Expenses under this Lease for fractional periods shall be based on a
thirty (30) day month and a three hundred sixty (360) day year.

(b) BASIC RENT. Tenant shall pay the "Basic Rent" set forth in Article
1 hereof on the first day of each month in advance, beginning on the
Commencement Date. If the Commencement Date occurs on a day other than the
first day of the month, then the Basic Rent for the partial month in which the
Commencement Date occurs shall be prorated on the basis of a thirty (30) day
month.

(c) PREPAID RENT. Tenant shall pay prepaid Basic Rent concurrently with
the execution of this Lease, as set forth in Article 1 hereof.

(d) FREE RENT. Notwithstanding anything to the contrary contained herein,
so long as Tenant is not in default hereunder, Tenant shall not be required to
pay Basic Rent for the second (2nd), third (3rd), one hundred nineteenth (119th)
and one hundred twentieth (120th) months of the term of this Lease.

4
<PAGE> 22
6. EXPENSES

Tenant shall pay "Expenses" on the first day of each month during the
term hereof as set forth in this Article. The Expenses payable by Tenant
hereunder consist of the amount by which Tenant's Share of Direct and Indirect
Costs exceeds Landlord's Costs (as such terms are hereinafter defined).

(a) DEFINITIONS. As used in this Lease, the following terms have the
meanings indicated:

(i) The term "Landlord's Costs" means the annualized dollar
amount which results from (1) multiplying the amount of Landlord's Monthly
Costs as set forth in Article 1 hereof by twelve (12) months, and (2) by
multiplying the resulting sum by the rentable square footage of the Premises.

(ii) The term "Landlord's Monthly Costs" means the amount per
square foot per month of the total Direct and Indirect Costs which Landlord
agrees to pay without reimbursement from Tenant, which amount is set forth in
Article 1 hereof.

(iii) The term "Direct Costs" means all expenses, costs and
fees paid or incurred by Landlord during any calendar year during the term
hereof in connection with or attributable to the Building Area (as described
hereinafter) for:

(1) Electricity, water, gas, sewer, and other utility
services to or for the Building Area, including any utility taxes, fees,
charges or other similar impositions paid or incurred by Landlord in connection
therewith; and

(2) Operation, maintenance, replacement, repair,
management, insurance (including public liability and property damage, rent
continuation, boiler and machinery and extended coverage insurance), and
cleaning of the Building Area and all furnishings, fixtures and equipment
therein and any other expense which, in accordance with standard accounting
principles, consistently applied, would be treated as a normal maintenance or
operating expense by landlords of comparable first-class institutional quality
office buildings, but excluding the costs of special services rendered to
tenants (including Tenant) for which a separate charge is made, costs of
preparing space for new tenants in the Building, or costs borne solely by
Tenant under the Lease. The term "Direct Costs" includes the annual
amortization of costs (including financing at the then prevailing rate, if any)
of any equipment, device or improvement required after (i) completion of the
Building by governmental authority or (ii) incurred as a labor saving measure
or to reduce operation or maintenance expenses with respect to the Building
Area which costs are amortized over the useful life thereof and which do not
inure primarily to the benefit of any particular tenant or group of tenants,
including Landlord in the event Landlord is a tenant; provided, however, that
the annual amortization of costs under Section (ii) shall be limited to the
annual reduction of labor, operating or maintenance expenses resulting from
such equipment, device or improvement, and

(3) All real property taxes and personal property
taxes, licenses, charges and assessments which are levied, assessed or imposed
by any governmental authority or improvement or assessment district during any
calendar year with respect to the Building Area and the land on which the
Building Area is located, and any improvements, fixtures, equipment and other
property of Landlord, real or personal, located in the Project and used in
connection with the operation or maintenance of the Building Area (computed as
if paid in permitted installments regardless of whether actually so paid), as
well as any tax which shall be levied or assessed in addition to or in lieu of
such taxes (it being acknowledged that because of the passage of laws which
limit increases in real property taxes, government agencies may impose fees,
charges, assessments or other levies in connection with services previously
furnished without charge or at a lesser charge and which were previously paid
for in whole or in part, directly or indirectly by real property taxes), any
charge upon Landlord's business of leasing the Premises or other part of the
Building, and any costs or expenses of contesting any such taxes, licenses,
charges or assessments, but excluding any federal or state income or gift tax
or any franchise, capital stock, transfer, estate or inheritance taxes.
Notwithstanding anything to the contrary contained herein, Tenant shall not,
during the initial term of this Lease, be liable for increases in real property
taxes that result from changes in ownership of the Project, or a transfer of
any interest in the Building or Project which results in real property tax
increases under Proposition 13. For purposes of this Lease, "change in
ownership" has the same definition as in California Revenue and Taxation Code
Sections 60-68, or any amendments or successor statutes to those sections.
Notwithstanding anything to the contrary contained herein, all assessments
which are not specifically charged to Tenant because of what Tenant has done,
which can be paid by Landlord in installments, shall be paid by Landlord in the
maximum number of installments permitted by law and charged as Direct and
Indirect Costs only in the year in which the assessment installment is actually
paid.

(iv) The term "Indirect Costs" means all costs, expenses and fees paid
or incurred by Landlord in connection with or attributable to the operation,
maintenance, replacement, repair, restriping and resurfacing, management,
insurance and cleaning of the Common Area (as described hereinafter), together
with the cost of any taxes, fees or assessments thereon and costs of contesting
same, if any. The term "Indirect Costs" includes the annual amortization of
costs (including financing costs at the then prevailing rate, if any) of any
equipment, device or im-

<PAGE> 23
provement required (i) after completion of the Building by governmental
authority or (ii) incurred as a labor saving measure or to reduce operation or
maintenance expenses with respect to any or all of the Common Area; provided,
however, that the annual amortization of costs under section (ii) above shall be
limited to the annual reduction of labor, operating or maintenance expenses
resulting from such equipment, device or improvement. Any cost or expense
included in Indirect Costs which is attributable to Common Area shall be
prorated by Landlord between the Building Area and such Common Area based on the
proportion which the total gross square footage of the Building bears to the
total gross square footage of all buildings in the Project from time to time,
except that, with regard to taxes, Landlord may use such allocation of taxes
among the various parcels in the Project as may have been used by the taxing
authority. Notwithstanding anything to the contrary contained herein, Indirect
Costs shall not include any costs of operating the parking facilities.

(v) The term "Building Area" means the Building and that portion of
the Project immediately adjacent to the Building which is from time to time
designated and improved for nonexclusive, common use by all tenants of the
Project. The approximate size and location of the Building Area is shown on
Exhibit A-1 attached hereto and incorporated by reference.

(vi) The term "Common Area" means that portion of the Project other
than the Building Area which is from time to time designated and improved for
nonexclusive, common use by all tenants of the Project. The general location of
the Common Area is shown on Exhibit A-1 attached hereto and incorporated by
reference. The Common Area includes parking facilities in the Project.

(vii) The term "Initial Year" means the calendar year in which the
Commencement Date occurs.

(viii) The term "Subsequent Year" means any calendar year during the
term hereof after the Initial Year.

(ix) The term "Tenant's Share" means the proportion which the rentable
square footage of the Premises bears to the total rentable square footage of
the Building, which proportion is hereby agreed by Landlord and Tenant to be
the percentage set forth in Article 1 hereof.

(x) Notwithstanding anything to the contrary in the definitions of
"Direct and Indirect Costs", Direct and Indirect Costs shall not include the
following:

(1) any ground lease rental;

(2) capital expenditures required by Landlord's failure to
comply with laws enacted on or before the date the Building's Temporary
Certificate of Occupancy, or the equivalent, is validly issued;

(3) costs incurred by Landlord for the repair of damage to the
Building or Project, to the extent that Landlord is reimbursed by insurance
proceeds;

(4) costs, including permit, license and inspection costs,
incurred with respect to the installation of tenant improvements made for
tenants in the Building or Project or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for tenants or
other occupants of the Building or Project;

(5) depreciation, amortization and interest payments, except as
provided herein, and except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply services Landlord
might otherwise contract for 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
standard accounting principles, consistently applied;

(6) leasing commissions, attorneys' fees, and other costs and
expenses incurred in connection with negotiations or disputes with present or
prospective tenants or other occupants of the Building or Project;

(7) costs incurred by Landlord for alterations which are
considered capital improvements and replacements under standard accounting
principles, consistently applied;

(8) costs of a capital nature, including, without limitation,
capital improvements, capital repairs, capital equipment and capital tools, all
as determined in accordance with standard accounting principles, consistently
applied;

(9) expenses in connection with services or other benefits which
are not offered to Tenant or for which Tenant is charged directly but which are
not provided to another tenant or occupant of the Building or Project;

(10) costs incurred by Landlord due to the violation by Landlord
or any tenant of the terms and conditions of any lease of space in the Building
or Project;

(11) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for services in the Building or Project
to the extent the same exceeds the costs of such services rendered by
unaffiliated third parties on a competitive basis;

(12) interest, principal, points and fees on debts or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Project, the Building or the Land;

(13) Landlord's general corporate overhead and general and
administrative expenses;

(14) any compensation paid to clerks, attendants or other
persons in commercial concessions operated by Landlord or in the parking garage
of the Building or Project;

(15) except for making repairs or keeping permanent systems in
operation while repairs are being made, rentals and other related expenses
incurred in leasing air conditioning systems, elevators or other equipment
ordinarily considered to be of a capital nature, except equipment not affixed
to the Building or Project which is used in providing janitorial or similar
services;

(16) all items and services for which Tenant or any other tenant
in the Building or Project reimburses Landlord or which Landlord provides
selectively to one or more tenants (other than Tenant) without reimbursement;

(17) advertising and promotional expenditures, and costs of
signs in or on the Building or Project identifying the owner of the Building or
Project;
(18) electric power costs for which any tenant directly
contracts with the local public service company;

(19) services provided and costs incurred in connection with the
operation of the retail, restaurant, and garage operations in the Building or
Project;

(20) costs incurred in connection with upgrading the Building or
Project to comply with handicap, life, fire and safety codes in effect at the
time the Building Certificate of Occupancy or Temporary Certificate of
Occupancy, or the equivalent, is issued;

(21) any other expenses which, in accordance with standard
accounting principles, consistently applied, would not be treated as a normal
maintenance or operating expense by landlords of comparable first-class
institutional quality office buildings;

(22) tax penalties incurred as a result of Landlord's negligence
or inability or unwillingness to make payments when due;

(b) PAYMENT OF DIRECT AND INDIRECT COSTS IN EXCESS OF LANDLORD'S COSTS.
Tenant shall pay to Landlord the following amounts in the manner specified:

(i) Landlord shall submit to Tenant, prior to the Commencement
Date or as soon thereafter as Landlord has sufficient data, a reasonably
detailed statement showing the estimated Direct Costs and Indirect Costs for
the Initial Year. The determination of estimated Direct and Indirect Costs
hereunder shall be made by Landlord based upon experience with actual costs and
projections. If Tenant's Share of such estimated Direct and Indirect Costs
exceeds Landlord's Costs, then at the first monthly Rent payment date
thereafter during the Initial Year, Tenant shall pay to Landlord as Expenses an
amount equal to one-twelfth (1/12) of the excess of (1) the sum of the
estimated Direct and Indirect Costs multiplied by Tenant's Share, over (2)
Landlord's Costs. If Landlord does not submit said statement to Tenant until
after the Commencement Date, Tenant shall pay, at the monthly rent payment date
next following the submittal of such statement, any amounts theretofore accrued
from the Commencement Date (equalling one twelfth (1/12) of such excess for each
month of the term hereof which has then elapsed). Landlord may revise such
estimated Direct and Indirect Costs at the end of any calendar quarter, and
Tenant shall pay such revised estimated Expenses after notice thereof as herein
provided.

(ii) For each Subsequent Year, Landlord shall submit to Tenant,
prior to January 1 of such Subsequent Year or as soon thereafter as
practicable, a reasonably detailed statement showing the estimated Direct and
Indirect Costs for such Subsequent Year. Tenant shall pay to Landlord as
Expenses an amount equal to one-twelfth (1/12) of the excess of (1) the sum of
the estimated Direct and Indirect Costs multiplied by Tenant's Share, over (2)
Landlord's Costs. If Landlord does not submit said statement to Tenant prior to
January 1 of any such Subsequent Year, Tenant shall continue to pay Expenses at
the then existing rate until such statement is submitted, and, thereafter, at
the monthly Rent payment date next following the submittal of such statement,
shall pay Expenses based on the rate set forth in such statement together with
any Expenses based on such rate which may have theretofore accrued from January
1 of such Subsequent Year. Landlord may revise such estimated Direct and
Indirect Costs at the end of any calendar quarter, and Tenant shall pay the
monthly amount of such revised estimated Expenses after notice thereof as herein
provided.

(iii) On or before March 31 of each Subsequent Year or as soon
thereafter as Landlord has sufficient data, Landlord shall submit to Tenant a
reasonably detailed statement showing the actual
<PAGE> 24
Direct and Indirect Costs paid or incurred by Landlord during the previous
calendar year, if Tenant's Share of such actual Direct and Indirect Costs is
less than the amount of Tenant's Share of the estimated Direct and Indirect
Costs for such previous year theretofore paid by Tenant, then Landlord shall
credit the amount of such difference against estimated and/or actual Expenses
which may thereafter be due from Tenant; provided, however, that in no event
shall Tenant receive a credit as provided herein for any amount calculated to be
less than Landlord's Costs. If Tenant's Share of such actual Direct and
Indirect Costs is more than the amount of Tenant's Share of the estimated Direct
and Indirect Costs for such previous year theretofore paid by Tenant, then
Tenant shall, at the time which is the later of ten (10) days after notice from
Landlord of the amount of the difference, or the monthly Rent payment date next
following the submittal of such statement to Tenant, pay to Landlord the full
amount of such difference.

(iv) The reconciliation of the Expenses paid by Tenant for
calendar year in which this Lease terminates shall be made upon Landlord's
submittal to Tenant of the statement of actual Direct and Indirect Costs for
such calendar year. The estimated Direct and Indirect Costs for such calendar
year, and the actual Direct and Indirect Costs for such calendar year, shall be
prorated based on the actual number of days in such calendar year that this
Lease was in effect, and shall be compared. If pursuant to such comparison it
is determined that there has been an underpayment or an overpayment by Tenant
for such calendar year, Landlord shall refund the overpayment to Tenant, or
Tenant shall pay the amount calculated as owning to Landlord, as the case may
be, within thirty (30) days after the submittal of the statement by Landlord.
Notwithstanding the preceding, if Landlord deems it advisable Landlord may
submit partial year statements pursuant to this paragraph in order to cause an
earlier reconciliation of Expenses for the calendar year in which this Lease
terminates.

(i) Notwithstanding any provision of this Article to the
contrary, if at any time during the term of this Lease any tenant, pursuant to
an express provision in its lease and with Landlord's approval, contracts for
certain Building or Common Area services to be provided directly to it and at
its expense, which services would normally be furnished by Landlord (e.g.,
janitorial, maintenance, utilities, etc.), then Landlord may make an appropriate
adjustment in calculating Tenant's Share of Direct and Indirect Costs to the end
that the cost of the remaining services provided by Landlord are shared
proportionately by all tenants receiving such services but only if there is a
corresponding reduction in the cost to Landlord of providing such services to a
reduced number of tenants.

(iv) The computation of Expenses pursuant to this Article is
intended to constitute a formula for an agreed rental escalation, and may or
may not constitute an actual reimbursement to Landlord for Direct Cost and
Indirect Costs paid by Landlord, and for Landlord's administration.

(v) Any delay or failure of Landlord in computing or billing for
Expenses shall not constitute a waiver of, or in any way impair, the continuing
obligation of Tenant to pay Expenses hereunder.

(d) Within one (1) year following Tenant's receipt of said statement,
Tenant may, upon no less than sixty (60) days prior written notice to Landlord,
audit books pertaining to the Direct and Indirect Costs incurred by Landlord
during the previous calendar year. Such audit shall be conducted at the office
where said books are maintained and shall be during usual business hours. Said
right to audit shall be restricted to one (1) per calendar year and shall be at
the sole cost and expense of Tenant; provided, however, that if such audit
reveals a discrepancy greater than five percent (5%), then Landlord will pay
the reasonable costs incurred by Tenant for such audit. If it is determined
that Landlord has overcharged Tenant, then Landlord shall promptly reimburse
Tenant the amount of the overcharge together with interest thereon at the
Agreed Rate, and if Tenant has underpaid Landlord, then Tenant shall promptly
pay to Landlord the amount of the underpayment together with interest thereon
at the Agreed Rate.

8
<PAGE> 25
7. TAXES PAYABLE SOLELY BY TENANT

In addition to the Rental and Expenses to be paid by Tenant, Tenant
shall pay before delinquency and without notice or demand by Landlord any and
all taxes levied or assessed on and which become payable by Tenant (or
indirectly by Landlord) during the term of this Lease (excluding, however,
state and federal personal or corporate income taxes measured by the income of
Landlord from all sources, capital stock taxes, and estate and inheritance
taxes), whether or not now customary or within the contemplation of the parties
hereto, which are based upon, measured by or otherwise calculated with respect
to: (i) the gross or net Rent payable under this Lease, including, without
limitation, any gross receipts tax or any other gross income tax or excise tax
levied by any taxing authority with respect to the receipt of the Rental
hereunder; (ii) the value of Tenant's equipment, furniture, fixtures or other
personal property located in the Premises; (iii) the possession, lease,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion thereof; (iv) the value of any
improvements, alterations or additions made in or to the Premises at the
expense of Tenant, regardless of whether title to such improvements,
alterations or additions is in Tenant or Landlord; or (v) this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises. Real property taxes on Building Standard
improvements (hereinafter defined) in the Premises shall be deemed to be
included in the taxes described in Article 6(a)(iii)(3) above, as to which
Tenant shall pay Tenant's Share. If it is not lawful for Tenant to reimburse
Landlord for any such taxes paid or incurred by Landlord, the Rent shall be
revised so as to net Landlord the same net Rental after imposition of such
taxes as would have been payable prior to the imposition of such taxes.

8. LATE PAYMENTS

In the event that Tenant shall fail to pay to Landlord within ten (10)
days after notice from Landlord any Rent, Expenses or other sums owing to
Landlord pursuant to the terms of this Lease, said late payment shall bear
interest at the Agreed Rate as herein provided and, in addition:

(a) For each such late payment that is not paid within ten (10) days
after written notice from Landlord that the same was due, Tenant shall pay to
Landlord a service charge equal to five percent (5%) of the overdue amount.
Tenant acknowledges and agrees that such late payment by Tenant will cause
Landlord to incur costs and expenses not contemplated by this Lease, the exact
amounts of which will be extremely difficult to ascertain, and that such
service charge represents a fair estimate of the costs and expenses which
Landlord would incur by reason of Tenant's late payment. Tenant further agrees
that such service charge shall neither constitute a waiver of Tenant's default
with respect to such overdue amount nor prevent Landlord from exercising any
other right or remedy available to Landlord; and

(b) Following any three consecutive late payments of Rent (as used
herein, "late payment" is a payment which is not made by Tenant within ten (10)
days after notice from Landlord), Landlord may, upon notice to Tenant, require
that, beginning with the first payment of Rent due following the date the third
late payment was due, Rent shall no longer be paid in monthly installments but
shall be payable three (3) months in advance.

9
<PAGE> 26
10. TENANT IMPROVEMENTS

(a) Applicability. If the Premises are being leased on an "As Is"
basis without any improvements, alterations or additions required to be made
thereto by Landlord or Tenant, the provisions of this Article shall not apply.
However, if any improvements, alterations or additions to the Premises are
required to be made by Landlord and/or Tenant, the provisions of the
"Construction Provisions" attached as Exhibit C hereto shall govern with regard
to work to be completed at Landlord's expense ("Building Standard Work"), if
any, and work to be completed at Tenant's expense ("Over Standard Work"), if
any. Landlord has no obligation and has made no promise to alter, remodel,
decorate, paint or otherwise improve the Premises or any part thereof except as
specifically set forth in the Construction Provisions. To the extent Landlord
is required to perform Building Standard Work or Over Standard Work pursuant to
the Construction Provisions, Landlord shall use reasonable diligence to
complete such work in a timely manner.

(b) Effect on Commencement Date. Time is of the essence in connection
with the delivery to Landlord of each and every drawing, plan, specification,
schedule or other item required to be given by Tenant to Landlord, or to be
approved by Tenant, pursuant to the schedule in and provisions of the
Construction Provisions. If Landlord is delayed in substantially completing
Building Standard Work or Over Standard Work as a result of (i) Tenant's failure
to approve plans, specifications, changes, cost estimates and other items within
the time limits specified therefor in the Construction Provisions, or (ii) any
change by Tenant in said plans, specifications, or other items after the
expiration of such time limits, or (iii) any request by Tenant or requirement
necessitated by Tenant for materials, finishes or installations other than the
Building Standard (provided, however, that Tenant is given notice that such
change or request will cause a delay and one (1) business day to withdraw or
reevaluate its request for a change or requirement for items other than Building
Standard), then, in any or all such instances and without limitation as to any
other right or remedy available to Landlord, the nine (9) month period after the
Target Commencement Date under Article 3(c) will be extended for each day of
such delay, and Landlord may, under Article 3(a)(iii), determine that the
Commencement Date is the date that Building Standard Work would have been
substantially completed but for such delay. Tenant's failure to perform or
cause to be performed Tenant's obligations within the time limits referred to in
the Construction Provisions, and any delays however caused in performing Over
Standard Work if such delays were within the control of Tenant, shall not delay
commencement of the term or Tenant's obligation to pay Rent or Expenses
hereunder.

10
<PAGE> 27
11. USE

The Premises shall be used and occupied by Tenant for general office
purposes and any other legally permitted usage consistent with the character of
the Building and for no other purpose without the prior written consent of
Landlord. Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the Premises, the
Building, or the Project, or with respect to the suitability thereof for the
conduct of Tenant's business. Tenant shall not do or permit anything to be
done in or about the Premises nor bring or keep anything therein which will in
any way increase the existing rate (without paying the increase in such rate)
of or affect or cause a cancellation of any fire or other insurance covering
the Building or the Premises or any of its contents, nor shall Tenant sell or
permit to be kept, used or sold in or about the Premises any article which may
be prohibited by a standard form policy of insurance. Tenant shall promptly
upon demand reimburse Landlord for any additional premium charged for any such
insurance by reason of Tenant's failure to comply with the provisions of this
Article. Tenant agrees that it will use the Premises in such manner as not to
interfere with the rights of other tenants of the Building or the Project.
Tenant shall neither use or allow the Premises to be used for any unlawful or
objectionable purpose, nor cause, maintain or permit any nuisance or waste in,
on or about the Premises or the Project. Tenant will not place a load upon any
floor exceeding the floor load which such floor was designed to carry, and
Landlord reserves the right to prescribe the location of any safe or other
heavy equipment in the Premises. Tenant shall not use or allow anything to be
done in or about the Premises or the Project which will in any way conflict
with any law, ordinance or governmental regulation or requirement of any board
of fire underwriters or any duly constituted public authority now in force or
hereafter enacted or promulgated affecting the use or occupancy of the
Premises, and shall promptly comply with all such laws or requirements at its
sole cost and expense. The judgment of any court of competent jurisdiction
that Tenant has violated any such law, statute, ordinance, rule, regulation or
requirement shall be conclusive of such fact as between Landlord and Tenant.

12. SERVICE AND UTILITIES

(a) LANDLORD'S OBLIGATIONS. Landlord shall make available to the
Premises during those days and hours listed in paragraph 17 of the Building
Rules and Regulations attached hereto as Exhibit F ("Business Hours"), and
subject to the Rules and Regulations described in Article 36 hereof, such
amounts of air conditioning, heating and ventilation as may be required for the
comfortable use of the Premises, as well as elevator service, reasonable
amounts of electric current for normal lighting by Building Standard overhead
fixtures and for fractional horsepower office machines, and water for lavatory
and drinking purposes. During non-business hours Landlord shall keep the
public areas of the Building partially lighted and shall provide elevator
service with at least one elevator, but shall not be obligated to furnish
heating or air conditioning unless Tenant has previously notified Landlord of
its need for such services. If Tenant requires heating and/or air conditioning
during non-business hours, Tenant shall give Landlord reasonable prior notice
of such requirement and Tenant shall pay Landlord a service fee for such extra
service at the rate being charged by the local public utility company, plus
reasonable fees for wear and tear and depreciation. Landlord shall replace
Building Standard light bulbs, tubes and ballasts which need replacing due to
normal use. Landlord shall also maintain and keep lighted the common stairs,
entries and toilet rooms in the Building and shall provide trash removal,
janitorial service and window washing customary for first-class buildings in
the same geographical area. Landlord shall install and maintain security
system covering the Building and all entrances to and exits from the Building
restricting access to the Building during normal hours by uniformed guards and
after normal hours by a card system and twenty-four (24) hour security guards.
The card system will enable Tenant to gain access to the Building and parking
structure and to the Premises via selected elevators during after-hours.
Television cameras will be mounted at all major points of ingress to and egress
from the Building and will monitor those areas on a twenty-four (24) hours
basis. Electronic door locks will be installed and will indicate whether a
door has been entered through or exited from. Landlord shall also install and
maintain such safety and security devices for the Building as are required by
applicable laws. Any subsequent or modified security program shall provide at
least equivalent security coverage. Tenant, at its expense, and with the prior
approval of Landlord, may install such additional safety and security systems
or devices, including smoke detectors, fire suppression systems, electronic
security devices and auxiliary emergency electric power supplies, as Tenant may
deem appropriate. Tenant shall have the right, by installation of a key system
or otherwise, to control access to its Premises. Landlord shall not be in
default hereunder or liable for any damages directly or indirectly resulting
from, nor shall the Rent be abated by reason of (i) the installation, use or
interruption of use of any equipment in connection with the furnishing of any
of the foregoing utilities and services, (ii) failure to furnish, or delay in
furnishing, any such utilities or services when such failure or delay is caused
by acts of God, acts of government, labor disturbances of any kind, or other
conditions beyond the reasonable control of Landlord, or by the making of
repairs or improvements to the Premises or any part of the Project, or (iii)
governmental limitation, curtailment, rationing or restriction on use of water,
electricity or any other service or utility whatsoever serving the Premises or
the Building; provided, however, that if the utilities and/or services to the
Premises are interrupted for a period of ten (10) consecutive days or greater,
or fifteen (15) business days in any twelve (12) month period, then Rent shall
be abated until such time as the utilities and/or services are restored to the
Premises; provided, however, that if such interruption of utilities and/or
services continues for longer than thirty (30) consecutive days and Tenant's
space is untenantable, then Tenant shall have the right to cancel this Lease by
giving Landlord written notice of its intention. Landlord shall be entitled to
cooperate with the energy conservation efforts of governmental agencies or
utility suppliers. The failure of Landlord to provide such services in
accordance with the foregoing shall not constitute a constructive or other
eviction of Tenant.

11
<PAGE> 28
(b) TENANT'S OBLIGATIONS. Tenant shall pay, prior to delinquency, for
all telephone and all other materials and services not expressly required to be
paid by Landlord, which may be furnished to or used in, on or about the
Premises during the term of this Lease. Tenant shall also pay, prior to
delinquency, all charges and fees required to be paid by Tenant by the Rules
and Regulations described in Article 36 of this Lease. Tenant will not without
the prior written consent of Landlord use any apparatus or device in the
Premises, including (without limitation) electronic data processing machines,
punch card machines, and telephone switch gear, which will in any way increase
the amount of cooling or ventilation or electricity or water usually furnished
or supplied for use of the Premises as general office space: nor shall Tenant
connect with electric current (except through existing electrical outlets in
the Premises) or water pipes, any apparatus or device for the purpose of using
electrical current or water, except as may be provided in the Construction
Provisions. If Tenant shall use electricity at a rate in excess of 2
kilowatt/hours per rentable square foot of the Premises per year then the cost
to Landlord of any such excess use of utility service by Tenant shall be paid
by Tenant based on Landlord's reasonable estimates and costs. If Tenant shall
require ventilation, cooling, water or electric current or any other resource
in excess of that usually furnished or supplied for use of the Premises as
general office space. Landlord may cause a special meter to be installed in or
about the Premises to measure the amount of water, electric current or other
resource consumed by Tenant. The cost of any such meter, and of the
installation, maintenance and repair thereof, shall be paid for by Tenant, and
Tenant agrees to pay Landlord promptly upon demand for all such water, electric
current or other resource consumed, as shown by said meter, at the rates
charged by the local public utility or other supplier furnishing the same, plus
any reasonable additional expense incurred by Landlord in keeping account of
the foregoing and administering same. If any lights, machines or equipment
(including but not limited to computers) are used by Tenant in the Premises
which materially affect the temperature otherwise maintained by the heating,
ventilation or air conditioning system, or generate substantially more heat in
the Premises than would be generated by Building Standard lights or usual
fractional horsepower office equipment, Landlord shall have the right if Tenant
fails to remedy the situation within ten (10) days after written notice from
Landlord, to install any machinery and equipment which Landlord deems necessary
to restore the temperature balance in any affected part of the Building,
including but not limited to modifications to the Building Standard air
conditioning equipment, and the cost thereof including the cost of installation
and any additional cost of operation and maintenance occasioned thereby shall
be paid by Tenant to Landlord upon demand. Landlord shall not be liable under
any circumstances for loss of or injury to property, however occurring, in
connection with or incidental to the failure to furnish any of the foregoing.
Any sums payable under this Article 12(b) shall be considered Expenses and may
be added to any installment of Rent thereafter becoming due, and Landlord shall
have the same remedies for a default in payment of such sum as for a default in
the payment of Rent.

13. ENTRY BY LANDLORD

Landlord and its authorized representatives shall have the right to
enter the Premises at all reasonable times during normal business hours upon
reasonable notice to Tenant, but only in the presence of a representative of
Tenant, and at any time in case of an emergency (i) to determine whether the
Premises are in good condition and whether Tenant is complying with its
obligations under this Lease, (ii) to maintain or to make any repair or
restoration to the Building that Landlord has the right or obligation to
perform, (iii) to install any meters or other equipment which Landlord may have
the right to install, (iv) to serve, post, or keep posted any notices required
or allowed under the provisions of this Lease, (v) to post "for sale" signs at
any time during the term, and to post "for rent" or "for lease" signs during
the last three (3) months of the term, (vi) to show the Premises to prospective
brokers, agents or buyers and during the last six (6) months of the term, to
prospective tenants, (vii) to shore the foundations, footings, and walls of the
Building and to erect scaffolding and protective barricades around and about
the Building or the Premises, but not so as to prevent entry into the Premises,
and (viii) to do any other act or thing necessary for the safety or
preservation of the Premises or the Building. Landlord shall have the right at
all times to have and retain a key with which to unlock all doors in, upon and
about the Premises excluding Tenant's vaults and safes, and Landlord

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shall have the right to use any and all means which Landlord may deem proper to
gain entry in an emergency, and any entry to the Premises obtained by Landlord
by any of said means shall not be construed or deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant
from the Premises or any portion thereof. Tenant hereby waives any claim for
damages for any injury or inconvenience to or interference with Tenant's
business and any loss of occupancy or quiet enjoyment of the Premises by reason
of Landlord's exercise of its rights of entry in accordance with this Article,
and Tenant shall not be entitled to an abatement or reduction of Rent or
Expenses in connection therewith unless such damages were caused by the
negligence of willful misconduct of Landlord, its agents, contractors or
employees.

14. MAINTENANCE AND REPAIR

(a) LANDLORD'S OBLIGATIONS. Landlord shall maintain or cause to be
maintained in good order, condition and repair the structural and common
portions of the Building Area and all Common Areas in the Project (except to
the extent of damage caused by Tenant which shall be repaired by Landlord at
Tenant's expense, unless covered by insurance purchased by Landlord as part of
Expenses). Landlord shall not be liable, and neither Rent nor Expenses shall
be abated, for any failure by Landlord to maintain and repair areas which are
being used in connection with construction or reconstruction of improvements,
or for any failure to make any repairs or perform any maintenance, unless such
failure shall persist for an unreasonable time after written notice of the need
thereof is given to Landlord by Tenant to the extent the provisions of this
Article are in conflict with any statute now or hereafter in effect which would
afford Tenant the right to make repairs at Landlord's expense or to terminate
this Lease because of Landlord's failure to keep the Premises in good order,
condition and repair, the provisions of this Article shall govern.

(b) TENANT'S OBLIGATIONS.

(i) Tenant at its sole cost and expense, except for services
furnished by Landlord pursuant to Article 12 hereof and except for maintenance
and repair required of Landlord pursuant to Section 14(a) above, shall maintain
the Premises in good order, condition and repair, including all fixtures,
equipment, or other items in excess of Building Standard furnishings, installed
by or at the expense of Tenant.

(ii) In connection with Tenant surrendering possession of the
Premises at the end of the Lease term, Tenant agrees to repair any damage to
the Premises or the Building caused by or in connection with the removal of any
article of personal property, business or trade fixtures, machinery, equipment,
cabinetwork, furniture, movable partitions or permanent improvements or
additions, including without limitation thereto, repairing the floor and
patching and painting the walls where required by Landlord to Landlord's
reasonable satisfaction, all at Tenant's sole cost and expense. Tenant shall
indemnify Landlord against any loss or liability resulting from delay by Tenant
in so surrendering the Premises, including without limitation any claims made
by any succeeding tenant founded on such delay.

(iii) If Tenant fails to maintain the Premises in good order,
condition and repair, Landlord may give Tenant notice to do such acts as are
reasonably required to so maintain the Premises. If Tenant thereafter fails to
promptly commence such work and diligently prosecute it to completion, then
Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work. Any amount
so expended by Landlord shall be paid by Tenant promptly after demand, with
interest at the Agreed Rate from the date Tenant is presented with an invoice
for such work. Landlord shall have no liability to Tenant for any damage,
inconvenience, or interference with the use of the Premises by Tenant as a
result of performing any such work unless such damage, inconvenience or
interference is caused by the negligence of Landlord, its agents, employees or
contractors.

(c ) Compliance with Law. Landlord and Tenant shall each do all acts
required to comply with all applicable laws, ordinances, and rules of any
public authority relating to their respective maintenance obligations as set
forth herein.

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15. ALTERATIONS AND ADDITIONS

Tenant shall make no alterations, additions or improvements to the
Premises or any part thereof without obtaining the prior written consent of
Landlord in each instance. Such consent may be granted or withheld at
Landlord's sole discretion if the proposed alteration, addition or improvement
affects the Building structure, the Building systems, or the exterior
appearance of the Building. Any such alterations, additions or improvements
affecting the Building's structure, the Building systems, or the exterior
appearance of the Building consented to by Landlord may, at Landlord's option,
be made by Landlord for Tenant's account at a cost equal to the lowest bid
obtained by Tenant from an approved contractor and on the same payment terms as
such bid and Tenant shall reimburse Landlord for the cost thereof within
fifteen (15) days after an invoice therefor is submitted to Tenant. Landlord
may impose as a condition to such consent such requirements as Landlord may
deem necessary, including (without limitation) the requirement that Landlord be
furnished with working drawings before work commences, and requirements
relating to the manner in which the work is done, the contractor by whom it is
performed, and the times during which it is accomplished, as well as the
requirement that upon written request of Landlord made at the time of
installation of the alteration, addition or improvement, Tenant may remove at
its expense any such alterations, improvements or additions to the Premises
provided, however, in no event shall Tenant be required to furnish a bond. Any
damage done to the Premises in connection with any such removal shall be
repaired at Tenant's sole cost and expense. Unless so removed, all such
alterations, additions or improvements shall at the expiration or earlier
termination of the Lease become the property of Landlord and remain upon the
Premises. All articles of personal property and all business and trade
fixtures, machinery and equipment, cabinetwork, furniture and movable
partitions owned by Tenant or installed by Tenant at its expense in the
Premises shall be and remain the property of Tenant and may be removed by
Tenant at any time during the Lease term, provided that Tenant at its sole cost
repairs any damage to the Premises or the Building caused by such removal. All
such improvements, alterations or additions must be done in a good and
workmanlike manner and diligently prosecuted to completion so that the Premises
shall at all times be a complete unit except during the period of work. Upon
completion of any such work by Tenant, Tenant shall file for record in the
office of the County Recorder where the Project is located a Notice of
Completion, as required or permitted by law. Tenant shall deliver to Landlord
upon commencement of such work, a copy of the building permit with respect
thereto. All such work shall be performed and done strictly in accordance with
the laws and ordinances relating thereto. All such work shall be performed so
as not to obstruct the access to the premises of any other tenant in the
Building or Project. Tenant agrees to carry insurance as required by Article
17 covering any improvements, alterations or additions to the Premises made by
Tenant under the provisions of this Article, it being expressly agreed that
none of such improvements, additions or alterations shall be insured by
Landlord under the insurance Landlord may carry upon the Building, nor shall
Landlord be required under any provision for reconstruction to reinstall any
such improvements, additions or alterations. In addition, it is expressly
agreed that if any tax is imposed, or the amount of taxes on the Building or
the Project is increased, by reason of any such improvements, alterations or
additions, Tenant shall be solely responsible therefor under Article 7.

16. INDEMNITY

(a) Indemnification. Each party shall indemnify, defend and hold the
other party, its agents and employees, harmless from and against any and all
claims, liability, loss, cost or expense (including attorneys' fees) arising
out of or in connection with any injury or damage to any person or property
whatsoever occurring in, on or about the Premises or any part thereof or about
any area, the use of which such party may have in common with other tenants of
the Project, if such injury or damage is caused by any negligent act or
omission by such indemnifying party, its agents, contractors or employees.
Each party

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<PAGE> 31
shall further indemnify, defend and hold the other party, its agents and
employees harmless from and against any and all claims, loss or expense
(including attorneys' fees) arising out of or in connection with any breach or
default in the performance of any obligation on the first party's part to be
performed under this Lease. If any action or proceeding is brought against
either party by reason of any such claim, upon notice from the other party, the
first party shall defend the same at the first party's expense by counsel
reasonably satisfactory to the other party. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in, upon or about the Premises from any cause except
Landlord's negligence, and Tenant hereby waives all claims with respect thereto
against Landlord. The foregoing provisions shall survive the termination of
this Lease.

(b) Exemption of Landlord from Liability. If the Premises, the
Building, or the Property, or any part thereof, is damaged by fire or other
cause against which Tenant is required to carry insurance pursuant to this
Lease, Landlord shall not be liable to Tenant for any loss, cost or expense
arising out of or in connection with such damage. Tenant hereby releases
Landlord, its directors, officers, shareholders, partners, employees, agents
and representatives, from any liability, claim or action arising out of or in
connection with such damage. Furthermore, Landlord shall not be liable to
Tenant for loss, injury, or damage which may be sustained by the person, goods,
wares, merchandise or property of Tenant, its agents, contractors, employees,
invitees or customers, 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 the Building, or form the
breakage, leakage, obstruction or other defects of the pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures of the same,
whether such damage or injury results from conditions arising within the
Premises or other portions of the Building, or from other sources, unless
caused by Landlord's negligence or wrongful act or covered by the proceeds of
insurance purchased by Landlord as part of Expenses and in that event only to
the extent not covered by insurance which Tenant is required to carry pursuant
to this Lease. Landlord shall not be liable to Tenant for any damages arising
out of or in connection with any act or omission of any other tenant of the
Project. Landlord shall not be liable to Tenant for losses due to theft or
burglary or for damages arising out of wrongful acts of third parties.

17. INSURANCE

(a) General. All insurance required to be carried by Tenant hereunder
shall be issued by responsible insurance companies acceptable to Landlord and
the holder of any deed of trust secured by any portion of the Premises
(hereinafter referred to as a "Mortgagee"). All policies of insurance provided
for herein shall be issued by insurance companies with general policyholder's
rating of not less than B+ in the most current available "Best Insurance
Reports." Each policy shall name Landlord and at Landlord's request any
Mortgagee as an additional insured, as their respective interests may appear.
Tenant shall deliver duplicate originals of all policies to Landlord, evidencing
the existence and amounts of such insurance, at least ten (10) days prior to
Tenant's occupancy in the Premises (Tenant may deliver certificates of such
insurance in lieu of duplicate originals of policies, provided that such
certificates shall in Landlord's judgment provide clear and unambiguous evidence
of the existence and amounts of such insurance). All policies of insurance
delivered to Landlord must contain a provision that the company writing said
policy will give to Landlord thirty (30) days notice in writing in advance of
any modification, cancellation or lapse or reduction in the amounts of
insurance. All public liability, property damage and other casualty insurance
policies shall be written as primary policies, not contributing with, and not in
excess of coverage which Landlord may carry. Tenant shall furnish Landlord with
renewals or "binders" of any such policy at least thirty (30) days prior to the
expiration thereof. Tenant agrees that if Tenant does not procure and maintain
such insurance and fails to present policies of such insurance, or certificates
thereof, within ten (10) days after written notice from Landlord that Tenant has
failed to procure such insurance, then Landlord may (but shall not be required
to) obtain such insurance on Tenant's behalf and charge Tenant the premiums
therefor, payable upon demand. Tenant may carry such insurance under a blanket
policy provided such blanket policy expressly affords the coverage required by
this Lease by a Landlord's protective liability endorsement or otherwise.

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<PAGE> 32
(b) Casualty Insurance. At all times during the term hereof, Tenant
shall maintain in effect policies of casualty insurance covering (i) all
improvements in, on or to the Premises (including any Building Standard
furnishings, and any alterations, additions or improvements as may be made by
Tenant), and (ii) trade fixtures, merchandise and other personal property from
time to time in, on or upon the Premises. Such policies shall include coverage
in an amount not less than one hundred percent (100%) of the actual replacement
cost thereof from time to time during the term of this Lease. Such policies
shall provide protection against any peril included within the classification
"Fire and Extended Coverage," against vandalism and malicious mischief, against
theft unless waived in writing by Landlord, against sprinkler leakage, against
earthquake sprinkler leakage unless waived in writing by Landlord, and against
flood damage unless waived in writing by Landlord (and including cost of
demolition and debris removal). Replacement cost for purposes hereof shall be
determined by an accredited appraiser selected by mutual agreement. The
proceeds of such insurance shall be used for the repair or replacement of the
property so insured. Upon termination of this Lease following a casualty as
set forth in Article 18, the proceeds under (i) above (excluding any amounts
paid by Tenant for improvements to the Premises) shall be paid to Landlord, and
the proceeds under (ii) above shall be paid to Tenant.

(c) Liability Insurance. Tenant shall at all times during the term
hereof at its own cost and expense obtain and continue in force bodily injury
liability and property damage liability insurance adequate to protect Landlord
against liability for injury to or death of any person in connection with the
activities of Tenant in, on or about the Premises or with the use, operation or
condition of the Premises. Such insurance at all times shall be in an amount
of not less than Two Million Dollars ($2,000,000) for injuries to persons in
one accident, not less than One Million Dollars ($1,000,000) for injury to any
one person and not less than Five Hundred Thousand Dollars ($500,000) with
respect to damage to property. The limits of such insurance do not necessarily
limit the liability of Tenant hereunder. All public liability and property
damage policies shall contain a provision that Landlord, although named as an
insured, shall nevertheless be entitled to recovery under said policies for any
loss occasioned to it, its partners, agents and employees by reason of the
negligence of Tenant.

(d) Workers' Compensation Insurance. Tenant shall also, at all times
during the term hereof, and at Tenant's own cost and expense, procure and
continue in force workers' compensation insurance with employer liability
(coverage B) limits of not less than Five Hundred Thousand Dollars ($500,000).

(e) Adjustment. Every three (3) years during the term of this Lease,
or whenever Tenant materially improves or alters the Premises, whichever is
earlier, Landlord and Tenant shall mutually agree to increases in Tenant's
insurance policy limits for the insurance to be carried by Tenant as set forth
in this Article. If Landlord and Tenant cannot mutually agree upon the amounts
of said increases within thirty (30) days after notice from Landlord, then the
insurance policy limits set forth in this Article shall be adjusted upward by
an accredited insurance appraiser selected by Tenant and approved by Landlord
to reflect increased replacement costs and increased limits of liability then
prevailing generally in the local real estate industry.

(f) Landlord's Insurance. Landlord shall at all times from and after
substantial completion of the Premises maintain in effect a policy or policies
of insurance covering (i) the Building in an amount up to one hundred percent
(100%) of the actual replacement cost thereof (exclusive of the cost of
excavations, foundations and footings) from time to time during the term of
this Lease, providing protection against any peril generally included in the
classification "Fire and Extended Coverage" which may include insurance against
sprinkler damage, vandalism, malicious mischief, earthquake and third party
liability, and including such coverages in such amounts as Landlord may
designate, (ii) the rents payable hereunder and (iii) liability insurance on
the Building Area and Common Areas of the Project. Landlord's obligation to
carry the insurance provided for herein may be brought within the coverage of
any so-called blanket policy or policies of insurance carried and maintained by
Landlord, provided that the coverage afforded will not be reduced or diminished
by reason of the use of such blanket policy of insurance.

(g) Waiver of Subrogation. Landlord and Tenant each hereby waives
any and all rights of recovery against the other or against the directors,
officers, shareholders, partners, employees, agents and representatives of the
other, on account of loss or damage of such waiving party or its property, or
the property

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<PAGE> 33
of others under its control, to the extent that such loss or damage is insured
against under any fire and extended coverage insurance policy which either may
have in force at the time of such loss or damage. Tenant shall, upon obtaining
the policies of insurance required under this Lease, give notice to its
insurance carrier(s) that the foregoing mutual waiver of subrogation is
contained in this Lease. The waivers set forth herein shall be required to the
extent that same are available from each party's insurer without additional
premium; if an extra charge is incurred to obtain such waiver, it shall be paid
by the party in whose favor the waiver runs within fifteen (15) days after
written notice from the other party.

18. DAMAGE AND DESTRUCTION

(a) PARTIAL DAMAGE-INSURED. If the Premises or the Building are damaged
by a risk covered under fire and extended coverage insurance protecting
Landlord, then Landlord shall restore such damage provided insurance proceeds
are available to Landlord to pay eighty percent (80%) or more of the cost of
restoration, and provided such restoration by Landlord can be completed within
six (6) months after the commencement of work, in the opinion of a registered
architect or engineer appointed by Landlord (as to the Building) and as to the
Premises, an architect or engineer mutually agreed to by Landlord and Tenant. In
such event this Lease shall continue in full force and effect, except that
Tenant shall, so long as the damage is not due to the act or omission of Tenant,
be entitled to an equitable reduction of Rent and Expenses while such
restoration takes place, such reduction to be based upon the extent to which the
damage and the restoration efforts materially interfere with Tenant's business
in the Premises provided, however, that the amount of such reduction shall be no
less than the prorata amount of the square feet of the area damaged.

(b) PARTIAL DAMAGE-UNINSURED. If the Premises or the Building are
damaged by a risk not covered by such insurance or the insurance proceeds
available to Landlord are less than eighty percent (80%) of the cost of
restoration, or if the restoration cannot be completed within six (6) months
after the commencement of work in the opinion of the registered architect or
engineer appointed by Landlord (as to the Building) and as to the Premises, an
architect or engineer mutually agreed to by Landlord and Tenant, then Landlord
shall have the option either to (i) repair or restore such damage, this Lease
continuing in full force and effect, but the Rent and Expenses to be equitably
reduced as hereinabove provided, or (ii) give notice to Tenant at any time
within ninety (90) days after such damage terminating this Lease as of a date
to be specified in such notice, which date shall be not less than thirty (30)
nor more than sixty (60) days after giving such notice provided, however, that
Landlord shall have no right to terminate the Lease, unless it terminates the
leases of all other tenants in the Building similarly situated. If such notice
is given, this Lease shall expire and any interest of Tenant in the Premises
shall terminate on the date specified in such notice and the Rent and Expenses,
reduced by an equitable reduction (except as hereinabove provided) based upon
the extent, if any, to which such damage materially interfered with Tenant's
business in the Premises, shall be paid to the date of such termination, and
Landlord agrees to refund to Tenant any Rent or Expenses theretofore paid in
advance for any period of time subsequent to such date. If Landlord notifies
Tenant within sixty (60) days of the date of such damage that such restoration
by Landlord cannot be completed within six (6) months after the commencement of
work in the opinion of a registered architect or engineer appointed by Landlord
(as to the Building) and as to the Premises, an architect or engineer mutually
approved by Landlord and Tenant, then either party hereto may give notice to
the other at any time within ninety (90) days after such damage terminating
this Lease as of a date to be specified in such notice, which date shall be not
less than thirty (30) nor more than sixty (60) days after giving such notice.
If such notice is given, this Lease shall expire and any interest of Tenant in
the Premises shall terminate on the date specified in such notice and the Rent
and Expenses, reduced by an equitable reduction (except as hereinabove
provided) based upon the extent, if any, to which such damage materially
interfered with Tenant's business in the Premises, provided, however that the
amount of such reduction shall be no less than the pro rata amount of the
square footage of the area damaged, shall be paid to the date of such
termination, and Landlord agrees to refund to Tenant any Rent or Expenses
theretofore paid in advance for any period of time subsequent to such date.

(c) TOTAL DESTRUCTION. If the Premises are totally destroyed, or if in
Landlord's judgment the Premises cannot be restored as required herein under
applicable laws and regulations, then, notwithstanding the availability of
insurance proceeds, this Lease shall be terminated effective as of the date of
the damage. Landlord agrees to refund to Tenant any Rent or Expenses
theretofore paid in advance for any period of time subsequent to the date of
such termination.

(d) LANDLORD'S OBLIGATIONS. Landlord shall not be required to carry
insurance of any kind on Tenant's property and shall not be required to repair
any injury or damage thereto by fire or other cause, or to make any restoration
or replacement of any paneling, decorations, partitions, ceilings, floor
covering, office fixtures or any other improvements or property installed in the
Premises by or at the direct or indirect expense of Tenant, and Tenant shall be
required to restore or replace same in the event of damage. Tenant shall have
no claim against Landlord for any loss suffered by reason of any such damage,
destruction, repair or restoration unless the same is caused by the negligence
or willful misconduct of Landlord, its agents, employees or contractors.
Notwithstanding anything to the contrary contained in this Article, Landlord
shall have no obligation whatsoever to repair, reconstruct or restore the
Premises with respect to damage or destruction as described in this Article
occurring during the last twelve (12) months of the term of this Lease or any
extension thereof.

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(e) Waiver by Tenant. Tenant shall have no right to terminate this
Lease as a result of any statutory provisions now or hereafter in effect
pertaining to the damage and destruction of the Premises or the Building,
except as expressly provided herein, and Tenant expressly waives the provisions
of any statutes with respect to any destruction of the Premises.

19. CONDEMNATION

If all or any part of the Premises is taken or appropriated for public
or quasi-public use by the right of eminent domain or otherwise by a taking in
the nature of inverse condemnation, with or without litigation, or is
transferred by agreement in lieu thereof (any of the foregoing being referred to
herein as a "taking"), either party hereto may, by written notice given to the
other within thirty (30) days of receipt of notice of such taking, elect to
terminate this Lease as of the date possession is transferred pursuant to the
taking; provided, however, that before Tenant may terminate this Lease for a
taking, such taking shall be of such an extent and nature as to economically
frustrate Tenant's business in, or to substantially handicap, impede or impair
Tenant's use of , the Premises. If any part of the Project other than the
Premises shall be so taken, Landlord may elect to terminate this Lease provided,
however, that Landlord shall have no right to terminate the Lease unless it
terminates the leases of all other tenants similarly situated. No award for any
partial or entire taking shall be apportioned, and Tenant hereby 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 belonging
to Tenant. In the event of a partial taking which does not result in a
termination of this Lease, Rent and Expenses shall be equitably reduced to the
extend Tenant's business in or use of the Premises is economically impaired as
described above provided, however, that the amount of such reduction shall be no
less than the pro rata amount of the square footage of the area taken. No
temporary taking of the Premises or any part of the Project shall terminate this
Lease, except at Landlord's election, or give Tenant any right to any abatement
of Rent or Expenses hereunder, except that Rent and Expenses shall be equitably
reduced as described above during that portion of any temporary taking lasting
more than thirty (30) days. To the extent the provisions of this Article
conflict with California Code of Civil Procedure Section 1265.130 allowing
either party to petition the court to terminate this Lease for a partial taking,
the provisions of this Article shall govern. Anything to the contrary herein
notwithstanding, Tenant shall be entitled to that portion of the award
applicable to Tenant's personal property, trade fixtures and moving expenses.
In the event that separate awards are made by the condemning authority, Tenant
shall be entitled to claim, prove and receive in the condemnation proceedings
such awards as may be allowed for Tenant's trade fixtures and moving expenses.

20. LIENS

Tenant shall keep the Premises, the Building and the Project free from
any liens arising out of work performed, materials furnished, or obligations
incurred by Tenant, and shall indemnify, hold harmless and defend Landlord from
any liens and encumbrances arising out of any work performed or materials
furnished by or at the direction of Tenant. Tenant shall give Landlord at least
ten (10) business days, prior written notice of the expected date of
commencement of work relating to alterations or additions to the Premises.
Landlord shall have the right at all times to keep posted on the Premises any
notices permitted or required by law, or which Landlord shall deem proper, for
the protection of Landlord and the Premises, and any other party having any
interest therein, from mechanics' and materialmens' liens. If any claim of lien
is filed against the Premises or any similar action affecting title to such
property is commenced, the party receiving notice of such lien or action shall
immediately give the other party written notice thereof. If Tenant fails,
within twenty (20) days following the imposition of any lien, to cause such lien
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 no obligation) to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All such
sums paid by Landlord and all costs and expenses incurred by it in connection
therewith (including attorneys' fees) shall be payable to Landlord by Tenant on
demand, with interest at the Agreed Rate from the date of expenditure.

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21. DEFAULTS BY TENANT

The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Tenant:

(a) The abandonment of the Premises by Tenant.

(b) The failure by Tenant to make any payment of Rent or Expenses or
of any other sum required to be made by Tenant hereunder, within ten (10) days
after written notice from Landlord to Tenant that such amount has not been paid
when due.

(c) The failure by Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Tenant,
if such failure is not cured within thirty days after written notice thereof
from Landlord to Tenant; provided, however, that if the nature of Tenant's
default is such that it cannot be cured solely by payment of money and more
than thirty (30) days are reasonably required for its cure then Tenant shall
not be deemed to be in default if Tenant commences such cure within the thirty
(30) day period and thereafter diligently prosecutes such cure to completion:
Violations by Tenant of the Rules and Regulations described in Article 36 shall
be cured by Tenant within seventy-two (72) hours after written notice thereof
from Landlord, failing which Landlord may (but need not) cure same, in which
event Tenant shall pay Landlord, within ten (10) days after written notice
thereof by Landlord, the amount expended by Landlord to effect such cure
together with an administrative charge of five percent (5%) of the amount
thereof; provided, however, if neither Landlord nor Tenant cures a violation of
the Rules and Regulations within such 72-hour period then Tenant shall not be
deemed in default of this Lease entitling Landlord to the remedies set forth in
Article 22 unless the requirements of the first sentence of Article 21(c) are
met.

(d) The making by Tenant of any general assignment for the benefit of
creditors, the filing by or against Tenant of a petition to have Tenant
adjudged a 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, where such
seizure is not discharged within thirty (30) days.

22. LANDLORD'S REMEDIES

In the event of any material default or breach of this Lease by
Tenant, Landlord's obligations under this Lease shall be suspended and Landlord
may at any time thereafter, without limiting Landlord in the exercise of any
other right or remedy at law or in equity which Landlord may have (all remedies
provided herein being non-exclusive and cumulative), do any one or more of the
following:

(a) Maintain this Lease in full force and effect and recover the
Rent, Expenses and other monetary charges as they become due, without
terminating Tenant's right to possession irrespective of whether Tenant shall
have abandoned the Premises. If Landlord elects not to terminate the Lease,
Landlord shall have the right to attempt to relet the Premises at such rent and
upon such conditions, and for such a term, as Landlord deems appropriate in its
sole discretion and to do all acts necessary with regard thereto, without being
deemed to have elected to terminate the Lease, including re-entering the
Premises to make repairs or to maintain or modify the Premises, and removing
all persons and

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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. Reletting
may be for a period shorter or longer than the remaining term of this Lease,
and for more or less rent, but Landlord shall have no obligation to relet at
less than prevailing market rental rates. If reletting occurs, this Lease
shall terminate automatically when the new tenant takes possession of the
Premises and commences rent payment. Notwithstanding that Landlord fails to
elect to terminate the Lease initially, Landlord at any time thereafter may
elect to terminate the Lease by virtue of any previous uncured default by
Tenant. In the event of any such termination, Landlord shall be entitled to
recover from Tenant all damages incurred by Landlord by reason of Tenant's
default (including, without limitation, the damages described in Article 22(b)
below), as well as all costs of reletting, including commissions, attorneys'
fees and restoration or remodeling costs.

(b) Terminate Tenant's right to possession by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event, Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default including (without limitation) the following: (1) the worth,
at the time of award, of any unpaid rent which had been earned at the time of
such termination; plus (2) 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 exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus (3) 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 such rental loss that Tenant proves could have been
reasonably avoided; plus (4) any other amount, and court costs, necessary to
compensate Landlord for all the detriment proximately caused by Tenant's
default or which in the ordinary course of things would be likely to result
therefrom (including, without limiting the generality of the foregoing, the
amount of any commissions and/or finder's fee for a replacement tenant); plus
(5) at Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law. As used in
subparagraphs (1) and (2) of this Article 22(b), the "worth, at the time of
award" is to be computed by allowing interest at the then maximum rate of
interest allowable under law which could be charged Tenant by Landlord, and, as
used in subparagraph (3) of this Article 22(b), the "worth, at the time of
award" is to be computed by discounting such amount at the discount rate of the
U.S. Federal Reserve Bank of San Francisco at the time of award, plus one
percent (1%). The term "rent," as used in this Article, shall be deemed to be
and to mean all Rent, Expenses and other monetary sums required to be paid by
Tenant pursuant to this Lease. For the purpose of determining the amount of
"unpaid rent which would have been earned after termination" or the "unpaid
rent for the balance of the term" (as referenced in subparagraphs (2) and (3)
hereof), the amount of Expenses shall be deemed to increase annually for the
balance of the term by an amount equal to the average annual percentage
increase in Expenses during the three (3) calendar years preceding the year in
which the lease was terminated, or, if such termination shall occur prior to
the expiration of the third calendar year occurring during the term of this
Lease, then the amount of Expenses shall be deemed to increase monthly for the
balance of the term by an amount equal to the average monthly percentage
increase in Expenses during all of the calendar months preceding the month in
which the Lease was terminated.

(c) Collect sublease rents (or appoint a receiver to collect such
rent) and otherwise perform Tenant's obligations at the Premises, it being
agreed, however, that neither the filing of a petition for the appointment of a
receiver for Tenant nor the appointment itself shall constitute an election by
Landlord to terminate this Lease.

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<PAGE> 37
(d) Proceed to cure the default at Tenant's sole cost and expense,
without waiving or releasing Tenant from any obligation hereunder. If at any
time Landlord pays any sum or incurs any expense as a result of or in
connection with curing any default of Tenant (including any attorneys' fees),
the amount thereof shall be immediately due as of the date of such expenditure
and, together with interest at the Agreed Rate from the date of such
expenditures, shall be paid by Tenant to Landlord immediately upon demand, and
Tenant hereby covenants to pay any and all such sums,

(e) Require Tenant to remove all of Tenant's fixtures, furniture,
equipment, improvements, additions, and other personal property in the
Premises.

All covenants and agreements to be performed by Tenant under this
Lease shall be performed by Tenant at Tenant's sole cost and expense and
without any offset to or abatement of Rent or Expenses except as otherwise
provided in this Lease.

23. DEFAULTS BY LANDLORD

Landlord shall not be deemed to be in default in the performance of
any obligation under this Lease unless and until it has failed to perform such
obligation within thirty (30) days after receipt of written notice by Tenant to
Landlord specifying such failure; provided, however, that if the nature of
Landlord's default is such that more than thirty (30) days are required for its
cure, then Landlord shall not be deemed to be in default if it commences such
cure within the thirty (30) day period and thereafter diligently prosecutes
such cure to completion. Tenant agrees to give any Mortgagee a copy, by
registered mail, of any notice of default served upon Landlord, provided that
prior to such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then any such Mortgagee shall have
an additional thirty (30) days within which to cure such default on the part of
the Landlord or if such default cannot be cured within that time, then such
additional time as may be necessary if within that thirty (30) days the
Mortgagee has commenced and is pursuing the remedies necessary to cure such
default (including but not limited to commencement of foreclosure proceedings,
if necessary to effect such cure), in which event this Lease shall not be
terminated while such remedies are being so pursued. If Tenant recovers any
judgment against Landlord for a default by Landlord of this Lease, the judgment
shall be satisfied only out of the interest of Landlord in the Project and
neither Landlord nor any of its partners, shareholders, officers, directors,
employees or agents shall be personally liable for any such default or for any
deficiency.

24. COSTS OF SUIT

If either party brings action for relief against the other,
declaratory or otherwise, arising out of this Lease, including any suit by
Landlord for the recovery of Rent or possession of the Premises, the losing
party shall pay the successful party its costs incurred in connection with and
in preparation for said action, including its attorneys' fees (which costs
shall be deemed to have accrued on the commencement of such action and shall be
paid whether or not such action is prosecuted to judgment, it being agreed that
to be the successful party a party need not necessarily have recovered a
judgment, but shall be that party which, in light of all the facts and
circumstances of the case, shall be deemed to be without fault or to have a
lesser degree of fault than the other party). If either party, without fault on
its part, is made a party to any action instituted by the other party or a
third party against such other party.

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<PAGE> 38
or by or against any person holding under or using the Premises by license of
the other party, or for the foreclosure of any lien for labor or material
furnished to or for such party, or any such other person, or otherwise arising
out of or resulting from any act or omission of such party or of any such other
person, each party shall indemnify, defend and hold the other party harmless
from any judgment rendered in connection therewith and all costs and expenses
(including attorneys' fees) incurred by the other party in connection with such
action.

25. SURRENDER OF PREMISES; HOLDING OVER

(a) SURRENDER. On expiration or termination of this Lease, Tenant
shall surrender to Landlord the Premises, and all Tenant's improvements thereto
and alterations thereof, broom clean and in good condition (except for ordinary
wear and tear occurring after the last necessary maintenance made by Tenant, for
destruction to the Premises covered by Article 18 of this Lease, and for
alterations that Tenant has the right to remove or is obligated to remove, so
long as Tenant repairs any damage to the Premises under the provisions of this
Article or Article 15), and shall remove all of its personal property including
any signs, notices and displays. Tenant shall perform all restoration made
necessary by the removal of any such improvements or alterations or personal
property, prior to the expiration of the Lease term. If any such removal would
damage the Building structure, Tenant shall give Landlord prior written notice
thereof and Landlord may elect to make such removal at Tenant's expense.
Landlord may retain or dispose of in any manner any such improvements or
alterations or personal property that Tenant does not remove from the Premises
within five (5) days after expiration or termination of the term as allowed or
required by this Lease. Title to any such improvements or alterations or
personal property that Landlord so elects to retain or dispose of shall vest in
Landlord. Tenant waives all claims against Landlord for any damage or loss to
Tenant arising out of Landlord's retention or disposition of any such
improvements, alterations or personal property. Tenant shall be liable to
Landlord for Landlord's costs of storing, removing and disposing of any such
improvements, alterations or personal property. If Tenant fails to surrender the
Premises to Landlord on expiration or termination of the Lease as required by
this Article, Tenant shall indemnify, defend and hold Landlord harmless from all
damages, loss, cost and expense (including attorney's fees) arising out of or in
connection with Tenant's failure to surrender the Premises.

(b) HOLDING OVER. If Tenant holds over after the term hereof, with or
without the express or implied consent of Landlord, such tenancy shall be from
month-to-month only, and not a renewal hereof or an extension for any further
term, and in such case Rent shall be payable at a rental in the amount of one
hundred twenty-five percent (125%) of the Rent in effect as of the last month
of the term hereof and at the time specified in this Lease, and such
month-to-month tenancy shall be subject to every other term, covenant and
agreement contained herein. The foregoing shall not, however, be construed as a
consent by Landlord to any holding over by Tenant and Landlord reserves the
right to require Tenant to surrender possession of the Premises upon expiration
or termination of this Lease.

26. SURRENDER OF LEASE

The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work as a merger. Such surrender or
cancellation shall, at the option of Landlord, terminate all or any existing
subleases or subtenancies, or may, at the option of Landlord, operate as an
assignment to it of any or all such subleases or subtenancies. The delivery of
keys to the Premises to Landlord or its agent shall not, of itself, constitute
a surrender and termination of this Lease.

27. TRANSFER OF LANDLORD'S INTEREST

If Landlord sells or transfers its interest in the Premises (other than
a transfer for security purposes) Landlord shall be released from all
obligations and liabilities accruing thereafter under this Lease, if Landlord's
successor has assumed in writing Landlord's obligations under this Lease. Any
Security Deposit, prepaid Rent or other funds of Tenant in the hands of
Landlord at the time of transfer shall be delivered to such successor. Tenant
agrees to attorn to the purchaser or assignee, provided all Landlord's
obligations hereunder are assumed in writing by such successor. Notwithstanding
the foregoing, Landlord's successor shall not be liable to Tenant for any such
funds of Tenant which Landlord does not deliver to the successor.

<PAGE> 39
28. ASSIGNMENT AND SUBLETTING

(a) LANDLORD'S CONSENT REQUIRED. Tenant shall not transfer this Lease or
any interest therein (any sale, assignment, mortgage, pledge, hypothecation or
encumbrance of this Lease shall be deemed a "transfer"), and shall not sublet
the Premises or any part thereof, without the prior written consent of Landlord
in each instance, and any attempt to do so without such consent shall be
voidable by Landlord. Notwithstanding anything to the contrary contained herein,
Tenant may assign this Lease, or sublet the Premises, or any portion thereof, at
any time to any affiliate of Tenant; "Affiliate" is defined as any entity which
controls, is controlled by, or is under common control with, the Tenant, either
directly or indirectly (a "Permitted Transferee").

(b) TENANT'S APPLICATION. If Tenant desires at any time to transfer this
Lease (which transfer shall in no event be for less than its entire interest in
this Lease) or to sublet the Premises or any portion thereof to a party other
than a Permitted Transferee, Tenant shall notify Landlord of such intent, and
Landlord shall within thirty days thereafter, advise Tenant whether Landlord
elects to recapture such portion of the Premises as Tenant proposes to sublease
or assign, such recapture to be on the terms set forth in Section (c) below. If
Landlord shall not exercise its recapture right, Tenant may endeavor to find
prospective assignees or subtenants and Landlord shall have no right to
recapture such portion of the Premises as Tenant proposed to sublease or assign.
Tenant shall submit to Landlord at least thirty (30) days prior to the
proposed effective date of the transfer or sublease ("Proposed Effective Date"),
in writing, a notice of intent to transfer or sublease, setting forth: (i) the
Proposed Effective Date, which shall be no less than thirty (30) days after the
sending of such notice; (ii) the name of the proposed subtenant or transferee;
(iii) the nature of the proposed subtenant's or transferee's business to be
carried on in the Premises; and (iv) a description of the terms and provisions
of the proposed sublease or transfer. Such notice shall be accompanied by (i)
such certified financial information as Landlord may request concerning the
proposed subtenant or transferee, including recent financial statements and bank
references; (ii) a conformed or photostatic copy of the proposed sublease or
transfer agreement.

(c) LANDLORD'S OPTION TO RECAPTURE PREMISES. Landlord elects to recapture
such portion of the Premises as Tenant proposes to sublease or assign as
provided in paragraph (b) above, then this Lease shall terminate as to the
portion of the Premises recaptured and for the period of time specified in
Tenant's notice. In the event a portion only of the Premises is recaptured, the
Rental payable under this Lease, the Security Deposit, and Tenant's Share shall
be proportionately reduced based on the rentable square footage retained by
Tenant and the rentable square footage leased by Tenant hereunder immediately
prior to such recapture and termination, and Landlord and Tenant shall thereupon
execute an amendment of this Lease in accordance therewith. If Landlord
recaptures only a portion of the Premises, it shall construct and erect at its
sole cost such partitions as may be required to sever the space retained by
Tenant from the space recaptured by Landlord; provided, however, that said
partitions need only be finished in Building Standard condition, Landlord may,
without limitation, lease the recaptured portion of the Premises. If Landlord
does not elect to recapture pursuant to this paragraph, Tenant may thereafter
enter into a valid assignment or sublease with respect to the Premises, provided
Landlord pursuant to this Article, consents thereto, and provided further that
(i) such assignment or sublease executed within ninety (90) days after
notification to Landlord of such proposal pursuant to Section 28(b) above, and
(ii) the rental there is not less than that stated in such notification. Any
termination as provided in this Article 28(c) should be subject to the written
consent of any Mortgagee of Landlord. The effective date of any such termination
shall be as specified in Landlord's notice of termination.

<PAGE> 40

(d) APPROVAL/DISAPPROVAL STANDARDS. In the event that Tenant complies
with the provisions of Article 28(b), and Landlord does not exercise an option
provided to Landlord under Article 28(c), Landlord's consent to a proposed
assignment or sublease shall not be unreasonably withheld. In determining
whether to grant or withhold consent to a proposed assignment or sublease,
Landlord may consider any reasonable factor. Without limiting what may be
construed as a reasonable factor, it is hereby agreed that any one of the
following factors will be reasonable grounds for disapproval of a proposed
assignment or sublease:

(i) The proposed assignee or subtenant does not, in Landlord's
reasonable judgment, have sufficient financial worth, considering the
responsibility involved;

(iii) The proposed assignee or subtenant does not, in Landlord's
reasonable judgment, have a good reputation as a tenant of property;

(vii) The use of the Premises by the proposed assignee or subtenant
will not be identical to the use permitted by this Lease;

(viii) In Landlord's reasonable judgement, the proposed assignee or
subtenant is engaged in a business, and the Premises, or the relevant part
thereof, will be used in a manner, that is not in keeping with the then
standards of the Building, or that will violate any negative covenant as to
use contained in any other lease of space in the Building or the Project;

(ix) The use of the Premises by the proposed assignee or subtenant
will violate any applicable law, ordinance or regulation;

(xv) The proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this
Article; or

(xvi) Tenant is in default of any obligation of Tenant under this Lease.

<PAGE> 41
(e) APPROVAL/DISAPPROVAL PROCEDURE. If Landlord disapproves the
proposed transfer or sublease it shall notify Tenant in writing thereof. If
Landlord shall deny a request for consent to a proposed transfer or assignment,
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all losses, liabilities, damages, costs and claims that may be made against
Landlord by the proposed transferee or subtenant, or by any brokers or other
persons claiming a commission or similar compensation in connection with the
proposed transfer or sublease. If Landlord approves the proposed transfer or
sublease, it shall notify Tenant in writing thereof and Tenant shall, prior to
the Proposed Effective date, submit to Landlord all executed originals of the
transfer or sublease agreement for execution by Landlord on the signature pages
thereof after the words "The foregoing is hereby consented to by Landlord."
Provided such transfer or sublease agreement is in accordance with the terms
approved by Landlord. Landlord shall execute each original as described above
and shall retain two originals for its file and return the others to Tenant.
No purported transfer or sublease shall be deemed effective as against Landlord
and no proposed transferee or subtenant shall take occupancy unless such
document is so executed by Landlord.

(f) REQUIRED PROVISIONS. Any and all transfer or sublease agreements
shall (i) contain such terms as are described in Tenant's notice under Article
28(b) above or as otherwise agreed by Landlord, (ii) prohibit further
assignments, transfers or subleases without Landlord's prior written consent,
(iii) impose the same obligations and conditions on the transferee or sublessee
as are imposed on Tenant by this Lease except as to Rent and term or as
otherwise agreed by Landlord, (iv) be expressly subject and subordinate to each
and every provision of this Lease, (v) have a term that expires on or before the
expiration of the term of this Lease, (vi) provide that if Landlord succeeds to
sublessor's position, Landlord shall not be liable to sublessee for advance
rental payments, deposits or other payments which have not been actually
delivered to Landlord by the sublessor, and (vii) provide that Tenant and/or the
transferee or sublessee shall pay Landlord the amount of any additional costs or
expenses incurred by Landlord for repairs, maintenance or otherwise as a result
of any change in the nature of occupancy caused by the transfer or sublease.
Any and all sublease agreements shall also provide that in the event of
termination, re-entry, or dispossession by Landlord under this Lease, Landlord
may, at its option, take over all of the right, title and interest of Tenant as
sublandlord under such sublease, and such subtenant shall, at Landlord's option,
attorney to Landlord pursuant to the then executory provisions of such sublease,
except that Landlord shall not (i) be liable for any previous act or omission of
Tenant under such sublease; (ii) be subject to any offset not expressly provided
in such sublease, that theretofore accrued to such subtenant against Tenant or
(iii) be bound by any previous modification of such sublease or by any previous
prepayment of more than one (1) month's fixed rent or any additional rent then
due.

(g) PAYMENT OF ADDITIONAL RENT UPON TRANSFER OR SUBLEASE. If Landlord
shall give its consent to any assignment of this Lease or to any sublease of the
Premises. Tenant shall, in consideration therefor, pay to Landlord, as
additional Rent:

(i) In the case of an assignment, an amount equal to one-half (1/2) of
all sums and other consideration paid to Tenant by the assignee for, or by
reason of, such assignment excluding all sums paid by Tenant for leasing
commissions, reasonable legal fees, rental concessions, leasehold improvements;
the gross revenue paid to Landlord by Tenant subsequent to the date that Tenant
vacated the portion of the Premises proposed to be assigned and during which
that portion of the Premises was vacant and prior to the date the assignee was
to pay rent, and other reasonable assignment costs; and.

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(ii) In the case of a sublease one-half (1/2) of any rents,
additional charges, or other consideration payable under the sublease by the
subtenant to Tenant that are in excess of the Rent and Expenses accruing during
the term of the sublease in respect of the subleased space (at the rate per
square foot payable by Tenant hereunder) pursuant to the terms hereof excluding
all sums paid by Tenant for leasing commissions, reasonable legal fees, rental
concessions, leasehold improvements, the gross revenue paid to Landlord by
Tenant subsequent to the date that Tenant vacated the portion of the Premises
proposed to be sublet and during which that portion of the Premises was vacant
and prior to the date the sublessee was to pay rent, and other reasonable
sublease costs.

The sums payable under subparagraph (i) above shall be paid to
Landlord upon the effective date of the assignment. The sums payable under
subparagraph (ii) above shall be paid to Landlord as and when payable by the
sublessee to Tenant within fifteen (15) days after written request therefor by
Landlord. Tenant shall at any time and from time to time furnish evidence to
Landlord of the amount of all such sums or other consideration received or
expected to be received.

(h) FORM FOR REVIEW. Simultaneously with the giving of the notice
described in Article 28(b) above, Tenant shall pay to Landlord or Landlord's
designee Landlord's actual costs incurred by Landlord in connection with
reviewing each such transaction. In addition to such reimbursement, if Landlord
retains the services of an attorney to review the transaction, Tenant shall pay
to Landlord all reasonable actual attorneys fees incurred by Landlord in
connection therewith. Tenant shall pay such attorneys' fees to Landlord within
fifteen (15) days after written request therefor.

(i) NO RELEASE OF TENANT. No consent by Landlord to any transfer or
subletting by Tenant shall relieve Tenant of any obligation to be performed by
Tenant under this Lease, whether occurring before or after such consent,
transfer or subletting. The consent by Landlord to any transfer or subletting
shall not relieve Tenant from the obligation to obtain Landlord's express prior
written consent to any other transfer or subletting. In no event shall any
permitted subtenant transfer its sublease, further sublet all or any portion of
its sublet space, or otherwise suffer or permit the sublet space, or any part
thereof, to be used or occupied by others, except upon compliance with, and
subject to, provisions of this Article. The acceptance by Landlord of payment
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any subsequent transfer or
sublease, or to be a release of Tenant from any obligation under this Lease. The
joint and several liability of Tenant and any immediate or remote successor in
interest to Tenant, and the due performance of the obligations of this Lease on
Tenant's part to be performed or observed,shall not be discharged, released or
impaired in any respect by any agreement or stipulation made by Landlord
extending the time of, or modifying any of the obligations of, this Lease, or by
any waiver or failure of Landlord to enforce any of the obligations of this
Lease.

(j) ASSUMPTION OF OBLIGATIONS. Each transferee of Tenant shall assume
all obligations of Tenant under this Lease and shall be and remain liable
jointly and severally with Tenant for the payment of the Rent and the
performance of all the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the term of this Lease. No
transfer shall be binding on Landlord unless the transferee or Tenant delivers
to Landlord a counterpart of the instrument of transfer in recordable form which
contains a covenant of assumption by the transferee satisfactory in substance
and form to Landlord, and consistent with the requirements of this Article. The
failure or refusal of the transferee to execute such instrument of assumption
shall not release or discharge the transferee from its liability to Landlord
hereunder. Landlord shall have no obligation whatsoever to perform any duty to
or respond to any request from any sublessee, it being the obligation of Tenant
to administer the terms of its subleases.

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<PAGE> 43
(k) CORPORATE OR PARTNERSHIP TRANSFERS. If the Tenant is a privately held
corporation, or is an unincorporated association or partnership, the cumulative
or aggregate transfer, assignment or hypothecation of fifty percent (50%) or
more of the total stock or interest in such corporation, association or
partnership shall be deemed an assignment or transfer within the meaning and
provisions of this Article. None of this Article shall apply to transactions
with a corporation (i) into or with which Tenant is merged or consolidated,
(ii) to which substantially all of Tenant's assets are transferred, or (iii)
that controls, is controlled by, or is under common control with Tenant,
provided that, in any of such events:
(i) The successor of Tenant has a net worth, computed in accordance
with generally accepted accounting principles, at least equal to the net worth
of Tenant herein named on the date of this Lease;
(ii) Proof satisfactory to Landlord of such net worth shall have been
delivered to Landlord at least ten (10) days prior to the effective date of
such transaction;
(iii) Any such assignment, sublease or transfer shall be subject to all
of the terms and provisions of this Lease, and such assignee, sublessee or
transferee shall assume, in a written document reasonably satisfactory to
Landlord and delivered to Landlord promptly upon the assignment, sublease or
transfer, all the obligations of Tenant under this Lease;
(iv) Tenant shall remain fully liable for all obligations to be
performed by Tenant under this Lease; and
(v) Tenant shall reimburse Landlord, promptly on demand, for Landlord's
reasonable actual attorneys' fees incurred in conjunction with the processing
and documentation of any such transaction.

(m) ASSIGNMENT OF SUBLEASE RENTS. Tenant immediately and irrevocably assigns
to Landlord, as security for Tenant's obligations under this Lease, all rent
from any subletting of all or any part of the Premises, and Landlord, as
assignee and as attorney-in-fact for Tenant for purposes hereof, or a receiver
for Tenant appointed on Landlord's application, may collect such rents and
apply same toward Tenant's obligations under this Lease; except that, until the
occurrence of an act of default by Tenant, Tenant shall have the right and
license to collect such rents and Landlord shall have no right to collect
such rents.

29. ATTORNMENT
If any proceeding is brought for default under any ground or underlying
lease to which this Lease is subject, or in the event of foreclosure or the
exercise of the power of sale under any mortgage or deed of trust made by
Landlord covering the Premises, Tenant shall attorn to the successor upon any
such foreclosure or sale and recognize that successor as Landlord under this
Lease, provided such successor expressly agrees in writing to be bound to all
future obligations by the terms of this Lease, and, if so requested, Tenant
shall enter into a new lease with that successor on the same terms and
conditions as are contained in this Lease (for the unexpired term of this Lease
then remaining).

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30. SUBORDINATION

Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, this Lease shall be
subject and subordinate at all times to: (i) all ground or underlying leases
which may now exist or hereafter be executed affecting the Premises, and (ii)
the lien of any first mortgage or first deed of trust which may now exist or
hereafter be executed in any amount for which the Premises, such ground or
underlying leases, or Landlord's interest or estate in any of them, is
specified as security. Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated any such ground or underlying
leases or any such liens to this Lease. If any ground or underlying lease
terminates for any reason, Tenant shall, notwithstanding any subordination,
attorn to and become Tenant of the successor in interest to Landlord at the
option of such successor in interest. Tenant covenants and agrees to execute
and deliver, upon demand by Landlord and in the form requested by Landlord, any
documents evidencing the priority or subordination of this Lease with respect
to any such ground or underlying leases or the lien of any such first mortgage
or first deed of trust, and specifically to execute, acknowledge, and deliver
to Landlord from time to time within ten (10) days after requested to do so a
subordination of lease, or a subordination of deed of trust, in substantially
the form set forth in Exhibit D or D-1 respectively, attached hereto, or such
other form as may be customarily required by any Mortgagee of Landlord.
Notwithstanding anything to the contrary contained herein, Tenant's obligation
to subordinate its rights hereunder to the lien of any first mortgagee, first
deed of trust or other subordination shall be conditioned upon Tenant receiving
from any party seeking such superior position a non-disturbance agreement to
the effect that so long as Tenant pays the rentals due under this Lease and
otherwise complies with the terms hereof, Tenant's occupancy hereunder shall
not be disturbed. Tenant shall agree to attorn directly to any such party.
Landlord agrees to provide Tenant with such non-disturbance agreement prior to
the Commencement Date of this Lease.

31. ESTOPPEL CERTIFICATE

Tenant shall from time to time within ten (10) days after prior
written notice from Landlord execute, acknowledge and deliver to Landlord a
statement in writing in the form set forth in Exhibit E attached hereto, or
such other form as may be customarily required by Landlord's Mortgagee, (i)
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, (ii) 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, and (iii)
containing such other matters as are set forth in such form. Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrancer of
the Premises. Tenant's failure to deliver such statement within such time shall
be conclusive upon Tenant that this Lease is in full force and effect, without
modification except as may be represented by Landlord, that there are no
uncured defaults in Landlord's performance, and that not more than one month's
Rent has been paid in advance. (See page 28a)

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ARTICLE 31 (Continued)
Estoppel Certificate

Landlord shall, at any time and from time to time, within ten (10) days
following notice from Tenant, execute, acknowledge and deliver to Tenant a
statement in writing prepared by Tenant and edited by Landlord, as appropriate,
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, the dates to which Tenant has paid rent,
adjustments to rent, and other charges in advance, if any, stating whether or
not to the best knowledge of Landlord, Tenant is in default in the performance
of any covenant, agreement or condition contained in this Lease and, if so,
specifying each such default of which Landlord may have knowledge, or
containing any other information or certifications which reasonably may be
requested by Tenant, any proposed assignee or sublessee of Tenant, or any
proposed lender of Tenant. Any such statement, delivered pursuant to this
Article, may be relied upon by any proposed assignee or sublessee or any
proposed lender of Tenant. Landlord's failure to deliver such statement within
such time shall be conclusive upon Landlord that the Lease is in full force and
effect, without modification, except as may be represented by Tenant, and that
there are no uncured defaults in Tenant's performance.

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33. QUIET ENJOYMENT

So long as Tenant pays all Rent and other sums due under this Lease,
performs its covenants and obligations under this Lease and recognizes any
successor to Landlord in accordance with the terms of this Lease, Tenant shall
lawfully and quietly have, hold and enjoy the Premises without hindrance or
molestation by Landlord or anyone claiming by, through or under Landlord,
subject, however, to all the provisions of this Lease.

34. WAIVER OF REDEMPTION BY TENANT

Tenant hereby waives for Tenant and for all those claiming under Tenant
all right now or hereafter existing to redeem by order or judgment of any court
or by any legal process or writ, Tenant's right of occupancy of the Premises
after any termination of this Lease.

35. WAIVER OF LANDLORD - TENANT'S PROPERTY

Landlord shall, within thirty (30) days after written request from
Tenant, execute and deliver to Tenant any statement in form acceptable to
Landlord as may be required by any supplier, lessor, installment seller or
chattel mortgagee in connection with the installation in the Premises of any
personal property or trade fixtures of Tenant, pursuant to which Landlord shall
agree to waive any rights it may have or may acquire with respect to any such
property, provided in all cases that such supplier, lessor, installment seller
or chattel mortgagee expressly agrees in writing that: (i) It will remove at
its sole cost and expense all such property from the Premises before the
expiration or termination of the Lease and if it fails to do so within ten (10)
days after written request from Landlord it shall be deemed to have waived any
and all rights it may have had to such property; (ii) Prior to making any such
removal it will advise Landlord in writing of the date and time of such removal
and will, at the time of such removal, allow a representative of Landlord to be
present; (iii) It will promptly and diligently and at its sole cost and expense
repair any and all damage to the Premises attributable to such removal and
shall restore the Premises to substantially the same condition it was in prior
to such removal; (iv) It will allow Landlord to select the person or persons
who will effect such removal, repair and restoration, and will bear the costs
and expenses thereof; (v) It will, if Landlord chooses not to exercise its
rights under (iv) above, cause a performance and completion bond, satisfactory
to Landlord, to be furnished to Landlord with regard to the work of such
removal, repair and restoration; (vi) It will promptly pay Landlord any costs
and expenses incurred by Landlord in connection with the enforcement of
Landlord's rights hereunder, including attorneys' fees, and will indemnify and
hold Landlord harmless against any and all claims, loss, cost or expense
arising out of or in connection with such removal, repair and restoration;
(vii) It will pay Landlord interest on any outstanding amounts payable by it to
Landlord at the "Agreed Rate" (as hereinafter defined); (viii) It will not
record such statement without Landlord's prior written consent which Landlord
may withhold in its sole discretion; and (ix) It will not assign its rights or
delegate its duties under such statement without Landlord's prior written
consent.

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36. RULES AND REGULATIONS

The Rules and Regulations attached hereto as Exhibit F are expressly
made a part hereof. Tenant agrees to comply with such Rules and Regulations and
any reasonable amendments, modifications or additions thereto as may hereafter
be adopted and published by notice to tenants in the Building, and to cause its
agents, contractors and employees to comply therewith, and that the violation
of any of them shall constitute a default by Tenant under this Lease. Landlord
agrees that the Building Rules and Regulations and the Parking Rules and
Regulations, attached to and made a part of the Lease, shall not be enforced in
any unreasonable way by Landlord nor enforced or changed by Landlord in such a
way as to interfere with the purposes permitted under Article 11 of the Lease.
If there is a conflict between the Rules and Regulations and any of the
provisions of this Lease, the provisions of this Lease shall prevail. Landlord
shall not be responsible to Tenant for the non-performance by any other tenant
or occupant of the Building or of the Project of any of the Rules and
Regulations.

37. NOTICES

Any notice, demand or communication required or permitted to be given
hereunder to Landlord by Tenant shall be personally served by a nationally or
locally recognized same-day courier service or deposited in the United States
mails, duly registered or certified with postage fully prepaid thereon,
addressed to Landlord at Landlord's address as set forth in Article 1 hereof, or
to such other address to which Tenant last forwarded Rent, or to such other
parties as Landlord may from time to time designate. Any notice, demand or
communication required or permitted to be given hereunder to Tenant by Landlord
shall be mailed as above stated to Tenant's address as set forth in Article 1
hereof or delivered personally by a nationally or locally recognized same-day
courier service to Tenant at the address set forth in Article 1 hereof. Either
party may by written notice similarly given designate a different address for
notice purposes, except that Landlord may in any event use the Premises as
Tenant's address for notice purposes after the Commencement Date. Notice shall
be effective three (3) days after the date when mailed or delivered as above
specified.

38. WAIVER

No delay or omission in the exercise of any right or remedy of either
party for any default by the other party shall impair such right or remedy or be
construed as a waiver. The receipt and acceptance by Landlord of delinquent
payments shall not constitute a waiver of any other default, and shall not
constitute a waiver of timely payment of the particular payment involved. No act
or conduct of Landlord, including, without limitation, the acceptance of keys to
the Premises, shall constitute an acceptance of the surrender of the Premises by
Tenant before the expiration of the term. Only an express notice to such effect
from Landlord to Tenant shall constitute acceptance of the surrender of the
Premises sufficient to terminate this Lease. Either party's consent to or
approval of any act by the other party requiring the first party's consent or
approval shall not constitute a consent or approval of any subsequent act by the
other party. Any waiver by either party of any default must be in writing and
shall not be a waiver of any other default concerning the same or any other
provision of this Lease.

39. MISCELLANEOUS

(a) EXECUTION BY LANDLORD. The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or an option for, the Premises. This document becomes effective
and binding only upon execution and delivery hereof by Tenant and by Landlord.
No act or omission of any employee or agent of Landlord or of Landlord's broker
shall alter, change or modify any of the provisions hereof.

(b) LANDLORD AND TENANT. As used in this Lease, the words "Landlord"
and "Tenant" include the plural as well as the singular. Words used in the
neuter gender include the masculine and feminine and words in the masculine or
feminine gender include the neuter. If there is more than one person or entity
constituting Landlord or Tenant, the obligations imposed hereunder upon
Landlord or Tenant are joint and several. If Tenant consists of a husband and
wife, the obligations of Tenant hereunder extend individually to the sole and
separate property of each of them as well as to their community property. The
obligations contained in this Lease to be performed by Landlord shall be
binding on Landlord's successors and assigns only during their respective
periods of ownership of the Premises.

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<PAGE> 48
(c) BROKERS. Either party shall hold the other party harmless
from all damages (including attorneys' fees and costs) resulting from any
claims that may be asserted against the other party by any broker, finder, or
other person claiming to have acted on behalf of such party, except the leasing
agent for the Building duly appointed by Landlord.

(d) SIGNS. Tenant shall not place or permit to be placed in
or upon the Premises, where visible from outside the Premises, or outside the
Premises on any part of the Building or Project, any signs, notices, drapes,
shutters, blinds, or displays of any type, without the prior written consent of
Landlord. Landlord reserves the right in its sole discretion to place and
locate on the roof or exterior of the Building, and in any area of the Project
not leased to Tenant, any signs, notices, displays and similar items as
Landlord deems appropriate. Notwithstanding the preceding, Landlord hereby
agrees that tenant may, subject to obtaining all requisite approvals from the
City of Irvine and subject also to compliance with the sign criteria for the
Project implemented by Landlord, install two (2) top building signs on the
Building identifying Tenant's name. Tenant shall bear all costs associated
with such sign, including costs of installation, maintenance and insurance;
upon the expiration or earlier termination of this Lease, Tenant shall remove
such sign at Tenant's expense, and shall repair any damage caused by such
removal. Tenant shall not install such sign unless Landlord's written approval
of the location, size, material, design and color thereof, and the means of
installation thereof, is first had and obtained. All such signage rights are
personal to Tenant and no transferee or subtenant of Tenant shall be entitled
to any such signage. The foregoing signage rights shall be exclusive, and
Landlord agrees that during the term of the Lease, it will not grant any other
tenant of the Building, or any other person, organization or entity the right
to install any sign on the top of the Building. Landlord hereby approves the
signage described on Exhibit G attached hereto.

(e) NAME OF BUILDING. Tenant shall not use the name of the
Project for any purpose other than the address of the business to be conducted
by Tenant in the Premises. Tenant shall not use any picture of the Building or
the Project in its advertising, stationery or in any other manner without
Landlord's prior written approval. Landlord expressly reserves the right at any
time to change the name of the Project without in any manner being liable to
Tenant therefor.

(f) PARKING. Subject to the Parking License Agreement
attached hereto and incorporated here during the term of this Lease. Tenant
shall only be entitled to such use of parking spaces in the parking areas
located in the Project as shall be confirmed in writing by the parties, and
absent any written agreement to the contrary, parking for Tenant and its
employees, agents, customers, invitees and licensees shall be on a first-come,
first-served basis, at rates and upon other terms and conditions as may be
established from time to time by Landlord or Landlord's operator of the parking
areas. Parking rates shall be hourly, weekly or monthly, or such other rate
system as Landlord deems advisable, and Tenant acknowledges that its employees
shall not be entitled to park in such parking areas located in and about the
Building Area which may from time to time be designated for visitors of the
Building. Landlord may also designate areas for assigned, reserved or employee
parking either within the parking areas located in and about the Building Area,
or in other areas reasonably close thereto. Landlord shall have the right to
change any such designated parking areas from time to time. Tenant may purchase
parking validations for its visitors and guests at Landlord's current rates for
such validations.

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<PAGE> 49
(h) APPROVAL OF LANDLORD'S MORTGAGEE. Tenant acknowledges that this
Lease is subject to the approval of Landlord's Mortgagee, and Tenant agrees to
make such reasonable modifications to this Lease as may be ordinarily and
customarily requested by Landlord's Mortgagee, so long as such modifications
shall not affect the Rent payable hereunder, increase Tenant's obligations
hereunder, reduce Tenant's rights hereunder or otherwise adversely affect
Tenant in any material way.

(i) LANDLORD'S FINANCING. In connection with Landlord's financing of
the Premises or any other part of the Project, if Landlord's Mortgagee requires
Tenant to execute, acknowledge and deliver to Landlord or Landlord's Mortgagee
certain documents as may be ordinarily and customarily required by such lender
in connection with financing, including without limitation those documents as
may be required under Articles 30 and 31 of this Lease, Tenant shall be
responsible for any and all liability, loss, cost, damage, and expense
(including without limitation the differential cost of interest charged between
Landlord's interim lender and such Mortgagee, and attorneys' fees) which
Landlord may sustain or incur as a result of or in connection with Tenant's
failure or delay in executing, acknowledging and delivering such documents, or
Tenant's breach of any other covenant or agreement embodied in this Lease that
results in the delay, impairment or cancellation of Landlord's financing.

(j) NONRECORDABILITY OF LEASE. Tenant agrees that in no event shall
this Lease or a memorandum hereof be recorded without Landlord's express prior
written consent. Landlord agrees that in no event shall this Lease or a
memorandum thereof be recorded without Tenant's express prior written consent.

(k) MATTERS OF RECORD. This Lease and Tenant's rights hereunder are
subject and subordinate in all respects to matters affecting Landlord's title
recorded in the official records of the county recorder's office for the county
in which the Project is located prior or subsequent to the date of execution of
this Lease, and is expressly subject and subordinate to the following:
Declaration of Restrictions Irvine Industrial Complex dated May 20, 1965 and
recorded May 21, 1965 as Document No. 16662 in the Official Records of Orange
County, State of California and a Declaration Establishing Reciprocal Parking
Easements dated December 31, 1985 and recorded on September 5, 1986 as Document
No. 86-405189 in the Official Records of Orange County, State of California.
Tenant agrees that as to its leasehold estate it, and all persons in possession
or holding under it, will conform with and will not violate any such covenants,
conditions and restrictions, or other matters, of record.

(l) SEVERABILITY. If any provision of this Lease shall, to any extent,
be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
every other term and provision of this Lease shall be valid and enforceable to
the fullest extent permitted by law.

(m) CONSTRUCTION. All provisions hereof, whether covenants or
conditions, shall be deemed to be both covenants and conditions. The
definitions contained in this Lease shall be used to interpret this Lease.

(n) INTEREST. Except as expressly provided otherwise in this Lease, any
amount due to Landlord which is not paid when due and any amount due to Tenant
which is not paid when due shall bear interest from the date due at the prime
commercial rate of interest charged from time to time by Citibank N.A. plus two
percent (2%) per annum, but not to exceed the maximum rate of interest allowable
under the law (the "Agreed Rate"). Payment of such interest shall not excuse or
cure any default by Tenant or Landlord under this Lease.

(o) BINDING EFFECT; CHOICE OF LAW. Except as expressly provided
otherwise in this Lease, all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of California.

(p) TIME; RIGHTS CUMULATIVE. Time is of the essence of this Lease and
each and every provision hereof, except as to the provisions relating to
delivery of possession of the Premises to Tenant. All rights and remedies of
the parties shall be cumulative and non-exclusive of any other remedy at law or
in equity.

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(q) INABILITY TO PERFORM. This Lease and the obligations of Tenant and
Landlord hereunder shall not be affected or impaired because Landlord or Tenant
is unable to fulfill any of its obligations except monetary obligations
hereunder or is delayed in doing so, if such inability or delay is caused by
reason of force majeure, strike, labor troubles, acts of God, acts of
government, unavailability of materials or labor, or any other cause beyond the
control of Landlord or Tenant.

(r) CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of Tenant represents and warrants that he is
duly authorized to execute and deliver this Lease on behalf of Tenant, and that
Tenant is qualified to do business in the State of California, and shall
deliver appropriate certification to that effect if requested.

(s) PARTNERSHIP AUTHORITY. If Tenant is a partnership, joint venture,
or other unincorporated association, each individual executing this Lease on
behalf of Tenant represents that this Lease is binding on Tenant. Furthermore,
Tenant agrees that the execution of any written consent hereunder, or of any
written modification or termination of this Lease, by any general partner of
Tenant or any other authorized agent of Tenant, shall be binding on Tenant. If
Landlord is a partnership, joint venture or other unincorporated association,
each individual executing this Lease on behalf of Landlord represents that this
Lease is binding on Landlord. Furthermore, Landlord agrees that the execution
of any written consent hereunder, or of any written modification or
termination of this Lease, by any general partner of Landlord or any authorized
agent of Landlord, shall be binding on Landlord.

(t) SUBMITTAL OF FINANCIAL STATEMENT. At any time and from time to
time during the term of this Lease, within fifteen (15) days after request
therefor by Landlord but no more often than once per year, Tenant shall supply
to Landlord and/or any Mortgagee a current certified financial statement or such
other certified financial information as may be required by any such party.

(u) RIDERS. Clauses, plats, addenda, and riders, if any, that are
signed by Landlord and Tenant and affixed to this Lease, are a part hereof.

40. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS

This Lease contains all of the agreements of the parties hereto with
respect to any matter covered or mentioned in this Lease, and no prior
agreement, negotiations, brochures, arrangements, or understanding pertaining
to any such matter shall be effective for any purpose unless expressed herein.
No provisions of this Lease may be amended or added to except by an agreement
in writing signed by the parties hereto or their respective successors in
interest.
41., 42., 43., 44., 45. & 46. (See Addendum)

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the last
date indicated below.

LANDLORD: TENANT:

MICHELSON CO., a general partnership CITICORP NORTH AMERICA, INC.,
a Delaware corporation

By: SC ENTERPRISES, a limited By: [sig illegible]
partnership, partner ---------------------------
Title: [ILLEGIBLE]
By: /s/ Shurl Curci -------------------------
---------------------------- By: [sig illegible]
Shurl Curci, general partner ---------------------------
Title: Vice President Citicorp
By: [sig illegible] North America, Inc.
---------------------------- DATED this 21 day of March, 1988
Attorney in fact

DATED this 22 day of March, 1988

<PAGE> 51
ADDENDUM TO LEASE BY AND BETWEEN MICHELSON CO., A GENERAL PARTNERSHIP, AS
LANDLORD, AND CITICORP NORTH AMERICA, INC., A DELAWARE CORPORATION, AS TENANT,
IN 2600 MICHELSON

ARTICLE 41 -- RIGHT OF FIRST OFFER

So long as Tenant is not in default under this Lease, Tenant shall have
a Right of First Offer to lease any contiguous space becoming available on the
eleventh (11th) floor of the Building (the "First Offer Space") in accordance
with the following:

(a) Upon notice of the future termination of any lease of
contiguous space on the eleventh (11th) floor, and prior to Landlord entering
into a lease for all or any portion thereof to any third party, Landlord shall
offer such First Offer Space to Tenant at the then prevailing fair market
rental rate per square foot for comparable space in the competitive market
area, and upon all the other terms and conditions of this Lease, other than the
provisions of this paragraph and any provisions providing for a tenant
improvement allowance to be paid by Landlord and provided further than any
provisions for free rent or free parking or fixed parking rates or any parking
spaces in excess of the Building Standard parking ratio provided in this Lease
or in the License attached hereto shall not be applicable to a lease by Tenant
of such First Offer Space. As used herein, the term "prevailing fair market
rental rate" for the First Offer Space shall mean the effective rental and all
other monetary payments and escalations, including without limitation, consumer
price indexing, that Landlord could obtain from a third party desiring to lease
the First Offer Space for the remaining terms of this Lease taking into account
the age of the Building, the size, location and floor level of the First Offer
Space, the quality of construction of the Building and the First Offer Space,
the services provided in the Building, the effective net rental then being
obtained for new leases of space comparable to the First Offer Space in the
locality of the Building (taking into account the free rent or other
concessions being granted to new tenants in such locality) and all other
factors that would be relevant to a third party desiring to lease the First
Offer Space for the remaining term of this Lease in determining the rental such
party would be willing to pay therefor ("Landlord's Offer"). If, for example,
comparable leases give a new non-equity tenant comparable space at $40.00 per
rentable square foot, with a $10.00 tax and expense base amount (stop), five
(5) months at no rent to construct improvements, four (4) months' free rent,
$50.00 per usable square foot tenant improvement allowance, a lease takeover
worth $100,000, and certain other generally applicable economic terms, the
prevailing fair market rental rate shall not be $40.00 per rentable square
foot only, but shall be $40.00 per rentable square foot, five (5) months at no
rent to construct improvements, or five months' additional free rent in lieu of
such construction, four (4) months' free rent, a $10.00 tax and expense base
amount (stop), $50.00 per usable square foot tenant improvement allowance or
$50.00 per usable square foot in lieu of such allowance, $100,000 in lieu of a
lease takeover, and the other generally applicable economic terms.

(b) If Tenant elects to lease the First Offer Space, Tenant shall,
within ten (10) days after its receipt of Landlord's Offer, give Landlord
written notice of its election to lease the First Offer Space so offered by
Landlord. In its election notice, Tenant shall advise Landlord whether or not
Tenant agrees with Landlord's opinion of the prevailing fair market rental rate
for the First Offer Space. Failure of Tenant to deliver to Landlord a written
notice thereof within such time period shall be deemed a rejection by Tenant of
such First Offer Space. If Tenant accepts such First Offer Space but does not
accept Landlord's determination of the prevailing fair market rental rate, then
Landlord and Tenant shall thereupon execute an Amendment to Lease

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adding such First Offer Space to this Lease and Tenant shall pay Rent for such
First Offer Space at the rate proposed in Landlord's Offer until such time as
the prevailing fair market rental rate is determined pursuant to the appraisal
procedure set forth in Article 46 of this Lease. In the event it is determined
that less Rent is due, Landlord shall refund to Tenant the excess due, if any,
within ten (10) days after notice to Landlord of the decision of such
appraisers.

(c) If Tenant rejects or is deemed to have rejected Landlord's
Offer, Tenant's rights hereunder shall be deemed to have terminated as to the
space being offered and Landlord shall be free for a period of six (6) months to
lease all or any portion of said space to any party Landlord chooses upon the
same terms and conditions offered to Tenant but not on terms any more favorable
to such party than were offered to Tenant under subparagraph (a) above. If
Landlord offers such space to any third party on terms more favorable than those
which were offered to Tenant under subparagraph (a) above, then Landlord shall
be required to first offer such space on the same terms to Tenant pursuant to
the procedure set forth herein.

(d) If Tenant accepts Landlord's Offer in accordance with the
provisions hereof, Landlord and Tenant shall thereupon execute an Amendment of
this Lease adding such First Offer Space to this Lease in accordance with the
provisions of subparagraph (a) above. If Tenant fails to execute said Amendment
within thirty (30) days after Landlord furnishes same to Tenant, the acceptance
of Landlord's Offer shall be deemed to have been rejected by Tenant and
thereupon the provisions of subparagraph (c) above shall apply.

ARTICLE 42 - OPTION TO EXPAND

So long as this Lease is in full force and effect and Tenant is not in
default of this Lease, Tenant shall have the option, to lease 2,000-4,000
square feet of rentable area on the eleventh (11th) floor contiguous to the
Premises (the "Expansion Space") at the expiration of each of the thirty-sixth
(36th), sixtieth (60th) and eighty-fourth (84th) months of the Lease term.
Tenant shall give one hundred eighty (180) days prior written notice to
Landlord of its election to lease the Expansion Space (the "Expansion Notice")
and Landlord shall deliver such space to Tenant at anytime within six (6)
months BEFORE OR AFTER the above-referenced dates of the Lease term and in such
increments as Landlord shall determine in its reasonable discretion.

Said option is subject to the following terms, conditions and
exceptions:

A. Within twenty (20) days of Landlord's receipt of Tenant's
Expansion Notice, Landlord shall offer such Expansion Space to Tenant at the
then prevailing fair market rental rate per square foot for comparable space in
the competitive market area, and upon all the other terms and conditions of this
Lease, other than the provisions of this paragraph and any provisions providing
for a tenant improvement allowance to be paid by Landlord and provided further
that any provisions for free rent or free parking or fixed parking rates or any
parking spaces in excess of the Building Standard parking ratio provided in this
Lease or in the License attached hereto shall not be applicable to a lease by
Tenant of such Expansion Space. As used herein, the term "prevailing fair market
rental rate" for the Expansion Space shall mean the effective rental and all
other monetary payments and escalations, including without limitation, consumer
price indexing, that Landlord could obtain from a third party desiring to lease
the Expansion Space for the remaining term of this Lease taking into account the
age of the Building, the size, location and floor level of the Expansion Space,
the quality of

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<PAGE> 53
construction of the Building and the Expansion Space, the services provided in
the Building, the effective net rental then being obtained for new leases of
space comparable to the Expansion Space in the locality of the Building (taking
into account the free rent or other concessions being granted to new tenants in
such locality) and all other factors that would be relevant to a third party
desiring to lease the Expansion Space for the remaining term of this Lease in
determining the rental such party would be willing to pay therefor ("Landlord's
Offer"). If, for example, comparable leases give a new non-equity tenant
comparable space at $40.00 per rentable square foot, with a $10.00 tax and
expense base amount (stop), five (5) months at no rent to construct
improvements, four (4) months' free rent, $50.00 per usable square foot tenant
improvement allowance, a lease takeover worth $100,000, and certain other
generally applicable economic terms, the prevailing fair market rental rate
shall not be $40.00 per rentable square foot only, but shall be $40.00 per
rentable square foot, five (5) months at no rent to construct improvements, or
five months' additional free rent in lieu of such construction, four (4)
months' free rent, a $10.00 tax and expense base amount (stop),
$50.00 per usable square foot tenant improvement allowance or $50.00 per usable
square foot in lieu of such allowance, $100,000 in lieu of a lease takeover, and
the other generally applicable economic terms.

(b) If Tenant elects to lease the Expansion Space, Tenant shall, within
ten (10) days after its receipt of Landlord's Offer, give Landlord written
notice of its election to lease the Expansion Space so offered by Landlord. In
its election notice, Tenant shall advise Landlord whether or not Tenant agrees
with Landlord's opinion of the prevailing fair market rental rate for the
Expansion Space. Failure of Tenant to deliver to Landlord a written notice
thereof within such time period shall be deemed a rejection by Tenant of such
Expansion Space. If Tenant accepts such Expansion Space but does not accept
Landlord's determination of the prevailing fair market rental rate, then
Landlord and Tenant shall thereupon execute an Amendment to Lease adding such
Expansion Space to this Lease and Tenant shall pay Rent for such Expansion Space
at the rate proposed in Landlord's Offer until such time as the prevailing fair
market rental rate is determined pursuant to the appraisal procedure set forth
in Article 46 of this Lease. In the event it is determined that less Rent is
due, Landlord shall refund to Tenant the excess due, if any, within ten (10)
days after notice to Landlord of the decision of such appraisers.

C. If for any reason Tenant fails to properly give the Expansion
Notice, or if Tenant properly gives the Expansion Notice but thereafter for any
reason (except for Landlord's fault) does not timely enter into the Expansion
Amendment, Landlord will be free to rent the Expansion Space to another tenant
but Tenant's right to Lease the Expansion Space as of the expiration of the
sixtieth (60th) and eighty-fourth (84th) months of the Lease term shall not be
affected by its failure to timely give the Expansion Notice prior to the
expiration of the thirty-sixth (36th) month, or prior to the expiration of the
thirty-sixth (36th) and sixtieth (60th) months, respectively.

ARTICLE 43 -- CONSENTS/DUTY TO ACT REASONABLY

Regardless of any reference to the words "sole" or "absolute", except for
matters which could have an adverse effect on the Building's HVAC system,
plumbing system electrical system or life safety systems, or which could affect
the exterior appearance of the Building, any time the consent of Landlord or
Tenant is required, such consent shall not be unreasonably withheld or delayed.
Whenever the Lease grants Landlord or Tenant the right to take action, exercise
discretion, establish rules and regulations, or make an allocation or other
determination,

-33c-

<PAGE> 54
Landlord and Tenant shall act reasonably and in good faith and take
no action which might result in the frustration of the other party's
reasonable expectations concerning the benefits to be enjoyed under
the Lease. If either Landlord or Tenant withholds consent or
approval, such party shall, upon request, deliver to the other party
a written statement specifying in detail the reason or reasons why
such consent or approval was refused.

ARTICLE 44 -- QUALITY OF CONSTRUCTION/STANDARDS FOR MAINTENANCE AND REPAIR

Landlord hereby warrants to Tenant that the Building and that
portion of the Premises already constructed and to be constructed by
Landlord or Landlord's contractor have been and will be constructed
in a first-class manner and in full compliance with all governmental
regulations, ordinances, and laws existing at the time of
construction in order to make the Building and the Premises suitable
for occupancy by Tenant utilizing the space for business offices.
Landlord will be fully responsible for making all alterations and
repairs to the Building and the Premises resulting from or
necessitated by the failure of Landlord and or Landlord's contractor
to comply with governmental regulations, ordinances and laws in
effect at the time the Building and Premises were constructed, or the
utilization by Landlord and/or Landlord's contractor of asbestos or
hazardous wastes, at its cost, which cost shall not be included as
Direct Costs or Indirect Costs.

ARTICLE 45 -- ARBITRATION

Either party may request arbitration of any matter in dispute wherein
arbitration is expressly provided in this Lease as the appropriate
remedy. The party requesting arbitration shall do so by giving notice
to that effect to the other party, and both parties shall promptly
thereafter jointly apply to the American Arbitration Association (or
any organization successor thereto) in the City and County of Los
Angeles for the appointment of a single arbitrator.

The arbitration shall be conducted in accordance with the then
prevailing rules of the American Arbitration Association (or any
organization successor thereto) in the City and County of Los
Angeles. In rendering such decision and award, the arbitrator shall
not add to, subtract from or otherwise modify the provisions of this Lease.

If for any reason whatsoever a written decision and award of the
arbitrator shall not be rendered within sixty (60) days after the
appointment of such arbitrator, then at any time thereafter before
such decision and award shall have been rendered either party may
apply to the Supreme Court of the State of California or to any other
court having jurisdiction and exercising the functions similar to
those now exercised by such court, by action, proceeding or otherwise
(but not by a new arbitration proceeding) as may be proper to
determine the question in dispute consistently with the provisions of
this Lease.

In any such proceeding the prevailing party (as determined by the
arbitrator(s) therein) shall be entitled to recover its costs and
expenses (including attorney's fees) from the other party.

ARTICLE 46 -- APPRAISAL

In each case under this Lease in which this Lease provides that a
particular prevailing fair market rent shall be determined by
appraisal, said appraisal shall be conducted in accordance with the
following procedures:

-33d-
<PAGE> 55
(a) Within ten (10) days after receipt of a notice to appraise given by
either party, Landlord and Tenant shall each select a real estate appraiser, who
shall be a member of the American Institute of Appraisers, and who shall have at
least five (5) years appraisal experience with respect to commercial and office
rental properties in the Cities of Costa Mesa or Irvine, California. If one of
the parties hereto fails to appoint an appraiser within the time period
prescribed, then the single appraiser appointed shall be the sole appraiser and
shall determine the prevailing fair market rent at issue. If two appraisers are
appointed, they shall have twenty (20) days from the date the second appraiser
is appointed (the "20-day Appraisal Period") within which to agree upon the
prevailing fair market rental at issue. The appraiser(s) shall be advised that
the determination of the prevailing fair market rent at issue shall be governed
by the definition of same set forth in this Lease. The determination of the
prevailing fair market rent at issue by the two appraisers shall be binding on
Landlord and Tenant.

(b) If the two appraisers appointed by the parties hereto are unable to
agree upon the prevailing fair market rent at issue within the 20-day Appraisal
period, then said appraisers shall attempt, within the 20-day Appraisal Period,
then said appraisers shall attempt, within ten (10) days after the expiration
of the 20-day Appraisal Period, to select a third appraiser (the "Third
Appraiser"). If the first two appraisers are unable to agree on the Third
Appraiser within the ten (10) day period prescribed in the immediately
preceding sentence, either Landlord or Tenant, by giving ten (10) days notice
to the other party hereto, shall request that the presiding judge of the court
of general jurisdiction for the county in which the Building is located select
the Third Appraiser. The Third Appraiser, however selected, shall meet the
qualifications set forth in subparagraph (a) above, and shall be a person who
has not previously acted in any capacity for either Landlord or Tenant.

(c) On the tenth day after the Third Appraiser is appointed or selected,
the first two appraisers shall each simultaneously submit in a sealed envelope
his/her opinion of the prevailing fair market rent at issue together with any
written arguments or data in support of said opinion(s), to the Third Appraiser.
Within thirty (30) days after he/she is appointed or selected, the Third
Appraiser shall determine the prevailing fair market rent at issue which shall
be equal to one of the opinions submitted by the first two appraisers. The
determination of the Third Appraiser shall be binding on Landlord and Tenant.

(d) Each party hereto shall pay the fees and expenses of the appraiser
selected by such party, and the fees and expenses of the Third Appraiser shall
be borne equal by Landlord and Tenant.

/s/ Signature illegible /s/ Signature illegible
- ------------------------------------ ------------------------------------
LANDLORD'S INITIALS TENANT'S INITIALS

/s/ Mohamed A. Hamir
MOHAMED A. HAMIR
Vice President
Citicorp North America, Inc.

-33e-
<PAGE> 56

2600 MICHELSON

[ELEVENTH FLOOR PLAN]

EXHIBIT A(1)
<PAGE> 57

2600 MICHELSON

[TWELTH FLOOR PLAN]

EXHIBIT A(2)
<PAGE> 58

2600 MICHELSON

[SITE PLAN]

EXHIBIT A-1
<PAGE> 59
EXHIBIT B

VERIFICATION OF TERM AND INITIAL RENT

RE: Lease dated _______________ between _______________________________
___________________________________________________________ ("Landlord") and
_________________________________________________ ("Tenant") for premises in
_________________________________________________________. Tenant hereby
verifies that the dates and amounts stated below are correct and further
acknowledges and accepts possession of the Premises.

Area: _______________________ (rentable/usable/gross)
sq. ft.
Commencement Date: _______________________
Termination Date: _______________________
Options: _______________________
Initial Rent: _______________________
Address for Notices: _______________________
_______________________
_______________________
_______________________
Billing Address: _______________________
_______________________
_______________________
_______________________
ATTN: _______________________
Telephone Number: ( )

By: __________________________
Title: __________________________
Date: __________________________
<PAGE> 60
EXHIBIT C

CONSTRUCTION PROVISIONS

These provisions define the scope of work to be provided by Landlord
in the Premises under the terms of the Lease. Words and phrases used herein
which are defined in the Lease have the meanings set forth therein unless
provided otherwise.

It is the intent of these provisions that Tenant shall be permitted
freedom in the interior design and layout of its space so long as same is
consistent with Landlord's policies and structural requirements, applicable
building codes, and with sound architectural and construction practices, and
provided further that no interference is caused to the operation of the
Building's mechanical heating, cooling or electrical systems or structure, or
other Building operations or functions, and that no increase in maintenance,
insurance, taxes, fees or utility charges will be incurred by Landlord or the
other tenants in the Building as a result thereof. Any additional cost of
design, construction, operation, insurance, maintenance, taxes, fees or
utilities which results from Over Standard Work (as hereinafter defined) shall
be charged to Tenant and paid for by Tenant in accordance with the provisions
hereof and of the Lease.

1. ALLOWANCE FOR BUILDING STANDARD WORK. Landlord hereby grants
Tenant a construction allowance not to exceed $30.00 per usable sq. ft. of
Premises which allowance shall be used only as a credit towards the cost of the
following services and materials (hereinafter referred to as "Building Standard
Work"):

(a) The services of Tenant's space planner to prepare one
(1) approved space layout and one (1) set of approved working drawings (with
five (5) prints and the services of Landlord's space planner to review Tenant's
plans.

(b) The construction of the improvements and the
installation of the items shown in Schedule A attached hereto, which shall be
installed in the Premises substantially in accordance with the Plans
hereinafter defined (as used in the Lease and this Exhibit C, the term
"Building Standard" refers to the level of improvement to the Premises that is
shown in Schedule A).

(c) Engineering fees and Permits and license fees
relating to construction of Tenant's improvements. Notwithstanding anything to
the contrary contained herein, any unused construction allowance will be applied
towards the Rent due hereunder.

2. OVER STANDARD WORK. All costs incurred in excess of the
foregoing allowance for other improvements, services or materials required by
Tenant in or for the Premises (hereinafter referred to as "Over Standard Work")
shall be for the account of Tenant and at Tenant's sole cost and expense.
Tenant shall pay building lifting charges (if any) for Over Standard Work to
the extent the same are not otherwise included in the cost of Building Standard
Work.

3. SPACE PLANNER. Tenant shall use the services of the space
planner retained by Tenant to prepare a space layout and working drawings and
specifications for all construction work on the Premises. Interior design, and
details and specifications for improvements other than Building Standard, shall
be for the account of Tenant and shall be paid by Tenant upon invoice therefor.
Tenant shall devote such time in consultation with Tenant's space planner as
shall be necessary to enable the planner to develop complete working drawings
and specifications (hereinafter referred to as the "Plans") for construction of
improvements in the Premises, showing thereon partitions, doors, electrical and
telephone outlets, light fixture locations, wall finishes, floor coverings and
special requirements (if any) for Landlord's review and approval. Failure of
Tenant to provide the Plans to Landlord within the time limit specified in
paragraph 5 hereof shall be deemed a Tenant-caused delay and shall be subject
to the provisions of Section 10 of this Exhibit C. If Tenant requests or
necessitates any changes or revisions in the Plans prepared by the space
planner, Tenant shall bear all costs associated therewith.

C(1)
<PAGE> 61

4. COST ESTIMATES. As soon as practicable after Tenant's approval
of the Plans, and submission thereof to Landlord, Landlord will advise Tenant of
the estimated cost payable by Tenant due to improvements, services or materials
in excess of the construction allowance for Building Standard Work (i.e. the
estimated cost for Over Standard Work), which cost shall include architectural
and engineering expenses, contractors' fees, and a fee payable to Landlord's
Tenant Coordinator equal to five percent (5%) of the cost of the Over Standard
Work as reimbursement for the expense of administration and coordination of
such work by Landlord's Tenant Coordinator. Landlord will have no obligation
whatsoever to commence construction of any improvements in the Premises unless
Tenant pays such estimated costs in advance, and Landlord's refusal to proceed
under such circumstances shall not defer the Commencement Date. Upon Tenant's
authorization to proceed and payment of such estimated costs, Landlord shall
commence the construction of improvements in the Premises. Upon substantial
completion of the Premises (which in the event of dispute shall be determined
by Landlord's project architect pursuant to AIA standards), Tenant shall pay
the amount of actual costs in excess of such estimated costs previously paid by
Tenant or, if the actual costs are less than such estimated costs previously
paid by Tenant, Landlord shall reimburse the difference to Tenant. If Tenant
fails to make such payment within thirty (30) days after receipt of a demand
therefor, Landlord shall have the same rights and remedies as in the case of a
default by Tenant in the payment of Rent under the Lease, and interest will
accrue thereon at the Agreed Rate.

5. TIME LIMITS. The following maximum time periods shall be
allowed for the indicated matters:

Time Limit After Completion of
Action Preceding Item

(a) Tenant meets with Tenant's space February 2, 1988
planner and submits approved
space layout.
(b) Tenant furnishes completed February 19, 1988
architectural drawings and stairwell
details to Landlord.
(c) Landlord submits engineered March 11, 1988
drawings to Tenant for review and
approval.
(d) Tenant gives Landlord its March 18, 1988
approval of working drawings, with
any required changes in detail and
authorizes Landlord to proceed.
(e) Landlord quotes estimated costs 10 business days
to Tenant for Over Standard Work.
(f) Tenant approves such estimated 5 business days
costs and pays the amount thereof to
Landlord, and authorizes Landlord to
proceed.
(g) Upon substantial completion of the
improvements in the Premises (i.e.,
exclusive of punchlist items) Tenant
shall pay the entire then remaining
balance of actual costs in excess of
the construction allowance within
thirty (30) days after its receipt of
a billing statement from Landlord.

It is expressly acknowledged by Tenant that inaccurate or incomplete
information furnished by Tenant may cause delays and that delays in the time
schedule set forth in this paragraph 5 attributable to Tenant, its agents or
contractors will result acceleration of the Commencement Date as set forth in
paragraph 10 hereof.

C(2)
<PAGE> 62
6. CONSTRUCTION BY LANDLORD'S CONTRACTOR. Unless otherwise agreed
in writing in this Exhibit C, all construction work in the Premises including
Over Standard Work shall be performed by the Tenant Improvement Contractor ("TI
Contractor") retained by Landlord. The TI Contractor shall perform such work in
a good and workmanlike manner and shall construct the improvements in the
Premises substantially in accordance with the Plans. All such construction work
shall be performed in accordance with all laws, ordinances and requirements of
government agencies having jurisdiction. If Landlord shall, pursuant to this
Exhibit C, permit Tenant to have any work performed by a contractor retained by
Tenant rather than by the TI Contractor, then (i) Tenant shall use only such
contractor as shall have first been approved by Landlord; (ii) such contractor
shall be bondable and shall use union employees only, except that such
contractor may use non-union employees only if prior to the commencement of any
work Tenant shall purchase and deliver to Landlord and indemnity bond fully
protecting Landlord against any and all loss or damage that may result from any
work stoppage or interruption arising from the use of such non-union employees;
(iii) Landlord will permit entry of such contractor into the Premises for the
purpose of performing such work, prior to commencement of the term of the
Lease, and while the TI Contractor is working at the Premises, but only at such
time or times as Landlord shall deem feasible in the circumstances: (iv) such
license to enter before commencement of the term is expressly conditioned upon
the contractor retained by Tenant working in harmony and not interfering with
the workmen, mechanics and contractors of Landlord or of any other tenant in
the Building or the Project, and if at any time such entry or work by Tenant's
contractor shall cause any disharmony or interference, such permission to enter
may be withdrawn by Landlord immediately upon written notice to Tenant; (v)
worker's compensation, public liability and property damage insurance, all in
amounts and with companies and on forms satisfactory to Landlord, shall be
provided and at all times maintained by Tenant's contractor, and before
proceeding with the work, certificates of such insurance shall be furnished to
the Landlord; (vi) such entry shall be deemed to be under all the terms,
covenants, provisions and conditions of the Lease, except the covenant to pay
Rent and Expenses; and (vii) all materials, work, installations and decorations
of any nature whatsoever brought on or installed in the Premises before the
commencement of the term of the Lease shall be at Tenant's risk, and neither
Landlord nor any party acting on Landlord's behalf shall be responsible for any
damage thereto or loss or destruction thereof.

7. TENANT COORDINATOR. Landlord has designated a "Tenant
Coordinator" who shall be responsible for the implementation of all work to be
performed by Landlord in the Premises. With regard to all matters involving
such work, Tenant shall communicate with the Tenant Coordinator rather than
the TI contractor. Landlord shall not be responsible for any statement,
representation or agreement made between Tenant and TI Contractor. It is hereby
expressly acknowledged by Tenant that such TI Contractor is not Landlord's
agent and has no authority whatsoever to enter into agreements on Landlord's
behalf or otherwise bind Landlord. The Tenant Coordinator will furnish Tenant
with notices of substantial completion, cost estimates for Over Standard Work,
Landlord's approvals or disapprovals of Plans and changes thereto, billings for
actual costs of Over Standard Work and other similar notices. Tenant shall
deliver all payments required hereunder to the Tenant Coordinator unless
written notice is given to the contrary. The Tenant Coordinator shall be Keith
Holmes.

8. CHANGES. If Tenant requests or necessitates any change,
addition or deletion to Premises after approval of the Plans, as described in
paragraph 5(d) above, a request for the change shall be submitted to the Tenant
Coordinator accompanied by revised plans prepared by Tenant's space planner at
Tenant's sole expense. The Tenant Coordinator shall thereafter notify Tenant in
writing of the estimated cost which will be chargeable to Tenant by reason of
such change addition or deletion. Such estimated cost shall include Landlord's
cost of any delay in completion of the premises resulting from such change
(including, but not limited to, loss of income, additional interest, penalties,
and extra labor costs incurred in order to minimize further delay). Tenant
shall within five (5) business days thereafter notify the Tenant Coordinator in
writing whether it desires to proceed with such change. In the absence of such
written authorization and payment in full of the total estimated cost within
that five (5) day period, Landlord shall not be obligated to perform such
change and shall be deemed to have been authorized by Tenant to proceed without
making such change.

C(3)
<PAGE> 63
9. SUBSTITUTIONS. Tenant may select different new materials
(except exterior window draperies or levelors which will be installed by
Landlord for all exterior windows) in substitution for the materials specified
as the Building Standard, provided the selection is indicated on the approved
Plans.

10. RESPONSIBILITY FOR DELAYS. Tenant hereby expressly agrees that
if Tenant is responsible for any delay in substantial completion of the
Premises, whether by reason of (i) failure to meet the time schedule set forth
in paragraph 5 above, (ii) delays in performance or completion by a party
employed by Tenant, (iii) building code problems arising from Tenant's design,
or (iv) an unapproved change in the work necessitated by Tenant, Landlord will
suffer loss or damage (which loss or damage may include administrative costs,
attorney's fees, excess interest penalties and loss of income), the amount of
which would be extremely difficult to ascertain. Therefore, it is expressly
agreed that for each day of such delay attributable to Tenant the Commencement
Date shall be accelerated as set forth in Article 10 of the Lease. Furthermore,
if Tenant unreasonably fails to approve the Plans within ninety (90) days after
execution of the Lease or fails to pay the estimated costs of Over Standard
Work within thirty (30) days after the same become due and payable. Landlord
may cancel the Lease upon written notice to Tenant and in such event Landlord
shall not be precluded by reason of the foregoing from recovering any
additional damages it may suffer as a result of such cancellation. It is
acknowledge and agreed by Tenant that notwithstanding the provisions for
accelerated Commencement Date provisions, from pursuing any rights or remedies
available under the law for losses incurred as a result thereof.

11. INCORPORATION BY REFERENCE. This Exhibit is and shall be
incorporated by reference in the Lease, and all of the terms and provisions of
the Lease are incorporated herein by this reference. Schedule A to this
Exhibit, setting forth the Building Standard to be furnished by Landlord, is
hereby incorporated by this reference in the Lease and in this Exhibit.

12. ATTORNEYS' FEES. In the event of any action or proceeding
initiated by a party hereto for the enforcement or interpretation of the
provisions contained herein, the prevailing party shall be entitled to recover
its costs incurred in connection therewith, including its attorneys' fees.

13. CLEANING. Landlord shall thoroughly clean the Premises
immediately before and after Tenant's move into the Premises.

C(4)
<PAGE> 64
BUILDING STANDARD IMPROVMENTS

2600 MICHELSON/IRVINE

BUILDING STANDARD/ TENANT IMPROVMENTS
SPECIFICATION

Demising Partition:

a. 2-1/2" - 25 gauge metal studs - 24% on center
b. 5/8" drywall - one layer each side of studs. Height from floor slab to
ceiling grid + 8'5". Partition taped smooth to receive paint or wall
covering. Seismic bracing per code.
c. Batt insulation in cavity (R-11)
d. Western Integrated extended aluminum top track, bronze finish.
e. Sound insulation over top of wall.

Interior Partition

a. 2-1/2" - 25 gauge metal studs - 24" on center
b. 5/8" drywall - one layer each side of studs. Height from floor slab to
ceiling grid + 8'-5". Partition taped smooth to receive paint or wall
covering. Seismic bracing per code. Attach to ceiling with 1/4" tee
bolt as required.
c. Western Integrated extended aluminum top track, bronze finish.

Corridor Door Assembly - Tenant

a. Door - 3'0" x 8'3", 20 minute label, stain grade cherry veneer.
b. Frame - 3'0" x 8'5" Western Integrated extruded aluminum, 20 min.
rated bronze anodized with snap-in section @ head - 1 each.
c. Hardware - Sargent 12-15-8143 INL "Mortise Lever" with 2 pair ball
bearing hinges, latch, strike, floor stop and closer, oil rubbed,
brushed bronze finish.
d. Finish -Stain and lacquer.

Interior Door Assembly:

a. Door - 3'0" x 8'3" solid core stain grade cherry doors.
b. Frame - 3'0" x 8'5" Western Integrated extruded aluminum with snap-in
section at head - 1 each.
c. Hardware - Sargent - 24-6015 OSL with 2 pair ball bearing hinges,
strike, latch and floor stop, oil rubbed, brushed bronze finish.
d. Finish - Stain and lacquer.

Acoustical Ceiling:

a. 2'x2' "Donn Fine Line", ceiling grid 8'6" A.F.F. wire suspension per
code
b. 2'x2' Armstrong "Cirrus", with factory Tegular edge with 5/16"
shoulder flush with face of grid.
c. Hanger rods.

2' x4' Flourescent Light Fixture:

a. 2'x4', lay-in type - 3 - 32 watt lamp 18 cell parabolic fixture,
attached to grid with Luminaire clips. Wire suspension per code and
wires

Schedule A
To
Exhibit C

5/15/96
<PAGE> 65
Building Standard Improvements
Page Two

Light Switch Assembly:

a. Leviton, Decora #5600 series, or equal, switch 2 each. Switches paired
in double gang box to meet Title XXIV requirements.

Electrical Wall Outlet:

a. Leviton, Decora #5600 series, or equal, duplex receptacle - 1 each.
Ivory color. # of outlets per circuit at 120 volts per code. Mounted
vertically. Outlet height at 12" AFF-to center line of outlet.

Telephone Wall Outlet:

a. Single gang box in wall - mounted vertically, 3/4" metal conduit up to
plerum and stubbed out. Cable and cover plate by phone company.

Data Wall Outlet:

a. Single gang box in wall - mounted vertically, 3/4" metal conduit up to
plerum and stubbed out.

Heating & Air Conditioning Distribution:

a. Furnish and install low pressure distribution duct work.
b. Furnish and install variable air volume boxes, interior zone
c. Same as above - exterior zone, with electric reheat coil.
d. Furnish and install air registers and return air grilles, 1 per 200
sq. ft.
e. Furnish and install thermostats, one per zone.
f. Main distribution direct from fan room.

Floor Covering:

a. 38 oz. carpet, Bentley "Camden Hill", 1/10 gauge, 11 stitches per inch,
.218" pile height.
b. Carpet pad - 40 oz. jute

Rubber Base:

a. 4" straight or coved rubber by Poppe or equal.

Painting:

a. Two coats flat interior latex paint. One accent color, one base color.

Fire Sprinklers:

a. Fully-recessed head with chrome finish w/ white escutcheon cover plate.

Fire Life Safety:

a. Ceiling mounted illuminated exit signs
b. Fire sprinkler main

Signage:

a. Directory Strip
b. Anodized aluminum panel per SKA design

Window Coverings:

a. Horizontal mini blinds, Levelor

Schedule A
To
Exhibit C

5/15/86

<PAGE> 66
EXHIBIT D

SUBORDINATION OF LEASE

Recording Requested By And
When Recorded Returned To:

Attention:

NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN THE LEASEHOLD ESTATE IN THE
PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER
OR LATER SECURITY DOCUMENT.

SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT

THIS AGREEMENT made as of the ____________ day of ____________________
19____, among ________________________________________________________________
_________________ (hereinafter referred to as "Mortgagee"), __________________
_________________________________________________________________ (hereinafter
referred to as "Landlord"), and ______________________________________________
______________________________________________________________________________
(hereinafter referred to as "Tenant").

W I T N E S S E T H
-------------------

WHEREAS, Mortgagee has become the owner and holder of a beneficial
interest under a deed of trust recorded ____________________, as Instrument
No. ____________________ Official Records, County of ____________________,
California (hereinafter referred to as the "Mortgage") covering certain
premises described in Exhibit A attached hereto (hereinafter referred to as the
"Mortgaged Premises") and of the note, bond or other obligation secured thereby
(hereinafter referred to as the "Note");

WHEREAS, Tenant is the holder of a leasehold estate in a portion of
the Mortgaged Premises (hereinafter referred to as the "Demised Premises")
under and pursuant to the provisions of a certain lease dated ______________,
19____ by and between Tenant and Landlord (hereinafter referred to as the
"Lease");

D(1)
<PAGE> 67
WHEREAS, Landlord's interest in the Lease has been assigned to
Mortgagee as additional security for the Mortgage; and

WHEREAS, Tenant has agreed to subordinate the Lease to the Mortgage and
to the lien thereof and Mortgagee has agreed to grant non-disturbance to Tenant
under the Lease on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt of which is hereby acknowledged, Mortgagee and
Tenant hereby covenant and agree as follows:

1. So long as Tenant is not in default in the payment of rent or
additional rent or in the performance of any of the other terms, covenants or
conditions of the Lease on Tenant's part to be performed, Tenant's possession
of the Demised Premises under the Lease, or any extensions or renewals thereof
which may be effected in accordance with any option therefor in the Lease,
shall not be diminished or interfered with by Mortgagee and Mortgagee shall not
join Tenant as a party defendant in any action or proceeding for the purpose of
terminating Tenant's interest and estate under the Lease because of any default
under the Mortgage.

2. If Mortgagee shall become the owner of the Mortgaged Premises or
the Mortgaged Premises shall be sold by reason of foreclosure, trustee's sale
or other proceedings brought to enforce the Mortgage, or if the Mortgaged
Premises shall be transferred by deed in lieu of the foreclosure, the Lease
shall continue in full force and effect as a direct Lease between the then
owner of the Mortgaged Premises (including Mortgagee or the grantee under a
deed in lieu of foreclosure) and Tenant, upon and subject to all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining and any extensions or renewals thereof which may be effected in
accordance with any option therefor in the Lease, and Tenant does hereby attorn
to Mortgagee or any other such owner as its Landlord, said attornment to be
effective and self-operative without the execution of any further instruments,
except that Tenant shall neither make, nor be entitled to make, any claim
against Mortgagee or other such owner with respect to any takeover and/or
subleased space, and Tenant shall, from and after Mortgagee's or other such
owner's succession to the interest of Landlord under the Lease, have the same
remedies for the breach of covenant contained in the Lease that Tenant might
have had under the Lease against Landlord; provided further, however, that
Mortgagee or other such owner shall not be:

(a) liable for any act or omission of any prior landlord
(including Landlord); or

(b) subject to any offsets or defenses which Tenant might
have against any prior landlord; or

(c) bound by any prepayment of rent or additional rent
which Tenant might have paid for more than the current month to any prior
landlord; or

(d) bound by any amendment or modification of the Lease or
by any waiver or forebearance on the part of any prior landlord made or given
without the written consent of Mortgagee or any subsequent holder of the
Mortgage.

3. The Lease is hereby made, and shall at all times be subject and
subordinate in each and every respect, to the Mortgage and to any and all
renewals, modifications, extensions, substitutions, replacements and/or
consolidations of the Mortgage, but any and all such renewals, modifications,
extensions, substitutions, replacements and/or consolidations, shall
nevertheless be subject to and entitled to the benefits of the terms of this
Agreement.

D(2)
<PAGE> 68
4. To the extent that the Lease shall entitle the Tenant to notice
of any Mortgage, this Agreement shall constitute such notice to the Tenant with
respect to the Mortgage and to any and all renewals, modifications, extensions,
substitutions, replacements and/or consolidations of the Mortgage.

5. This Agreement may not be modified orally or in any other
manner than by an agreement in writing signed by the parties hereto or their
respective successors in interest. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their successors and assigns.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and acknowledged as of the day and year first above written.

Mortgagee: Tenant:

- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
By: --------------------------- By: ---------------------------
Title: ------------------------ Title -------------------------

Landlord:

- -------------------------------
- -------------------------------
By: ---------------------------
Title: ------------------------

D(3)

<PAGE> 69
EXHIBIT D-1

SUBORDINATION OF DEED OF TRUST

___________________________________________________ (hereinafter called
"Lender") as owner and holder of a certain promissory note dated _______________
in the principal sum of _______________________________________________ Dollars
($________________) and a Deed of Trust dated of even date therewith securing
said Note, now a first lien upon the premises more particularly demised and
described in those certain leases by and between________________________, as
Landlord, and the persons named (whose agreement hereto is evidenced by
unrecorded agreements in the possession of Landlord and Lender) in Exhibit A
attached hereto and made a part hereof, as Tenant, and upon other property, in
consideration of such leasing and of the sum of One Dollar ($1.00) and other
good and valuable consideration, receipt of which is hereby acknowledged.

DOES hereby covenant and agree that the said Deed of Trust shall be,
and the same is hereby made, SUBJECT AND SUBORDINATE to said leases with the
same force and effect as if the said leases had been executed, delivered and
recorded prior to the execution, delivery and recording of said Deed of Trust,
without regard to the date on which said leases had been executed, delivered and
recorded in relation to the date on which said Deed of Trust has become an
effective lien by the terms therein demised:

EXCEPT, HOWEVER, that this Subordination shall not affect or be
applicable to and does hereby expressly exclude:

(a) The prior right, claim and lien of the said Deed of Trust in, to
and upon any award or other compensation heretofore or hereafter
to be made for any taking by eminent domain of any part of said
premises, and to the right of disposition thereof in accordance
with the provisions of said Deed of Trust.

(b) The prior right, claim and lien of the said Deed of Trust in, to
and upon any proceeds payable under all policies of fire and rent
insurance upon the said premises and as to the right of
disposition thereof in accordance with the terms of said Deed of
Trust, and

(c) Any lien, right, power or interest, if any which may have arisen
or intervened in the period between the recording of the said
Deed of Trust and the execution of the said leases, or any lien
or judgment which may arise at any time under the terms of such
leases.

The subordination shall inure to the benefit of and shall be binding
upon the undersigned, its successors and assigns.

IN WITNESS WHEREOF, this Subordination has been duly signed and
delivered by the undersigned this ______ day of _______ ,19____.

"Lender"

_______________________________________
_______________________________________
By:____________________________________
By:____________________________________

D-1
<PAGE> 70
ESTOPPEL STATEMENT

Re: Lease dated as of ___________________ (hereinafter the "Lease"),
between MICHELSON COMPANY, a general partnership, (hereinafter the "Landlord")
and _______________________________________________ "Tenant"), (and amended by
______________________________), concerning the premises described in Exhibit A
attached hereto (the "Premises").

As the Tenant under the Lease, the undersigned hereby certifies to Dean
Witter Realty Inc. or any affiliate thereof (the "Lender"), which has or is
about to make a loan to the Landlord, part of the security for which will be
deed of trust covering the Premises leased to the Tenant and an assignment of
the Landlord's interest in the Lease, the truth and accuracy of the following
statements pertaining to the Lease.

1. The Tenant named under the Lease is the original Tenant and there
has been no sublet or assignment thereof.

2. The Tenant has accepted, is satisfied with (except for only
nonsubstantial defects, notice of which has previously been given to Landlord),
and is in full possession of the Premises, including all improvements,
additions and alterations thereto required to be made by the Landlord under the
Lease, and the Tenant is not aware of any patent or latent defects in
construction of the improvements (except for only nonsubstantial defects,
notice of which has previously been given to the Landlord) which would
constitute a default by the Landlord pursuant to the Lease and except as set
forth on Exhibit B all contributions required to be paid by the Landlord to
date for improvements to the Premises have been paid in full.

3. The Tenant is paying the full rent stipulated in the Lease to be
paid by the Tenant as of the date hereof with no offsets, defenses or claims.

4. The Landlord is not presently in default under any of the terms,
covenants or provisions of the Lease and to the best knowledge of the Tenant
except as set forth in Exhibit B (x) no party to the Lease is in default, and
(y) no event has occurred which with the giving of notice or passage of time,
or both, would constitute such a default.

5. The Landlord has satisfactorily complied with all of the
requirements and conditions precedent to the commencement of the term of the
Lease as specified in the Lease.

6. The Basic Rent under the Lease is $__________ per annum which is
payable in monthly installments of $________ which has been paid to the
Landlord through and including ________ and no moneys have been paid to the
Landlord in advance of the due date set forth in the Lease, except as set forth
in Exhibit B.

7. The Tenant's Expense payments payable pursuant to the Lease which
include without limitation the cost of Operation, Maintenance, Real Property
Taxes, and CAM cost have been paid in accordance with the Landlord's bills
rendered through ________. The Tenant's Expenses actually paid by Tenant for
1987 were $ _______(subject to end of year accounting by Landlord which may
result in adjustment) and the Tenant's Projected Expenses for 1988 are $ ______.

8. The Lease is for a term of _______ years and the Tenant has been in
occupancy since ________, and paying rent since__________.
<PAGE> 71
9. The Lease commenced on _________________________ and the Tenant
has no options or right to renew or cancel the Lease or to lease additional
space in the Premises or to purchase any portion of the same except as set
forth in Exhibit B.

10. There are no actions, whether voluntary or otherwise, pending
against the undersigned or any guarantor of the undersigned's obligations under
the Lease pursuant to the bankruptcy or insolvency laws of the United States or
any state thereof, except as may be described in Exhibit B.

11. The Tenant acknowledges that the Lender assumes no liability for
its security deposits, if any, or for sums escrowed with the Landlord for taxes
or insurance or other expenses in the event that the Lender acquires the
Premises through foreclosure or through a transfer of title in lieu of
foreclosure.

12. The Tenant hereby acknowledges (a) that there have been no
modifications or amendments to the Lease other than herein specifically stated,
(b) that it has no notice of a prior assignment, hypothecation or pledge of
rents or of the Lease, (c) that the Lease is in full force and effect and the
Tenant has no defenses, setoffs or counterclaims against the Landlord arising
out of the Lease or in anyway relating thereto, or arising out of any other
transaction between the Tenant and the Landlord, (d) that the Lease represents
the entire agreement between the parties thereto as to the Premises, (e) that no
prepayment or reduction of rent, and no modification, termination or acceptance
of surrender of the Lease will be valid as to the Lender without the consent of
the Lender, and (f) that notice of the proposed assignment of the Landlord's
interest in the Lease may be given the Tenant by Certified or Registered Mail,
Return Receipt Requested, at the Premises, or as otherwise directed herein.

Dated: ________________, 1988

TENANT:

BY: __________________________________

ITS: _____________________________

(Address to which notices are to be
sent if other than Premises):

___________________________________
___________________________________
___________________________________

2
<PAGE> 72

EXHIBIT F

BUILDING RULES AND REGULATIONS

The following rules and regulations shall be applicable to the Building:

(1) No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the Building,
or of the Premises if visible from outside the Premises, without the prior
written consent of Landlord. Tenant's identification signs and lettering shall
be in accordance with Landlord's standard requirements for the Building unless
otherwise approved in writing by Landlord. All approved signs or lettering on
doors shall be printed, painted, affixed, or inscribed at the expense of Tenant
by a person approved by Landlord.

(2) All window coverings shall be provided by Landlord and Tenant
shall not place or maintain any other window covering, blinds or drapes on any
window without Landlord's prior written approval. A breach of this rule will
directly and adversely affect the exterior appearance of the Building. Upon
request by Landlord, Tenant shall remove any window covering, or any other item
visible from outside the Premises, if installed or placed without Landlord's
written approval.

(3) A directory of the Building will be provided for the display of
the name and location of tenants and a reasonable number of the principal
employees thereof and Landlord reserves the right to exclude any other names
therefrom. Tenant shall be provided with at least thirty-one (31) listings on
the Building's directory board in the lobby of the Building.

(4) The sidewalks, halls, passages, exits, entrances, elevators,
escalators, and stairways shall not be obstructed by Tenant or used by it for
any purpose other than for ingress to and egress from the Premises. The halls,
passages, exits, entrances, elevators, escalators, 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 the Landlord might be prejudicial to the safety,
character, reputation and interests of the Building and its tenants, provided
that nothing herein contained shall be construed so as to prevent such access
to persons with whom Tenant normally deals in the ordinary course of Tenant's
business unless such persons are engaged in illegal activities or are creating
a nuisance. No employee, invitee, contractor or agent of Tenant shall go upon
the roof of the Building.

(5) 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 (except as to safes and vaults of Tenant approved by Landlord).

(6) The toilet rooms and urinals, wash bowls and other apparatus
therein 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 placed
therein; the expense of breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees,
invitees, contractors or agents, shall have caused it.

(7) Except as to normal pictures and furnishings, Tenant shall not
mark, drive nails, screw or drill into partitions, woodwork or plaster or in
any way deface the Premises or any part thereof. No boring, cutting or
stringing of wires shall be permitted except with the prior written consent of
Landlord and as Landlord may direct. Tenant shall not 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 expense of
repairing any damage resulting from a violation of this rule or removal of any
floor covering shall be borne by Tenant.

F(1)
<PAGE> 73
(8) Tenant shall not overload any floor of the Premises or the
Building. No furniture, freight or equipment of any kind shall be brought into
the Building by Tenant or its contractors or agents without prior consent of
Landlord and all moving of the same into or out of the Building shall be done
at such time and in such manner as Landlord shall designate. Landlord shall
have the right to prescribe the weight, size and position of all safes and
other heavy objects brought into the Building and also the time and manner of
moving the same in and out of the Building. Safes and other heavy objects shall,
if considered necessary by Landlord, stand on wood strips of such thickness as
is necessary to properly distribute weight. Landlord will not be responsible for
less or damage to any property from any such cause, and all damage done to the
Building by moving or maintaining any such safe or other property shall be
repaired at the expense of Tenant. There shall not be used in any part of the
Building any hand truck unless it is equipped with rubber tires and side guards.

(9) Tenant shall not employ any person or persons other than the
janitor of Landlord for the purpose of cleaning the Premises unless otherwise
agreed to in writing by Landlord. Except with the prior written consent of
Landlord, no person or persons other than those approved by Landlord shall be
permitted to enter the Building for the purpose of cleaning same. Tenant shall
pay the cost of any additional labor required by reason of Tenant's carelessness
or indifference in the preservation of good order and cleanliness. Landlord
shall in no way be responsible to Tenant for any loss of property on the
Premises, however occurring, or for any damage done to the effects of Tenant or
any of its employees or other persons by the janitor of Landlord. Janitor
service shall be performed Monday through Friday (Holidays excepted) and shall
include ordinary dusting and cleaning by the janitor assigned to such work and
shall not include cleaning of carpets or rugs, except normal vacuuming, or
moving of furniture and other special services. Janitor service will not be
furnished on nights when rooms are occupied after 9:30 p.m. Window cleaning
shall be done only by Landlord at reasonable hours and as Landlord deems
necessary and the outside surfaces of the windows shall be washed
at least twice per year, and the inside surfaces at least once per year.

(10) Tenant shall not use, keep or permit to be used or kept any
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. No
tenant shall make or permit to be made any loud or disturbing noises or
disturb or interfere with occupants of the Building or those having business
with them whether by the use of any musical instrument, radio, phonograph,
shouting or in any other manner. Tenant shall not throw anything out of doors
or down the passageways.

(11) The Premises shall not be used for the storage of merchandise
except as such storage may be incidental to the use of the Premises authorized
by the Lease. No cooking shall be done or permitted in the Premises without
Landlord's consent, except that use by Tenant of Underwriter's Laboratory
approved microwave ovens or equipment for brewing coffee or similar beverages
for employee shall be permitted. Tenant shall not advertise for day laborers
giving an address at the Premises. The Premises shall not be used for lodging
or sleeping or for any illegal purposes. Tenant shall not keep or maintain pets
or animals of any type and shall not store or keep bicycles, mopeds or
motorcycles in the Premises or the Building.

F(2)
<PAGE> 74

(12) Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or flammable or combustible fluid or material, or use any
method of heating or air conditioning other than that supplied or permitted by
Landlord.

(13) Landlord will direct electricians as to where and how electrical,
telephone and telegraph wires are to be introduced to the Premises. No boring
or cutting for wires will be allowed without the prior consent of Landlord. The
location of telephone call boxes and other office equipment in the Premises
shall be subject to the approval of Landlord.

(14) Landlord will furnish Tenant free of charge two (2) keys for each
door in the Premises. Any additional or replacement keys will be furnished at
a reasonable charge. All keys to offices, rooms and toilet rooms shall be
obtained from Landlord and Tenant shall not duplicate or obtain such keys from
any other source. Upon termination of the Lease, Tenant shall deliver to
Landlord the keys to the offices, rooms and toilet rooms which were previously
furnished to Tenant, failing which Tenant shall pay Landlord the cost of
replacing same or of changing the lock or locks opened by any unreturned key if
Landlord deems it necessary to make such changes. Landlord shall have the
right periodically to change all locks and furnish Tenant with new keys
therefor.

(15) No furniture, packages, supplies, equipment or merchandise will
be received in the Building or carried up or down in the elevators, except
between such hours and in such elevators as shall be designated by Landlord.

(16) Landlord reserves the right to close and keep locked all
entrances and exit doors of the Building on Saturdays (outside the hours of
8:00 a.m. and 12:00 noon), Sundays, New Year's Day, Washington's Birthday,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day ("Holidays")
and on other days between the hours of 6:00 p.m. and 7:00 a.m., and during such
further hours as Landlord may deem advisable for the adequate protection of the
Building and the property of its tenants (such hours are hereinafter referred
to as "non-business hours"). However, during such non-business hours Tenant
and/or authorized employees as well as guests, licensees or invitees of Tenant
who are accompanied by Tenant or an authorized employee of Tenant, shall be
allowed access to the Building upon proper identification. Landlord shall in
no case be liable for damages for any error with regard to the admission to or
exclusion from the Building of any person. In case of invasion, mob, riot,
public excitement, or other commotion, Landlord reserves the right to prevent
access to the Building during the continuance of same.

(17) Landlord shall keep the public areas of the Building lighted, and
shall furnish elevator service and heating and air conditioning during the
hours of 7:00 a.m. to 6:00 p.m. Monday through Friday and during the hours of
8:00 a.m. to 12:00 noon Saturdays except for Holidays. During non-business
hours Landlord shall keep the public areas of the Building partially lighted
and shall provide elevator service with at least one elevator serving the
Premises, but shall not be obligated to furnish heating or air conditioning
except upon reasonable notice from Tenant. If Tenant requires heating and/or
air conditioning during non-business hours Tenant shall give Landlord
reasonable prior notice of such requirement and Tenant shall pay Landlord a
service fee for such extra service at the rate being charged by the local
public utility company, plus reasonable fees for wear and tear, and
depreciation.

(18) Tenant shall be responsible for assuring that doors to the
Premises are locked during non-business hours. Such doors shall not be left
open during business hours, except while moving furniture or other items in or
out of the Premises.

F(3)
<PAGE> 75
(19) Tenant shall not canvass or solicit other tenants in the
Building and Tenant shall cooperate to prevent any such canvassing and/or
solicitation. Canvassing and peddling in the Building is prohibited. Tenant
shall not obtain for use in the Premises food, beverage, shoe-shine or other
services except as expressly permitted by Landlord.

(20) Landlord reserves the right to exclude or expel from the
Building any person who, in the judgment of Landlord, is intoxicated or under
the influence of liquor or drugs, has no legitimate purpose to be in the
Building, or is violating the rules and regulations of the Building.

(21) The requirements of Tenant will be attended to only upon
application to Landlord's designated property manager. Tenant acknowledges
that employees of Landlord shall have no obligation to perform work for Tenant
or do anything outside their regular duties for Tenant unless under special
instructions from Landlord, and that no employee will have any obligation to
admit any person (Tenant or otherwise) to any office of Landlord without
specific instructions from Landlord.

(22) No vending machines of any description shall be
installed, maintained, or operated by Tenant upon the Premises or in the
Building, without the prior written consent of Landlord.

(23) Tenant agrees that it shall comply with all fire and
security regulations that may be issued from time to time by Landlord, and
Tenant shall also provide Landlord with the name of a designated responsible
employee to represent Tenant in all matters pertaining to such fire or security
regulations.

(24) Tenant shall not install any radio or television antenna,
loudspeaker or other device on the roof or exterior walls of the Building.
Tenant shall not interfere with broadcasting or reception from or in the
Building or elsewhere.

(25) Tenant shall store its trash and garbage within the
Premises or in other facilities designated by Landlord. Tenant shall not place
in any trash receptacle any material which cannot be disposed of in the
ordinary practice of trash disposal. All trash and garbage disposal shall be
made pursuant to directions issued from time to time by Landlord.

(26) Landlord may waive any one or more of the rules and
regulations as to any tenant without being construed as having waived same as to
any other tenant.

(27) Tenant shall be responsible for the observance of the
rules and regulations by Tenant's employees, agents, customers, invitees and
guests.

(28) Landlord reserves the right upon written notice to Tenant
to rescind, alter or waive any rule or regulation at any time prescribed for
the Building, or to establish additional rules and regulations when, in
Landlord's sole judgment, it is necessary, desirable or proper for the best
interest of the Building and its tenants.

(29) In the event of any conflict between these Building Rules
and Regulations and any provisions of the Lease, the provisions of the Lease
shall prevail.

F(4)
<PAGE> 76
PARKING LICENSE AGREEMENT

MICHELSON CO., a general partnership ("Licensor") hereby grants to
CITICORP NORTH AMERICA, INC., a Delaware corporation ("Licensee") the right and
license to use parking spaces in 2600 Michelson (the "Project"), as described
below and subject to the following conditions:

1. TYPE AND NUMBER OF PARKING SPACES: Licensee shall have the right to
use a minimum of one hundred (unassigned) automobile parking spaces of which one
hundred (100) are (structure/non-tandem) spaces. If the area of Licensee's
Premises is increased, Licensee may, at its option, increase the number of its
allotted parking spaces based on a ratio of 3.3 spaces per 1,000 square feet of
rentable area. Notwithstanding the preceding, Licensee shall have no right to
use any number of parking spaces in excess of the number of employees of
Licensee actually employed at the Premises.

2. MONTHLY FEE: Licensee shall pay for the right and license granted
hereby the prevailing rates charged for such spaces by Licensor from time to
time ("market rate"). Such sums shall be payable in advance on the first day
of each calendar month. Licensor shall have no obligation to accept such
payment from anyone other than Licensee (e.g. Licensee's employees, subtenants,
etc). Any late payment of the monthly fee will result in additional
administrative and processing costs being incurred by Licensor, the exact
amount which would be extremely difficult to determine, and it is agreed that
with respect thereto a late fee of ten percent (10%) of the amount due is a
reasonable estimate thereof and will be payable by Licensee with regard to any
monthly fee not paid when due. Notwithstanding the foregoing, Licensee's
employees actually employed at the Premises shall not be charged for parking in
such spaces during the initial twelve (12) months of the term of the Lease
referenced herein. Commencing in the 13th month of the Lease term, Licensee
shall pay Thirty Dollars ($30.00) per space per month. Commencing in the 61st
month of the Lease term, Licensee shall pay Fifty Dollars ($50.00) per space
per month. If Licensee desires to convert some of its parking spaces to
reserved spaces, the rate per assigned space shall be One Hundred Dollars
($100.00) per month for the first twelve (12) months of the Lease term;
thereafter, Licensee shall pay the market rate for such reserved spaces.

3. TERM: Licensee shall be entitled to the foregoing parking rights
for a period equivalent to the term of that certain "Lease" of Premises in the
Project entered into by Licensor and Licensee. Licensee's rights to any and
all parking spaces shall automatically be revoked and shall terminate upon any
material default hereunder, or any expiration or termination of said Lease.
Licensee must exercise its rights under this Agreement by delivering all
required security deposits and the initial monthly fee if any for the parking
spaces described above within thirty (30) days after the "Commencement Date" of
the aforementioned Lease (as defined herein) unless otherwise agreed by
Licensor. Failure of Licensee to so exercise its rights will entitle Licensor
with five (5) days prior notice to Licensee to transfer to others Licensee's
rights to park in any and all parking spaces as to which Licensee has not so
exercised its rights hereunder, and Licensee will be deemed to have waived its
rights hereunder with regard thereto.

4. LOCATION OF PARKING SPACES: Licensor shall have the right in its
reasonable discretion to designate the particular location of said parking
space(s), which designation is subject to change from time to time.

5. RIGHTS NON-TRANSFERRABLE: The foregoing parking rights are personal
to Licensee and Licensee shall not assign, convey or otherwise transfer said
rights in any manner whatsoever without Licensor's prior written consent except
to a permitted assignee or sublessee. Any attempt by Licensee to do so shall be
null and void and Licensor may, but shall not be obligated to, recapture those
spaces which Licensee attempted to transfer in violation of this Agreement. If
the Premises or any portion thereof is assigned or sublet pursuant to the terms
of the Lease, the number of parking spaces allotted to Licensee under paragraph
1 hereof shall automatically be adjusted accordingly and Licensor and Licensee
shall immediately execute an amendment to this Agreement setting forth (i) the
number of spaces retained by Licensee, (ii) the number of spaces allotted to
Licensee's assignee or subtenant (which number shall be based on the ratio
stated in paragraph 1 above), (iii) the then current "market rate" to be
charged

P(1)
<PAGE> 77
Licensee for the spaces allotted to its assignee or subtenant, and (iv) the
security deposit to be paid by Licensee for its assignee's or subtenant's
parking cards.

6. LICENSEE INDEMNIFICATION: Use of said parking spaces and of the
parking areas in the Project shall be at the sole risk of Licensee. Unless
caused by the wrongful acts of Licensor, its agents or employees, Licensee
hereby agrees to indemnify and hold Licensor harmless against any liability,
loss, cost or expense (including attorneys' fees) for any damage to or loss or
theft of any vehicle or property within any vehicle or any other property
(including property of Licensee), or injury to or death of any person (including
Licensee and Licensee's family, agents, employees, visitors or customers),
arising directly or indirectly out of or in connection with the use by Licensee
or such other persons of the parking areas or any part thereof.

7. INTERRUPTION OF USE: Licensor shall not be liable to Licensee for
any interruption of Licensee's use of the rights granted hereunder due to
repairs, improvements or alterations of the parking areas of the Project, or
due to any labor controversy, or resulting from any cause beyond the reasonable
control of Licensor. However, Licensee shall be entitled to an abatement of
the monthly fee with regard to any assigned parking space to the extent it is
prevented from using such space and no reasonably similar alternative space is
made available to it by Licensor.

8. RULES AND REGULATIONS: Licensor's parking rules and regulations are
attached hereto. Licensor may adopt such other rules and regulations relating
to the use of the parking areas as in Licensor's opinion are necessary or
desirable for the proper, orderly and safe use of the parking areas. If
Licensee fails to comply with the rules and regulations and modifications
thereto within a reasonable time after receiving notice thereof, Licensor may
at its option forthwith terminate this license and all rights of Licensee
hereunder, and may also, whether or not such license is so terminated, take
such action as shall be required to remedy such failure, and Licensee agrees to
pay Licensor on demand the cost to Licensor of such actions including
attorneys' fees. Licensee shall at all times be required to park in a lawful
manner, and no vehicle shall at any time be parked in more than one marked
space at a time. Licensor shall be entitled to tow away any vehicle which is
improperly parked, at the vehicle owner's sole cost and expense. In the event
of such tow away, neither Licensor nor any Mortgagee of Licensor shall have any
liability therefor to Licensee or to such vehicle owner.

9. LICENSOR'S PROPERTY RIGHTS: Licensor shall have the right to
decrease the size of any or all of the parking areas in the Project, to alter
or rearrange parking spaces and improvements in the parking areas, to take all
or any portion of the parking areas for purpose of maintaining, repairing or
restoring same, or for purposes of construction and operating structures
thereon or adjacent thereto, to have ingress and egress in connection with the
exercise of any such rights, and to do and perform such other acts with respect
to the parking areas as Licensor shall in its reasonable discretion deem
appropriate so long as Licensee's parking rights hereunder are not adversely
affected. Licensor may at any time and from time to time in its reasonable
discretion designate any portion of the parking areas in the Project for use as
assigned parking, visitor parking or employee parking. If Licensor establishes
an "employee parking" area or other assigned parking area for Licensee's
employees to park in, Licensee shall furnish Licensor, within twenty (20) days
after written request to do so, with a list of the vehicle license numbers of
Licensee's employees parking in the Project. Licensor may charge Licensee Ten
Dollars ($10.00) per day for each day or partial day for each vehicle parked by
Licensee or any of its employees in a parking space or area other than the space
or parking area assigned or designated for such vehicle. Licensor may tow away
any such improperly parked vehicles and may also attach violation notices or
stickers to improperly parked vehicles. In the event of such tow away, neither
Licensor not any Mortgagee of Licensor shall have any liability therefor to
Licensee or to such vehicle owner.

P(2)
<PAGE> 78
11. SECURITY DEPOSIT. A monthly parking card will be issued to
Licensee for each parking space to be used by Licensee hereunder. Licensee will
pay a security deposit equal to Fifteen Dollars ($15.00) for each parking card
at the time of issuance of the card. No card will be issued without payment of
such security deposit. Licensor shall have no obligation to accept any such
security deposit from anyone other than Licensee. The security deposit shall be
held by Licensor to secure Licensee's due performance of its obligations with
regard to parking hereunder and the return to Licensor of such parking card(s)
in good condition, normal wear and tear accepted, upon termination of Licensee's
rights hereunder. Licensee shall be obligated to take reasonable steps to
protect such cards from warping or mutilation. Without limitation as to the
generality of the foregoing, Licensor may apply such security deposit to remedy
any default by Licensee hereunder and further, if such card(s) are lost or
mutilated, Licensor may apply any or all of said deposit toward Licensor's cost
of such card(s). If at any time Licensor applies any or all of such security
deposit as provided herein, Licensee shall be obligated to deposit with Licensor
the amount so applied by Licensor within ten (10) days after written request
therefor is given. Upon termination of Licensee's rights hereunder and the
return to Licensor of the aforementioned card(s) (or cards issued in
substitution thereof) the security deposit or balance thereof shall be returned
to Licensee provided Licensee is not then in default hereunder. Licensor need
not hold said security deposit in a separate account.

12. REPLACEMENT CARDS: If for any reason (other than a malfunction for
which Licensee is not responsible hereunder) any card(s) issued to Licensee are
requested by Licensee to be replaced, Licensee shall pay Licensor the then
current non-refundable charge for said replacement card(s). At the current
time the charge is Fifteen Dollars ($15.00) per card.

13. MISCELLANEOUS: No waiver by Licensor of any breach of this
agreement by Licensee shall constitute a waiver of any other breach. Any amount
due to Licensor that is not paid when due shall bear interest at the maximum
rate allowable under law. In the event of any legal action taken or proceeding
brought to enforce the provisions hereof, the prevailing party shall be entitled
to recover its attorneys' fees and costs incurred in connection therewith.

DATED this 21 day of March 1988

<TABLE>
<S> <C>
LICENSOR; LICENSEE:

MICHELSON CO., a general partnership CITICORP NORTH AMERICA, INC., a Delaware
corporation

By: SC ENTERPRISES, a limited
partnership, partner By: /s/ (illegible)
------------------------------------

By: /s/ Shurl Curci TITLE: (illegible)
---------------------------- ------------------------------------
Shurl Curci, general partner BY: /s/ Mohamed A. Hamir
------------------------------------

By: /s/ (illegible) TITLE: Mohamed A. Hamir
--------------------------- ------------------------------------
Attorney-in-fact Vice President
Citicorp North America, Inc.
</TABLE>

P(3)
<PAGE> 79
PARKING RULES AND REGULATIONS

1. All claimed damage or loss must be reported and itemized in writing
delivered to the parking facility office or property manager's office as soon as
is reasonably possible after any claimed damage or loss occurs. Any claim not so
made is waived. Licensor has the option to make repairs at its expense of any
claimed damage within ten business days after filing a claim. In all court
actions the burden of proof to establish a claim remains with Licensee. Court
actions by Licensee for any claim must be filed in a court of jurisdiction where
the claimed loss occurred. Licensor is not responsible for damage by water,
fire, or defective brakes, or parts, or for the acts or omissions of others, or
for articles left in vehicles. The total liability of Licensor is limited to
$250.00 for all damages or loss to any vehicle unless such damage is due to the
negligence or willful misconduct of Licensor, its agents, employees or
contractors. Licensor is not responsible for loss of use.

2. Licensee shall not park or permit the parking of any vehicle under its
control in any parking area designated by Licensor as areas for parking by
visitors. Licensee shall not leave vehicles in the parking area overnight except
when Licensee's officers or employees are away on business nor park any vehicles
in the parking areas other than automobiles, motorcycles, motor driven or
non-motor driven bicycles or four-wheeled trucks.

3. Parking stickers or any other device or form of identification supplied
by Licensor as a condition of use of the parking facilities shall remain the
property of Licensor. Such parking identification device must be displayed as
requested and may not be mutilated in any manner. The serial number of the
parking identification device may not be obliterated. Devices are not
transferable and any device in the possession of an unauthorized holder will be
void.

4. No overnight or extended term storage of vehicles shall be permitted
except when Licensee's officers or employees are away on business.

5. Vehicles must be parked entirely within the painted stall lines of a
single parking stall.

6. All directional signs and arrows must be observed.

7. The speed limit within all parking areas shall be 5 miles per hour.

8. Parking is prohibited:

(a) in areas not striped for parking;

(b) in driveways;

(d) in cross hatched areas; and

(e) in such other areas as may be designated by Licensor or its parking
operator.

9. Every parker is required to park and lock his own vehicle. All
responsibility for damage to vehicles is assumed by the parker.

10. Loss or theft of parking identification devices from vehicles must be
reported to the parking operator immediately, and a lost or stolen report must
be filed at that time. Licensor has the right to exclude any vehicle from the
parking facilities that does not have an identification device.

11. Any parking identification devices reported lost or stolen found on any
unauthorized vehicle will be confiscated and the illegal holder will be subject
to prosecution.

12. Lost or stolen identification devices found by the Licensee should be
reported to the parking facility office or property manager immediately to
avoid confusion.

13. Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited.

14. Licensee shall acquaint all persons to whom Licensee assigns parking
space of these Rules and Regulations. Parking facility managers or attendants
are not authorized to make or allow any exceptions to these Rules and
Regulations.

15. Licensor reserves the right to refuse the sale of monthly stickers or
other parking identification devices to any person and/or his agents or
representatives who willfully refuses to comply with these Rules and
Regulations and all City, State or Federal ordinances, laws or agreements.

P(4)
<PAGE> 80
EXHIBIT B

VERIFICATION OF TERM AND INITIAL RENT

RE: Lease dated March 22, 1988 between MICHELSON CO., a general partnership
("Landlord") and CITICORP NORTH AMERICA, INC., a Delaware corporation
("Tenant") for premises in 2600 Michelson, Suites 1100 & 1200, Irvine, Ca.
92715. Tenant hereby verifies that the dates and amounts stated below are
correct and further acknowledges and accepts possession of the Premises.

Area: 31,357 Rentable sq. ft.

Commencement Date: July 5, 1988

Termination Date: July 4, 1998

Options: None

Initial Rent: $52,052.62

Address for Notices: CITICORP NORTH AMERICA
2600 Michelson, Suite 1200
Irvine, Ca. 92715
Mohammed Hamir & William Ward

In addition: Lillick McHose & Charles
725 S. Fiqueroa Street, 11th Fl
Los Angeles, Ca. 90017-2513
Attn: Michael E. Meyer, Esq.

Billing Address: __________________________________
__________________________________

Attn: __________________________________
Telephone Number: __________________________________

By: /S/ Mohammed Hamir
-------------------------------

Title: Vice President
-------------------------------

Date: 6/30/88
-------------------------------

<PAGE> 1

EXHIBIT 10.9

OFFICE SPACE LEASE

BETWEEN

THE IRVINE COMPANY

AND VISION SOLUTIONS, INC.
<PAGE> 2
OFFICE SPACE LEASE

THIS LEASE is made as of the 23rd day of September, 1996, by and
between THE IRVINE COMPANY, a Michigan corporation, hereafter called "Landlord,"
and VISION SOLUTIONS, INC., a California corporation, hereinafter called
"Tenant."

ARTICLE I. BASIC LEASE PROVISIONS

Each reference in this Lease to the "Basic Lease Provisions" shall
mean and refer to the following collective terms, the application of which
shall be governed by the provisions in the remaining Articles of this Lease.

1. Tenant's Trade Name: N/A

2. Premises: Suite No. 200 (the Premises are more particularly
described in Section 2.1).

Address of Building: 28 Executive park, Irvine, CA 92714

Project Description (if applicable): Executive Park I and III

3. Use of premises: General Office and for no other use.

4. Commencement Date: See Section 3.1.

5. Lease Term: The Lease Term shall expire at midnight on July 31,
1998.

6. Basic Rent: Twenty-Seven Thousand Two Hundred Four Dollars
($27,204.00) per month.

Rental Adjustments: None.

7. Property Tax Base: N/A

Building Cost Base: N/A

8. Floor Area of Premises: approximately 17,003 rentable square feet

9. Security Deposit: $27,204.00

10. Broker(s): Grubb & Ellis

11. Plan Approval Date: N/A

12. Address for Payments and Notices:
<PAGE> 3
LANDLORD TENANT

The Irvine Company Vision Solutions, Inc.
c/o PM Realty Group 28 Executive Park, Suite 200
20 Executive Park, Suite 140 Irvine, CA 92714
Attn: Property Manager

with a copy of notices to:

THE IRVINE COMPANY
P.O. Box 6370
Newport Beach, CA 92658-6370
Attn: Vice President, Operations -
Office Properties
<PAGE> 4
ARTICLE II. PREMISES

SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and
Tenant rents from Landlord the premises shown in Exhibit A (the "Premises"),
containing approximately the floor area set forth in Item 8 of the Basic Lease
Provisions and known by the suite number identified in Item 2 of the Basic
Lease Provisions. The Premises are located in the building identified in Item
2 of the Basic Lease Provisions (which together with the underlying real
property, is called the "Building"), and is a portion of the project described
in Item 2 (the "Project"). If, upon completion of the space plans for the
Premises, Landlord's architect or space planner determines that the rentable
square footage of the Premises differs from that set forth in the Basic Lease
Provisions, then Landlord shall so notify Tenant and the Basic Rent (as shown
in Item 6 of the Basic Lease Provisions) shall be promptly adjusted in
proportion to the change in square footage. Within five (5) days following
Landlord's request, the parties shall memorialize the adjustments by executing
an amendment to this Lease prepared by Landlord.

SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that 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, except as set forth in this Lease. The
taking of possession or use of the Premises by Tenant for any purpose other
than 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. The list shall be
limited to any items required to be accomplished by Landlord under the Work
Letter (if any) attached as Exhibit X, and shall be delivered to Landlord
within thirty (30) days after the term ("Term") of this Lease commences as
provided in Article III below. If there is no Work Letter, or if no items are
required of Landlord under the Work Letter, by taking possession of the
Premises Tenant accepts the improvements in their existing condition, and
waives any right or claim against Landlord arising out of the condition of the
Premises. 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.

SECTION 2.3. 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.

ARTICLE III. TERM

SECTION 3.1. GENERAL. Subject to the provisions of this Section 3.1, the
Term shall be for the period shown in Item 5 of the Basic Lease Provisions. The
Term shall commence ("Commencement Date") on the earlier of (a) January 1,
1998, or (b) the termination of the "Existing Lease" (as defined in Section
22.6 hereinbelow). Promptly following request by Landlord, the parties shall
memorialize on a form provided by Landlord the actual Commencement Date of this
Lease if earlier than January 1, 1998.

ARTICLE IV. RENT AND OPERATING EXPENSES

SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset a Basic Rent for the Premises
in the total amount shown (including subsequent adjustments, if any) in Item 6
of the Basic Lease Provisions. Any rental adjustment shown in Item 6 shall be
deemed to occur on the specified monthly anniversary of the Commencement Date,
whether or not that date occurs at the end of a calendar month. The rent shall
by due and payable in advance commencing on the Commencement Date (as prorated
for any partial month) and continuing thereafter on the first day of each
successive calendar month of the Term. No demand, notice or invoice shall be
required. An installment of rent in the amount of one (1) full month's Basic
Rent at the initial rate specified in Item 6 of the Basic Lease Provisions
shall be delivered to Landlord concurrently with Tenant's execution of this
Lease and shall be applied against the Basic Rent first due hereunder.

SECTION 4.2. OPERATING EXPENSE INCREASE.

(a) Tenant shall reimburse Landlord, as additional rent, for Tenant's
proportionate shares of "Building Costs" and "Property Taxes," as those terms
are defined below, incurred by Landlord in the operation of the Building and
Project. Property Taxes and Building Costs are mutually exclusive and may be
billed separately or in combination as determined by Landlord. Tenant's
proportionate share of Property Taxes shall equal the product of the rentable
floor area of the Premises multiplied by the difference of (i) Property Taxes
per rentable square foot less (ii) the Property Tax Base set forth in Item 7 of
the Basic Lease Provisions. Tenant's proportionate share of Building Costs
shall equal the product of the rentable floor area of the Premises multiplied
by the difference of (i) Building Costs per rentable square foot less (ii) the
Building Cost Base set forth in Item 7 of the Basic Lease Provisions. Tenant
acknowledges Landlord's rights to make changes or additions to the Building
and/or Project from time to time pursuant to Section 6.5 below, in which event
the total rentable square footage within the Building and/or Project may be
adjusted. For convenience of reference, Property Taxes and Building Costs may
sometimes be collectively referred to as "Operating Expenses."

(b) Commencing prior to the start of the first full "Expense Recovery
Period" of the Lease (as defined below), and prior to the start of each full or
partial Expense Recovery Period thereafter, Landlord shall give Tenant a written
estimate of the amount of Tenant's proportionate shares of Building Costs and
Property Taxes for the Expense Recovery Period or portion thereof. Tenant
shall pay the estimated amounts to Landlord in equal monthly installments, in
advance, with Basic Rent. If Landlord has not furnished its written estimate
for any Expense Recovery Period by the time set forth above, Tenant shall
continue to pay cost reimbursements at the rates established for the prior
Expense

<PAGE> 5
Recovery Period, if any; provided that when the new estimate is delivered to
Tenant, Tenant shall at the next monthly payment date, pay any accrued cost
reimbursements based upon the new estimate. For purposes hereof, "Expense
Recovery Period" shall mean every twelve month period during the Term (or
portion thereof for the first and last Lease years) commencing July 1 and ending
June 30; provided that Landlord may from time to time change the Expense
Recovery Period to reflect a calendar year or a new fiscal year of Landlord, in
which event Tenant's share of Operating Expenses shall be equitably prorated for
any partial year.

(c) Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Property Taxes and Building Costs
incurred by Landlord during the period, and the parties shall within thirty (30)
days thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments, if any, to Tenant's actual proportionate shares as shown by
the annual statement. If Tenant has not made estimated payments during the
Expense Recovery Period, any amount owing by Tenant pursuant to subsection (a)
above shall be paid to Landlord in accordance with Article XVI. If actual
Property Taxes or Building Costs allocable to Tenant during any Expense Recovery
Period are less than the Property Tax Base or the Building Cost Base,
respectively, Landlord shall not be required to pay the differential to Tenant.
Should Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within sixty (60) days following delivery of Landlord's
expense statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties.

(d) Even though the Lease has terminated and the Tenant has
vacated the Premises, when the final determination is made of Tenant's share of
Property Taxes and Building Costs for the Expense Recovery Period in which the
Lease terminates, Tenant shall upon notice pay the entire increase due over the
estimated expenses paid. Conversely, any overpayment made in the event expenses
decrease shall be rebated by Landlord to Tenant.

(e) If, at any time during any Expense Recovery Period, any
one or more of the Operating Expenses are increased to a rate(s) or amount(s)
in excess of the rate(s) or amount(s) used in calculating the estimated
expenses for the year, then Tenant's estimated share of Property Taxes or
Building Costs, as applicable, shall be increased for the month in which the
increase becomes effective and for all succeeding months by an amount equal to
Tenant's proportionate share of the increase. Landlord shall give Tenant
written notice of the amount or estimated amount of the increase, the month in
which the increase will become effective, Tenant's monthly share thereof and
the months for which the payments are due. Tenant shall pay the increase to
Landlord as a part of Tenant's monthly payments of estimated expenses as
provided in paragraph (b) above, commencing with the month in which effective.

(f) The term "Building Costs" shall include all expenses of
operation and maintenance of the Building and the Project, together with all
appurtenant Common Areas (as defined in Section 6.2), and shall include the
following charges by way of illustration but not limitation: water and sewer
charges; insurance premiums or reasonable premium equivalents should Landlord
elect to self-insure any risk that Landlord is authorized to insure hereunder;
license, permit, and inspection fees; heat; light; power; janitorial services;
repairs; air conditioning; supplies; materials; equipment; tools; amortization
of capital investments reasonably intended to produce a reduction in operating
charges or energy conservation; amortization of capital investments necessary to
bring the Building into compliance with applicable laws and building codes
enacted subsequent to the completion of construction of the Building; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building and/or
Project, including both Landlord's personnel and outside personnel; any expense
incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2 and Exhibits B and C
below; and a reasonable overhead/management fee. It is understood that Building
Costs shall include competitive charges for direct services provided by any
subsidiary or division of Landlord. The term "Property Taxes" as used herein
shall include the following: (i) all real estate taxes or personal property
taxes, as such property taxes may be reassessed from time to time; and (ii)
other taxes, documentary transfer fees, charges and assessments which are levied
with respect to this Lease or to the Building and/or the Project, and any
improvements, fixtures and equipment and other property of Landlord located in
the Building and/or the Project, except that general net income and franchise
taxes imposed against Landlord shall be excluded; and (iii) any tax, surcharge
or assessment which shall be levied in addition to or in lieu of real estate or
personal property taxes, other than taxes covered by Article VIII; and (iv)
costs and expenses incurred in contesting the amount or validity of any Property
Tax by appropriate proceedings. A copy of Landlord's unaudited statement of
expenses shall be made available to Tenant upon request. The Building Costs may
be extrapolated by Landlord to reflect at least ninety-five percent (95%)
occupancy of the rentable area of the Building.

(g) Notwithstanding the foregoing, Landlord hereby agrees that
Tenant shall not be obligated to reimburse Landlord for Operating Expenses
during the initial Lease Term.

SECTION 4.3 SECURITY DEPOSIT. On or before December 1, 1997 (or upon
the Commencement Date if sooner) Tenant shall deposit with Landlord the sum, if
any, stated in Item 9 of the Basic Lease Provisions, to be held by Landlord as
security for the full and faithful performance of Tenant's obligations under
this Lease (the "Security Deposit"). Upon any default by Tenant, including
specifically Tenant's failure to pay rent or to abide by its obligations under
Sections 7.1 and 15.3 below, Landlord may apply all or part of the Security
Deposit as full or partial compensation for that default. If any portion of the
Security Deposit is so applied, Tenant shall within five (5) days after written
demand by Landlord deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to its original amount. Landlord shall not be required to
keep this Security Deposit separate from its general funds, and Tenant shall not
be entitled to interest on the Security Deposit. If Tenant fully performs its
obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest in this Lease) within thirty (30) days after the expiration of
the Term.

ARTICLE V. USES

SECTION 5.1 USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions. The parties agree that any
contrary use shall be deemed to cause material and irreparable harm to Landlord
and shall entitle Landlord to injunctive relief in addition to any other
available remedy. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way interfere with the rights or quiet
enjoyment of

3
<PAGE> 6
other occupants of the Building or the Project, or use or allow the Premises to
be used for any unlawful purpose, nor shall Tenant permit any nuisance or commit
any waste in the Premises or the Project. Tenant shall not do or permit to be
done anything which will invalidate or increase the cost of any insurance
policy(ies) covering the Building, the Project and/or their contents, and shall
comply with all applicable insurance underwriters rules and the requirements of
the Pacific Fire Rating Bureau or any other organization performing a similar
function. Tenant shall comply at its expense with all present and future laws,
ordinances and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation all federal and
state occupational health and safety and handicap access requirements, whether
or not Tenant's compliance will necessitate expenditures or interfere with its
use and enjoyment of the Premises. Tenant shall not generate, handle, store or
dispose of hazardous or toxic materials (as such materials may be identified in
any federal, state or local law or regulation) in the Premises or Project
without the prior written consent of Landlord; provided that the foregoing shall
not be deemed to proscribe the use by Tenant of customary office supplies in
normal quantities so long as such use comports with all applicable laws. Tenant
agrees that it shall promptly complete and deliver to Landlord any disclosure
form regarding hazardous or toxic materials that may be required by any
governmental agency. Tenant shall also, from time to time upon request by
Landlord, execute such affidavits concerning Tenant's best knowledge and belief
regarding the presence of hazardous or toxic materials in the Premises. Landlord
shall have the right at any time to perform an assessment of the environmental
condition of the Premises and of Tenant's compliance with this Section. As part
of any such assessment, Landlord shall have the right, upon reasonable prior
notice to Tenant, to enter and inspect the Premises and to perform tests,
provided those tests are performed in a manner that minimizes disruption to
Tenant. Tenant will cooperate with Landlord in connection with any assessment
by, among other things, promptly responding to inquiries and providing relevant
documentation and records. The reasonable cost of the assessment/testing shall
be reimbursed by Tenant to Landlord if such assessment/testing determines that
Tenant failed to comply with the requirements of this Section. In all events
Tenant shall indemnify Landlord in the manner elsewhere provided in this Lease
from any release of hazardous or toxic materials caused by Tenant, its agents,
employees, contractors, subtenants or licensees. The foregoing covenants shall
survive the expiration or earlier termination of this Lease.

SECTION 5.2. SIGNS.

(a) Tenant, upon obtaining the approval of Landlord in writing, may
affix a sign (restricted solely to Tenant's name as set forth herein or such
other name as Landlord may consent to in writing) adjacent to the entry door of
the Premises and shall maintain the sign in good condition and repair during
the Term. The sign shall conform to the criteria for signs established by
Landlord. Tenant shall not place or allow to be placed any other sign,
decoration or advertising matter of any kind that is visible from the exterior
of the Premises. Any violating sign or decoration may be immediately removed by
Landlord at Tenant's expense without notice and without the removal constituting
a breach of this Lease or entitling Tenant to claim damages.

(b) Tenant shall have the right to install a sign on the exterior of
the Building facing the San Diego (405) Freeway, together with an exterior
secondary sign at the entrance to the lobby of the Building, which signage
shall consist only of the name "Vision Solutions." The type, location and
design of such signage shall be subject to Landlord's prior written approval
and shall be subject to the Executive Park Sign Criteria. Fabrication,
installation, insurance, and maintenance of such signage shall be at Tenant's
sole cost and expense. Except for the foregoing, no sign, advertisement or
notice visible from the exterior of the Premises shall be inscribed, painted or
affixed by Tenant on any part of the Premises without the prior consent of
Landlord. Tenant's signage right shall belong solely to Vision Solutions, Inc.
and may not be transferred or assigned without Landlord's prior written
consent, which may be withheld by Landlord in Landlord's sole discretion. In
the event Tenant, exclusive of any subtenant(s), fails to occupy the entire
Premises, then Tenant shall, within thirty (30) days following notice from
Landlord, remove the exterior signage at Tenant's expense. Tenant shall also
remove such signage promptly following the expiration or earlier termination of
this Lease. Any such removal shall be at Tenant's sole expense, and Tenant
shall bear the cost of any resulting repairs to the Building that are
reasonably necessary due to the removal.

ARTICLE VI. LANDLORD SERVICES

SECTION 6.1. UTILITIES AND SERVICES. Landlord shall furnish to the Premises
the utilities and services described in Exhibit B, subject to the conditions
and payment obligations and standards set forth in this Lease. Landlord shall
not be liable for any failure to furnish any services or utilities when the
failure is the result of any accident or other cause beyond Landlord's
reasonable control, nor shall Landlord be liable for damages resulting from
power surges or any breakdown in telecommunications facilities or services.
Landlord's temporary inability to furnish any services or utilities shall not
entitle Tenant to any damages, relieve Tenant of the obligation to pay rent or
constitute a constructive or other eviction of Tenant, except that Landlord
shall diligently attempt to restore the service or utility promptly. Tenant
shall comply with all rules and regulations which Landlord may reasonably
establish for the provision of services and utilities, and shall cooperate with
all reasonable conservation practices established by Landlord. Landlord shall at
all reasonable times have free access to all electrical and mechanical
installations of Landlord.

SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Building and the Project.
The term "Common Areas" shall mean all areas within the Building and other
buildings in the Project which are not held for exclusive use by persons
entitled to occupy space, and all other appurtenant areas and improvements
provided by Landlord for the common use of Landlord and tenants and their
respective employees and invitees, including without limitation parking areas
and structures, driveways, sidewalks, landscaped and planted areas, hallways
and interior stairwells not located within the premises of any tenant, common
entrances and lobbies, elevators, and restrooms not located within the premises
of any tenant.

SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas in common with Landlord and with all
others for whose convenience and use the Common Areas may be provided by
Landlord, subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. Landlord shall at all times during
the Term have exclusive control of the Common Areas, and may restrain any use or
occupancy, except as authorized by Landlord's rules and regulations. Tenant
shall keep the Common Areas clear of any obstruction or unauthorized use
related to Tenant's operations. Landlord may temporarily

<PAGE> 7
close any portion of the Common Areas for repairs, remodeling and/or
alterations, to prevent a public dedication or the accrual of prescriptive
rights, or for any other reasonable purpose.

SECTION 6.4. PARKING. Tenant shall have the parking rights set forth
in Exhibit C to this Lease.

SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. No change shall entitle Tenant
to any abatement of rent or other claim against Landlord, provided that the
change does not deprive Tenant of reasonable access to or use of the Premises.

ARTICLE VII. MAINTAINING THE PREMISES

SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole
expense shall make all repairs necessary to keep the Premises in the condition
as existed on the Commencement Date (or on any later date that the improvements
may have been installed), excepting ordinary wear and tear. All repairs shall
be at least equal in quality to the original work, shall be made only by a
licensed, bonded contractor approved in writing in advance by Landlord and
shall be made only at the time or times approved by Landlord. Any contractor
utilized by Tenant shall be subject to Landlord's standard requirements for
contractors, as modified from time to time. Landlord may impose reasonable
restrictions and requirements with respect to repairs, as provided in Section
7.3, and the provisions of Section 7.4 shall apply to all repairs.
Alternatively, Landlord may elect to make any such repair on behalf of Tenant
and at Tenant's expense, and Tenant shall promptly reimburse Landlord for all
costs incurred upon submission of an invoice.

SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR.

(a) Subject to Section 7.1 and Article XI, Landlord shall
provide service, maintenance and repair with respect to any air conditioning,
ventilating or heating equipment which serves the Premises (exclusive of any
supplemental HVAC equipment installed by or at the request of Tenant) and shall
maintain in good repair the roof, foundations, footings, the exterior surfaces
of the exterior walls of the Building, and the structural, electrical and
mechanical systems, except that Tenant at its expense shall make all repairs
which Landlord deems reasonably necessary as a result of the act or negligence
of Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function. Landlord
need not make any other improvements or repairs except as specifically required
under this Lease, and nothing contained in this Section shall limit Landlord's
right to reimbursement from Tenant for maintenance, repair costs and
replacement costs as provided elsewhere in this Lease. Tenant understands that
it shall not make repairs at Landlord's expense or by rental offset.

(b) Except as provided in Sections 11.1 and 12.1 below,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business arising from the making of
any repairs, alterations or improvements to any portion of the Building,
including repairs to the Premises, nor shall any related activity by Landlord
constitute an actual or constructive eviction; provided, however, that in
making repairs, alterations or improvements, Landlord shall interfere as little
as reasonably practicable with the conduct of Tenant's business in the Premises.

SECTION 7.3. ALTERATIONS. Tenant shall make no alterations,
additions or improvements to the Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Landlord may
impose, as a condition to its consent, any requirements that Landlord in its
discretion may deem reasonable or desirable, including but not limited to a
requirement that all work be covered by a lien and completion bond satisfactory
to Landlord and requirements as to the manner, time, and contractor for
performance of the work. Without limiting the generality of the foregoing,
Tenant shall use Landlord's designated mechanical and electrical contractors
for all work affecting the mechanical or electrical systems of the Building.
However, Tenant can recommend the contractor or subcontractors of other trades
and have said recommended contractors perform alterations subject to Landlord's
approval, which shall not be unreasonably withheld. All work to be performed
shall, unless otherwise agreed by Tenant, be competitively bid at a fair
market value cost. Tenant shall obtain all required permits for the work and
shall perform the work in compliance with all applicable laws, regulations and
ordinances, and Landlord shall be entitled to a supervision fee in the amount
of five percent (5%) of the cost of the work; provided that such supervision
fee shall not be required on cosmetic work done by Tenant that does not require
a permit. Under no circumstances shall Tenant make any improvement which
incorporates asbestos-containing construction materials into the Premises. Any
request for Landlord's consent shall be made in writing and shall contain
architectural plans describing the work in detail reasonably satisfactory to
Landlord. Unless Landlord otherwise agrees in writing, all alterations,
additions or improvements affixed to the Premises (excluding moveable trade
fixtures and furniture) shall become the property of Landlord and shall be
surrendered with the Premises at the end of the Term, except that Landlord may,
by notice to Tenant given at the time of Landlord's consent to the alteration
or improvement, require Tenant to remove by the Expiration Date, or sooner
termination date of this Lease, all or any alterations, decorations, fixtures,
additions, improvements and the like installed either by Tenant or by Landlord
at Tenant's request and to repair any damage to the Premises arising from that
removal. Landlord may require Tenant to remove an improvement provided as part
of the initial build-out pursuant to Exhibit X, if any, if and only if the
improvement is a non-building standard item and Tenant is notified of the
requirement prior to the build-out. Except as otherwise provided in this Lease
or in any Exhibit to this Lease, should Landlord make any alteration or
improvement to the Premises at the request of Tenant, Landlord shall be
entitled to prompt reimbursement from Tenant for all costs incurred.

SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free
from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord's attorneys' fees, shall be reimbursed by Tenant
promptly following Landlord's demand, together with interest from the date of
payment by Landlord at the maximum rate permitted by law until paid. Tenant
shall give Landlord no less than twenty (20) days' prior notice in writing
before commencing construction of any kind on the Premises so that Landlord may
post and maintain notices of nonresponsibility on the Premises.

SECTION 7.5. ENTRY AND INSPECTION. Landlord shall, during normal
business hours and with reasonable prior written or oral notice to Tenant
(except in emergencies), have the right to enter the Premises to inspect them,
to supply services in accordance with this Lease, to protect the interests of
Landlord in the Premises, and to submit

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the Premises to prospective or actual purchasers or encumbrance holders (or,
during the last one hundred and eighty (180) days of the Term or when an
uncured Tenant default exists, to prospective tenants), all without being
deemed to have caused an eviction of Tenant and without abatement of rent
except as provided elsewhere in this Lease. Landlord shall at all times have
and retain a key which unlocks all of the doors in 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 the doors in an emergency in order
to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord shall not under any circumstances be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises.

SECTION 7.6 SPACE PLANNING AND SUBSTITUTION. Landlord shall have
the right, upon providing Tenant sixty (60) days' written notice, to move Tenant
to other space of comparable size in the Building or in the Project. The new
space shall be provided with improvements of comparable quality to those within
the Premises. Landlord shall pay all of Tenant's reasonable out-of-pocket
moving expenses following receipt of invoices from Tenant. If Landlord
exercises this right, this Lease shall remain in effect and be deemed applicable
to the new space except that the Lease shall be appropriately amended to
reflect the new space. Notwithstanding the foregoing, however, Landlord shall
not enforce this Section 7.6 during the initial Lease Term.

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

Tenant shall be liable for and shall pay before delinquency, all taxes
and assessments levied against all personal property of Tenant located in the
Premises. When possible Tenant shall cause its personal property to be assessed
and billed separately from the real property of which the Premises form a part.
If any taxes on Tenant's personal property are levied against Landlord or
Landlord's property and if Landlord pays the same, or if the assessed value of
Landlord's property is increased by the inclusion of a value placed upon the
personal property of Tenant and if Landlord pays the taxes based upon the
increased assessment, Tenant shall pay to Landlord the taxes so levied against
Landlord or the proportion of the taxes resulting from the increase in the
assessment.

ARTICLE IX. ASSIGNMENT AND SUBLETTING

SECTION 9.1. RIGHTS OF PARTIES.

(a) Notwithstanding any provision of this Lease to the
contrary, Tenant will not, either voluntarily or by operation of law, assign,
sublet, encumber, or otherwise transfer all or any part of Tenant's interest in
this lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1.(c). No assignment
(whether voluntary, involuntary or by operation of law) and no subletting shall
be valid or effective without Landlord's prior written consent and, at
Landlord's election, shall constitute a material default of this Lease.
Landlord shall not be deemed to have given its consent to any assignment or
subletting by any other course of action, including its acceptance of any name
for listing in the Building directory. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), including Section 365(f)(1). Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth
in Section 9.1(c) of this Lease. If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, any and all monies or
other considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or the estate of the Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord
an instrument confirming that assumption.

(b) INTENTIONALLY DELETED.

(c) If Tenant desires to transfer an interest in this
Lease, it shall first notify Landlord of its desire and shall submit in writing
to Landlord: (i) the name and address of the proposed transferee; (ii) the
nature of any proposed subtenant's or assignee's business to be carried on in
the Premises; (iii) the terms and provisions of any proposed sublease or
assignment; and (iv) any other information requested by Landlord and reasonably
related to the transfer. Except as provided in Section (d) of this Section,
Landlord shall not unreasonably withhold its consent, provided: (1) the use of
the Premises will be consistent with the provisions of this Lease and with
Landlord's commitment to other tenants of the Building and Project; (2)
seventy-five percent (75%) of any profit received by the Tenant from the
assignment or subletting, whether during or after the Term of this Lease, shall
be paid to Landlord when received; (3) any proposed subtenant or assignee
demonstrates that it is financially responsible by submission to Landlord of
all reasonable information as Landlord may request concerning the proposed
subtenant or assignee, including, but not limited to, a balance sheet of the
proposed subtenant or assignee as of a date within ninety (90) days of the
request for Landlord's consent and statements of income or profit and loss of
the proposed subtenant or assignee for the two-year period preceding the
request for Landlord's consent; (4) any proposed subtenant or assignee
demonstrates to Landlord's reasonable satisfaction a record of successful
experience in business; (5) the proposed assignee or subtenant is not an
existing tenant of the Building or Project (except that this clause (5) shall
not apply if Landlord does not have sufficient available space to accommodate
the expansion requirement of that existing tenant); and (6) the proposed
transfer will not impose additional burdens or adverse tax effects on Landlord.
If Landlord consents to the proposed transfer, Tenant may within ninety (90)
days after the date of the consent affect the transfer upon the terms described
in the information furnished to Landlord; provided that any material change in
the terms shall be subject to Landlord's consent as set forth in this Section.
Landlord shall approve or disapprove any requested transfer within thirty (30)
days following receipt of Tenant's written request and the information set
forth above. Tenant shall pay to Landlord a transfer fee of Five Hundred
Dollars ($500) if and when any transfer requested by Tenant is approved.

(d) Notwithstanding the provisions of Subsection (c) above,
in lieu of consenting to a proposed assignment or subletting, Landlord may
elect to (i) sublease the Premises (or the portion proposed to be subleased),
or take an assignment of Tenant's interest in this Lease, upon the same terms
as offered in the proposed subtenant or assignee (excluding terms relating to
the purchase of personal property, the use of Tenant's name or the continuation
of Tenant's business), or (ii) terminate this Lease as to the portion of the
Premises proposed to be subleased or assigned with a proportionate abatement in
the rent payable under this Lease, effective on the date that the proposed
sublease or assignment would have become effective. Landlord may thereafter, at
its option, assign or re-let any space so recaptured to any third party,
including without limitation the proposed transferee of Tenant.

<PAGE> 9
SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even
with the consent of Landlord, shall relieve Tenant, or any
successor-in-interest to Tenant hereunder, of its obligation to pay rent and
to perform all its other obligations under this Lease. Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any act
or omission by an assignee or subtenant. Each assignee, other than Landlord,
shall be deemed to assume all obligations of Tenant under this Lease and shall
be liable jointly and severally with Tenant for the payment of all rent, and
for the due performance of all of Tenant's obligations, under this Lease. Such
joint and several liability shall not be discharged or impaired by any
subsequent modification of this Lease. No transfer shall be binding on Landlord
unless any document memorializing the transfer is delivered to Landlord and both
the assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements
of this Article. The acceptance by Landlord of any payment due under this Lease
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any transfer. Consent by Landlord
to one or more transfers shall not operate as a waiver or estoppel to the
future enforcement by Landlord of its rights under this Lease.

SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and
conditions shall apply to any subletting by Tenant of all or any part of the
Premises and shall be included in each sublease:

(a) Tenant hereby irrevocably assigns to Landlord all of
Tenant's interest in all rentals and income arising from any sublease of the
Premises, and Landlord may collect such rent and income and apply same toward
Tenant's obligations under this Lease; provided, however, that until a default
occurs in the performance of Tenant's obligations under this Lease, Tenant shall
have the right to receive and collect the sublease rentals. Landlord shall not,
by reason of this assignment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any Tenant's obligations under
the sublease. Tenant hereby irrevocably authorizes and directs any subtenant,
upon receipt of a written notice from Landlord stating that an uncured default
exists in the performance of Tenant's obligations under this Lease, to pay to
Landlord all sums then and thereafter due under this sublease. Tenant agrees
that the subtenant may rely on that notice without any duty of further inquiry
and notwithstanding any notice or claim by Tenant to the contrary. Tenant shall
have no right or claim against the subtenant or Landlord for any rentals so paid
to Landlord. In the event Landlord collects amounts from subtenants that exceed
the total amount then due from Tenant hereunder, Landlord shall promptly remit
the excess to Tenant.

(b) In the event of the termination of this Lease, Landlord
may, at its sole option, take over Tenant's entire interest in any sublease
and, upon notice from Landlord, the subtenant shall attorn to Landlord. In no
event, however, shall Landlord be liable for any previous act or omission by
Tenant under the sublease or for the return of any advance rental payments or
deposits under this sublease that have not been actually delivered to Landlord,
nor shall Landlord be bound by any sublease modification executed without
Landlord's consent or for any advance rental payment by the subtenant in excess
of one month's rent. The general provisions of this Lease, including without
limitation those pertaining to insurance and indemnification, shall be deemed
incorporated by reference into the sublease despite the termination of this
Lease.

ARTICLE X. INSURANCE AND INDEMNITY

SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, as its election,
provide any or all of the following types of insurance, with or without
deductible and in amounts and coverages as may be determined by Landlord in its
discretion; "all risk" property insurance, subject to standard exclusions,
covering the Building or Project, and such other risks as Landlord or its
mortgagees may from time to time deem appropriate, and commercial general
liability coverage. Landlord shall not be required to carry insurance of any
kind on Tenant's leasehold improvements, trade fixtures, furnishings,
equipment, interior plate glass, signs and all other items of personal
property, and shall not be obligated to repair or replace that property should
damage occur. All proceeds of insurance maintained by Landlord upon the
Building and Project shall be the property of Landlord, whether or not Landlord
is obligated to or elects to make any repairs.

SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by
law, Tenant shall defend, indemnify and hold harmless Landlord, its agents,
lenders, and any and all affiliates of Landlord, from and against any and all
claims, liabilities, costs or expenses arising either before or after the
Commencement Date from Tenant's use or occupancy of the Premises, the Building
or the Common Areas, or from the conduct of its business, or from any activity,
work, or thing done, permitted or suffered by Tenant or its agents, employees,
subtenants, invitees or licensees in or about the Premises, the Building or the
Common Areas, or from any default in the performance of any obligation on
Tenant's part to be performed under this Lease, or from any act or negligence of
Tenant or its agents, employees, subtenants, invitees or licensees. Landlord
may, at its option, require Tenant to assume Landlord's defense in any action
covered by this Section through counsel reasonably satisfactory to Landlord.

SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord, its employees and agents for loss of or damage to any
property, or any injury to any person, or loss or interruption of business or
income, resulting from any condition including, but not limited to, fire,
explosion, falling plaster, steam, gas, electricity, 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 of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building, except to the extent the
damage or injury is attributable to the negligence or willful misconduct of
Landlord and is not covered by Tenant's insurance. It is understood that any
such condition may require the temporary evacuation or closure of all or a
portion of the Building. Neither Landlord nor its agents shall be liable for
interference with light or other similar intangible interests. Tenant shall
immediately notify Landlord in case of fire or accident in the Premises, the
Building or the Project and of defects in any improvements or equipment.

SECTION 10.5. WAIVER OF SUBROGATION. Each party hereby agrees to
waive any right of recovery against the other party for any damage to or loss
of the property of the waiving party to the extent such damage or loss

<PAGE> 10
is covered by a property insurance policy carried by the waiving party. Each
party further agrees to cause its property insurance policy to provide for or
authorize a waiver of subrogation in favor of the other party hereto.

ARTICLE XI. DAMAGE OR DESTRUCTION

SECTION 11.1. RESTORATION.

(a) If the Building of which the Premises are a part is
damaged, Landlord shall repair that damage as soon as reasonably possible, at
its expense, unless: (i) landlord reasonably determines that the cost of repair
would exceed ten percent (10%) of the full replacement cost of the Building
("Replacement Cost") and the damage is not covered by Landlord's fire and
extended coverage insurance (or by a normal extended coverage policy should
Landlord fail to carry that insurance); or (ii) Landlord reasonably determines
that the cost of repair would exceed twenty-five percent (25%) of the
Replacement Cost; or (iii) Landlord reasonably determines that the cost of
repair would exceed ten percent (10%) of the Replacement Cost and the damage
occurs during the final twelve (12) months of the Term. Should Landlord elect
not to repair the damage for one of the preceding reasons, Landlord shall so
notify Tenant in writing within sixty (60) days after the damage occurs and
this Lease shall terminate as of the date of that notice.

(b) Unless Landlord elects to terminate this Lease in
accordance with subsection (a) above, this Lease shall continue in effect for
the remainder of the Term; provided that if the damage is so extensive as to
reasonably prevent Tenant's substantial use and enjoyment of the Premises for
more than nine (9) months, then Tenant may elect to terminate this Lease by
written notice to Landlord within the sixty (60) day period stated in
subsection (a).

(c) To the extent and for the period that Landlord is entitled
to reimbursement from the proceeds of rental interruption insurance carried by
Landlord as part of Operating Expenses, the rental to be paid under this Lease
shall be abated in the same proportion that the floor area of the Premises that
is rendered unusable by the damage from time to time bears to the total floor
area of the Premises.

(d) Notwithstanding the provisions of subsections (a), (b) and
(c) of this Section, the cost of any repairs shall be borne by Tenant, and
Tenant shall not be entitled to rental abatement or termination rights, if the
damage is due to the fault of neglect of Tenant or its employees, subtenants,
invitees or representatives. In addition, the provisions of this Section shall
not be deemed to require Landlord to repair any improvements or fixtures that
Tenant is obligated to repair or insure pursuant to any other provision of this
Lease.

SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

ARTICLE XII. EMINENT DOMAIN

SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion
of the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event title to a portion of the Building or
Project, other than the Premises, is taken or sold in lieu of taking, and if
Landlord elects to restore the Building in such a way as to alter the Premises
materially, either party may terminate this Lease, by written notice to the
other party, effective on the date of vesting of title. In the event neither
party has elected to terminate this Lease as provided above, then landlord
shall promptly, after receipt of a sufficient condemnation award, proceed to
restore the Premises to substantially their condition prior to the taking, and
a proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant is
deprived on account of the taking and restoration. In the event of a taking,
Landlord shall be entitled to the entire amount of the condemnation award
without deduction for any estate or interest of Tenant; provided that nothing
in this Section shall be deemed to give Landlord any interest in, or prevent
Tenant from seeking any award against the taking authority for, the taking of
personal property and fixtures belonging to Tenant or for relocation or
business interruption expenses recoverable from the taking authority.

SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises
shall terminate this Lease or give Tenant any right to abatement of rent, and
any award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.

SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably
equivalent parking in a location reasonably close to the Building; provided
that if Landlord fails to make that substitution within ninety (90) days
following the taking and if the taking materially impairs Tenant's use and
enjoyment of the Premises, Tenant may, at its option, terminate this Lease by
written notice to Landlord. If this Lease is not so terminated by Tenant, there
shall be no abatement of rent and this Lease shall continue in effect.

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE

SECTION 13.1. SUBORDINATION. At the option of Landlord or any of its
mortgagees/deed of trust beneficiaries, this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust,
if any, which may hereafter affect the Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the
event of termination of any such ground or underlying lease, or the foreclosure
of any such mortgage or deed of trust, to which Tenant has subordinated this
Lease pursuant to this Section. In the event of a termination of foreclosure,
Tenant shall become a tenant of and attorn to the successor-in-interest to
Landlord upon the same terms and conditions as are contained in this Lease, and
shall promptly execute any instrument reasonably required by Landlord's
successor for that purpose. Tenant shall also, within ten (10) days following
written request of Landlord (or the beneficiary under any deed of trust
encumbering the Building), execute and deliver all instruments as may be
required from time to time by Landlord or such beneficiary (including without

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limitation any subordination, nondisturbance and attornment agreement in the
form customarily required by such beneficiary) to subordinate this Lease and the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust; provided, however, that any such
beneficiary may, by written notice to Tenant given at any time, subordinate the
lien of its deed of trust to this Lease. Failure of Tenant to execute any
statements or instruments necessary or desirable to effectuate the provisions
of this Article, within ten (10) days after written request by Landlord, shall
constitute a default under this Lease. In that event, Landlord, in addition to
any other rights or remedies it might have, shall have the right, by written
notice to Tenant, to terminate this Lease as of a date not less than twenty (20)
days after the date of Landlord's notice. Landlord's election to terminate
shall not relieve Tenant of any liability for its default. Tenant acknowledges
that Landlord's mortgagees and successors-in-interest and all beneficiaries
under deeds of trust encumbering the Building are intended third party
beneficiaries of this Section.

SECTION 13.2. ESTOPPEL CERTIFICATE. Tenant shall, at any time upon not
less than ten (10) days prior written notice from Landlord, execute, acknowledge
and deliver to Landlord, in any form that Landlord may reasonably require, a
statement in writing in favor of Landlord and/or any prospective purchaser or
encumbrancer of the Building (i) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of the
modification and certifying that this Lease, as modified, is in full force and
effect) and the dates to which the rental, additional rent and other charges
have been paid in advance, if any, and (ii) acknowledging that, to Tenant's
knowledge, there are no uncured defaults on the part of Landlord, or specifying
each default if any are claimed, and (iii) setting forth all further information
that Landlord may reasonably require. Tenant's statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Building
or Project. Tenant's failure to deliver any estoppel statement within the
provided time shall constitute a default under this Lease and 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) there are no uncured
defaults in Landlord's performance, and (iii) not more than one month's rental
has been paid in advance.

ARTICLE XIV. DEFAULTS AND REMEDIES

SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:

(a) The failure by Tenant to make any payment of rent or
additional rent required to be made by Tenant, as and when due, where the
failure continues for a period of three (3) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu
of, and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 and 1161(a) as amended. For purposes of these default
and remedies provisions, the term "additional rent" shall be deemed to include
all amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.

(b) Assignment, sublease, encumbrance or other transfer of
the Lease by Tenant, either voluntarily or by operation of law, whether by
judgment, execution, transfer by intestacy or testacy, or other means, without
the prior written consent of Landlord.

(c) The discovery by Landlord that any financial statement
provided by Tenant, or by any affiliate, successor or guarantor of Tenant, was
materially false.

(d) The failure or inability by Tenant to observe or
perform any of the covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 and 1161(a) as amended.
However, if the nature of the failure is such that more than thirty (30) days
are reasonably required for its cure, than Tenant shall not be deemed to be in
default if Tenant commences the cure within thirty (30) days, and thereafter
diligently pursues the cure to completion.

(e) (i) The making by Tenant of any general assignment for
the benefit of creditors; (ii) the filing by or against Tenant of a petition to
have Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have
debts discharged or 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); (iii) 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, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening or a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event
described in this subsection unless notification in writing is received by
Landlord, nor shall there by any presumption attributable to Landlord of
Tenant's insolvency. In the event that any provision of this subsection is
contrary to applicable law, the provision shall be of no force or effect.

SECTION 14.2. LANDLORD'S REMEDIES.

(a) In the event of any default by Tenant, then in addition
to any other remedies available to Landlord, Landlord may exercise the
following remedies:

(i) Landlord may terminate Tenant's right to
possession of the Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Premises to
Landlord. Such termination shall not affect any accrued obligations of Tenant
under this Lease. Upon termination, Landlord shall have the right to reenter
the Premises and remove all persons and property. Landlord shall also be
entitled to recover from Tenant:

(1) The worth at the time of award of the
unpaid rent and additional rent which had been earned at the time of
termination;

(2) The worth at the time of award of the
amount by which the unpaid rent and additional rent which would have been earned
after termination until the time of award exceeds the amount of such loss that
Tenant proves could have been reasonably avoided;

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(3) The worth at the time of award of the
amount by which the unpaid rent and additional rent for the balance of the Term
after the time of award exceeds the amount of such loss that Tenant proves
could be reasonably avoided;

(4) 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 from Tenant's default, including, but not
limited to, the cost of recovering possession of the Premises, commissions and
other expenses of reletting, including necessary repair, renovation,
improvement and alteration of the Premises for a new tenant, the unamortized
portion of any tenant improvements and brokerage commissions funded by Landlord
in connection with this Lease, reasonable attorneys' fees, and any other
reasonable costs; and

(5) At Landlord's election, all other amounts
in addition to or in lieu of the foregoing as may be permitted by law. The term
"rent" as used in this Lease shall be deemed to mean the Basic Rent and all
other sums required to be paid by Tenant to Landlord pursuant to the terms of
this Lease. Any sum, other than Basic Rent, shall be computed on the basis of
the average monthly amount accruing during the twenty-four (24) month period
immediately prior to default, except that if it becomes necessary to compute
such rental before the twenty-four (24) month period has occurred, then the
computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the "worth at the
time of award" shall be computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subparagraph (3) above, the "worth at the
time of award" shall be computed by discounting the amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).

(ii) Landlord may elect not to terminate Tenant's
right to possession of the Premises, in which event Landlord may continue to
enforce all of its rights and remedies under this Lease, including the right to
collect all rent as it becomes due. Efforts by the Landlord to maintain,
preserve or relet the Premises, or the appointment of a receiver to protect the
Landlord's interests under this Lease, shall not constitute a termination of
the Tenant's right to possession of the Premises. In the event that Landlord
elects to avail itself of the remedy provided by this subsection (ii), Landlord
shall not unreasonably withhold its consent to an assignment or subletting of
the Premises subject to the reasonable standards for Landlord's consent as are
contained in this Lease.

(b) The various rights and remedies reserved to Landlord in
this Lease or otherwise shall be cumulative and, except as otherwise provided
by California law, Landlord may pursue any or all of its rights and remedies at
the same time. No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other
than the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice
to Landlord's right to recover the balance of the rent or pursue any other
remedy available to it. Tenant hereby waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Section 1174 or 1179,
or under any other present or future law, in the event this Lease is terminated
by reason of any default by Tenant. No act or thing done by Landlord or
Landlord's agents during the Term shall be deemed an acceptance of a surrender
of the Premises, and no agreement to accept a surrender shall be valid unless
in writing and signed by Landlord. No employee of Landlord or of Landlord's
agents shall have any power to accept the keys to the Premises prior to the
termination of this Lease, and the delivery of the keys to any employee shall
not operate as a termination of the Lease or a surrender of the Premises.

SECTION 14.3. LATE PAYMENTS.

(a) Any rent due under this Lease that is not paid to Landlord
within ten (10) days of the date when due shall bear interest at the maximum
rate permitted by law from the date due until fully paid. The payment of
interest shall not cure any default by Tenant under this Lease. In addition,
Tenant acknowledges that the late payment by Tenant to Landlord of rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impracticable to ascertain. Those
costs may include, but are not limited to, administrative, processing and
accounting charges, and late charges which may be imposed on Landlord by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any rent due from Tenant shall not be received by Landlord or
Landlord's designee within ten (10) days after the date due, then Tenant shall
pay to Landlord, in addition to the interest provided above, a late charge in
the amount of one hundred dollars ($100.00) for each delinquent payment.
Acceptance of a late charge by Landlord shall not constitute a waiver of
Tenant's default with respect to the overdue amount, nor shall it prevent
Landlord from exercising any of its other rights and remedies.

(b) Following each second consecutive installment of rent that
is not paid within ten (10) days following notice of nonpayment from Landlord,
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%). Should Tenant deliver to Landlord, at any time during
the Term, two (2) or more insufficient checks, the Landlord may require that
all monies then and thereafter due from Tenant be paid to Landlord by cashier's
check.

SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and
agreements to be performed by Tenant under this Lease shall be performed at
Tenant's sole cost and expense and without any abatement of rent or right of
set-off. If Tenant fails to pay any sum of money, or fails to perform any other
act on its part to be performed under this Lease, and the failure continues
beyond any applicable grace period set forth in Section 14.1, then in addition
to any other available remedies, Landlord may, at its election make the payment
or perform the other act on Tenant's part. Landlord's election to make the
payment or perform the act on Tenant's part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts. Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the maximum rate permitted by law
from the date of the payment by Landlord.

SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be
in default in the performance of any obligation under this Lease unless and
until it has failed to perform the obligation within thirty (30) days after
written notice by Tenant to Landlord specifying in reasonable detail the nature
and extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance,

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then Landlord shall not be deemed to be in default if it commences performance
within the thirty (30) day period and thereafter diligently pursues the cure to
completion.

SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant
bring any action in connection with this Lease, the prevailing party shall be
entitled to recover as a part of the action its reasonable attorneys' fees,
and all other costs. The prevailing party for the purpose of this paragraph
shall be determined by the trier of the facts.

SECTION 14.7. WAIVER OF JURY TRIAL/RIGHT TO ARBITRATE.

(a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF
AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO
TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND
RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST
ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED
ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF
INJURY OR DAMAGE.

(b) SHOULD A DISPUTE ARISE BETWEEN THE PARTIES REGARDING ANY
MATTER DESCRIBED ABOVE, THEN EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR
FORCIBLE DETAINER EITHER PARTY MAY CAUSE THE DISPUTE TO BE SUBMITTED TO
JAMS/ENDISPUTE OR ITS SUCCESSOR ("JAMS") IN ORANGE COUNTY, CALIFORNIA, FOR
BINDING ARBITRATION BEFORE A SINGLE ARBITRATOR. HOWEVER, EACH PARTY RESERVES
THE RIGHT TO SEEK A PROVISIONAL REMEDY BY JUDICIAL ACTION. NO ARBITRATION
ELECTION BY EITHER PARTY PURSUANT TO THIS SUBSECTION SHALL BE EFFECTIVE IF MADE
LATER THAN THIRTY (30) DAYS FOLLOWING SERVICE OF A JUDICIAL SUMMONS AND
COMPLAINT BY OR UPON SUCH PARTY CONCERNING THE DISPUTE. THE ARBITRATION SHALL
BE CONDUCTED IN ACCORDANCE WITH THE RULES OF PRACTICE AND PROCEDURE OF JAMS AND
OTHERWISE PURSUANT TO THE CALIFORNIA ARBITRATION ACT (CODE OF CIVIL PROCEDURE
SECTIONS 1280 ET SEQ.). NOTWITHSTANDING THE FOREGOING, THE ARBITRATOR IS
SPECIFICALLY DIRECTED TO LIMIT DISCOVERY TO THAT WHICH IS ESSENTIAL TO THE
EFFECTIVE PROSECUTION OR DEFENSE OF THE ACTION, AND IN NO EVENT SHALL SUCH
DISCOVERY BY EITHER PARTY INCLUDE MORE THAN ONE NON-EXPERT WITNESS DEPOSITION
UNLESS BOTH PARTIES OTHERWISE AGREE. THE ARBITRATOR SHALL APPORTION THE COSTS
OF THE ARBITRATION, TOGETHER WITH THE ATTORNEYS' FEES OF THE PARTIES, IN THE
MANNER DEEMED EQUITABLE BY THE ARBITRATOR, IT BEING THE INTENTION OF THE
PARTIES THAT THE PREVAILING PARTY ORDINARILY BE ENTITLED TO RECOVER ITS
REASONABLE COSTS AND FEES. JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATOR
MAY BE ENTERED BY ANY COURT HAVING JURISDICTION.

ARTICLE XV. END OF TERM

SECTION 15.1. 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, or
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. Any hold-over by Tenant shall be subject to all of the terms of
this Lease, except that the Basic rental shall be one hundred fifty percent
(150%) of the Basic monthly rental for the month immediately preceding the date
of termination, subject to Landlord's right to modify same upon thirty (30)
days notice to Tenant. As an example of the foregoing, if the Basic Rent for
the final month of the scheduled term is $27,204.00, then the Basic Rent for
the initial hold-over month shall be $40,806.00. 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 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.

SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate
any or all existing subleases unless Landlord, at its option, elects in writing
to treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall
quit and surrender possession of the Premises to Landlord in as good order,
condition and repair as when received or as hereafter may be improved by
Landlords or Tenant, reasonable wear and tear and repairs which are Landlord's
obligation excepted, and shall, without expense to Landlord, remove or cause to
be removed all voice and/or data transmission cabling installed by or for
Tenant, together with all personal property and debris, except for any items
that Landlord may by written authorization allow to remain. Tenants shall repair
all damage in the Premises resulting from the removal, which repair shall
include the patching and filling of holes and repair of structural damage,
provided that Landlord may instead elect to repair any structural damage at
Tenant's expense. If Tenant shall fail to comply with the provisions of this
Section, Landlord may effect the removal and/or make any repairs, and the cost
to Landlord shall be additional rent payable by Tenant upon demand. If
requested by Landlord, Tenant shall execute, acknowledge and deliver to
Landlord an instrument in writing releasing and quitclaiming to Landlord all
right, title and interest of Tenant in the Premises.

ARTICLE XVI. PAYMENTS AND NOTICES

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other may be delivered to the other party, at the address set forth in Item 12
of the Basic Lease Provisions, by personal service or telegram, telecopier, or
electronic facsimile transmission, or by any courier or "overnight" express
mailing service, or may be deposited in the United States mail, postage
prepaid. Either party may, by written notice to the other, served in the
manner provided in this Article, designate a different address. If any notice
or other document is sent by mail, it shall be deemed served or delivered three
(3) business days after mailing or, if sooner, upon actual receipt. If more
than one person or entity is named as Tenant under this Lease, service of any
notice upon any one of them shall be deemed as service upon all of them.

ARTICLE XVII. RULES AND REGULATIONS

Tenant agrees to comply with the Rules and Regulations attached as
Exhibit E, and any reasonable and nondiscriminatory amendments, modifications
and/or additions as may be adopted and published by written notice to tenants by
Landlord for the safety, care, security, good order, or cleanliness of the
Premises, Building, Project and/or Common Areas. Landlord shall not be liable
to Tenant for any violation of the Rules and Regulations or the breach of any
covenant or condition in any lease or any other act or conduct by any other
tenant, and the same shall not constitute a constructive eviction hereunder. One
or more waivers by Landlord of any breach of the Rules and Regulations by Tenant
or by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. Tenant's failure to keep and observe the Rules and
Regulations shall constitute a default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling.

ARTICLE XVIII. BROKER'S COMMISSION

ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

In the event of any transfer of Landlord's Interest in the Premises,
the transferor shall be automatically relieved of all obligations on the part
of Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor in which Tenant has an interest
shall be turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No holder of a mortgage and/or
deed of trust to which this Lease is or may be subordinate shall be responsible
in connection with the Security Deposit, unless the mortgagee or holder of the
deed of trust or the landlord actually receives the Security Deposit. It is
intended that the covenants and obligations contained in this Lease on the part
of Landlord shall, subject to the foregoing, be binding on Landlord, its
successors and assigns, only during and in respect to their respective
successive periods of ownership.

ARTICLE XX. INTERPRETATION

SECTION 20.1 GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

SECTION 20.2 HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

SECTION 20.3 JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

SECTION 20.4 SUCCESSORS. Subject to Articles IX and XIX, all rights
and liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and
assigns. Nothing contained in this Section is intended, or shall be construed,
to grant to any person other than Landlord and Tenant and their successors and
assigns any rights or remedies under this Lease.

SECTION 20.5 TIME OF ESSENCE. Time is of the essence with respect to
the performance of every provision of this Lease in which time of performance
is a factor.

SECTION 20.6 CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

SECTION 20.7 SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be hold invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and unforceable to the fullest extent permitted by law.

SECTION 20.8 WAIVER. One or more waivers by Landlord or Tenant of any
breach of any term, covenant or condition contained in this Lease shall not be a
waiver of any subsequent breach of the same or any other term, covenant or
condition. Consent to any act by one of the parties shall not be deemed to
render unnecessary the obtaining of that party's consent to any subsequent
act. No breach of this Lease shall be deemed to have been waived unless the
waiver is in a writing signed by the waiving party.

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SECTION 20.9. INABILITY TO PERFORM. In the event that either party
shall be delayed or hindered in or prevented from the performance of any work or
in performing any act required under this Lease by reason of any cause beyond
the reasonable control of that party, then the performance of the work or the
doing of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent.

SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and
other attachments cover in full each and every agreement of every kind between
the parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waivers its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.

SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance
of all the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord or any other person claiming by or through Landlord.

ARTICLE XXI. EXECUTION AND RECORDING

SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or
more counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.

SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The
submission of this Lease to Tenant shall be for examination purposes only, and
shall not constitute an offer to or option for Tenant to lease the Premises.
Execution of this Lease by Tenant and its return to Landlord shall not be
binding upon Landlord, notwithstanding any time interval, until Landlord has in
fact executed and delivered this Lease to Tenant, it being intended that this
Lease shall only become effective upon execution by Landlord and delivery of a
fully executed counterpart to Tenant.

SECTION 21.4. RECORDING. Tenant shall not record this Lease without
the prior written consent of Landlord, Tenant, upon the request of Landlord,
shall execute and acknowledge a "short form" memorandum of this Lease for
recording purposes.

SECTION 21.5. AMENDMENTS. No amendment or mutual termination of
this Lease shall be effective unless in writing signed by authorized
signatories of Tenant and Landlord, or by their respective successors in
interest. No actions, policies, oral or informal arrangements, business
dealings or other course of conduct by or between the parties shall be deemed
to modify this Lease in any respect.

ARTICLE XXII. MISCELLANEOUS

SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's
relationship with other tenants. Accordingly, Tenant agrees that it, and its
partners, officers, directors, employees and attorneys, shall not
intentionally and voluntarily disclose the terms and conditions of this Lease to
any other tenant or apparent prospective tenant of the Building or Project,
either directly or indirectly, without the prior written consent of Landlord,
provided, however, that Tenant may disclose the terms to prospective subtenants
or assignees under this Lease.

SECTION 22.2. REPRESENTATIONS BY TENANT. The application, financial
statements and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared,
certified and submitted to Landlord as an inducement and consideration to
Landlord to enter into this Lease. The application and statements are
represented and warranted by Tenant to be correct and to accurately and fully
reflect Tenant's true financial condition as of the date of execution of this
Lease by Tenant. Tenant shall during the Term promptly furnish Landlord with
annual financial statements reflecting Tenant's financial condition upon
written request from Landlord.

SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Building, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not materially increase the obligations of Tenant or materially and adversely
affect the leasehold interest created by this Lease.

SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the
part of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed of trust or mortgage covering the Building
whose address has been furnished to Tenant and (b) such beneficiary is afforded
a reasonable opportunity to cure the default by Landlord, including, if
necessary to effect the cure, time to obtain possession of the Building by
power of sale or judicial foreclosure provided that such foreclosure remedy is
diligently pursued.

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SECTION 22.5. DISCLOSURE STATEMENT. Tenant acknowledges that it has
read, understands and, if applicable, shall comply with the provisions of
Exhibit F to this Lease, if that Exhibit is attached.

SECTION 22.6. CONTINGENCY. Landlord is presently leasing the
Premises to Red Robin International, Inc. ("Red Robin") under an office space
lease dated June 27, 1991 (the "Existing Lease"). Concurrently herewith, the
parties intend to execute a Consent to Sublease pursuant to which Landlord will
consent to the subletting by Tenant of the entire Premises for the remainder of
the term of the Existing Lease. Such consent shall also include a waiver of Red
Robin's right to extend the term of the Existing Lease. Should Red Robin fail to
agree to such waiver and should said extension right be timely exercised by Red
Robin, this Lease shall become void and be of no further force or effect.

LANDLORD: TENANT:

THE IRVINE COMPANY, VISION SOLUTIONS, INC.
a Michigan corporation a California corporation

By /s/ William R. Halford By /s/ Robert J. Zwerling
--------------------------------------- ------------------------------
William R. Halford, Vice President and Printed Name ROBERT J. ZWERLING
General Manager,Irvine Office Company, ---------------------
a division of The Irvine Company Title CEO
----------------------------
By /s/ John C. Tsu
--------------------------------------- By /s/ David E. Peterson
John C. Tsu, -------------------------------
Assistant Secretary Printed Name DAVID E. PETERSON
---------------------
Title CFO
----------------------------
[STAMP - LEGAL APPROVAL]

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EXECUTIVE PARK

[LOGO]

28 EXECUTIVE PARK SECOND FLOOR

[MAP]

EXHIBIT A
<PAGE> 18
EXHIBIT B

UTILITIES AND SERVICES

The following standards for utilities and services shall be in effect
at the Building. Landlord reserves the right to adopt nondiscriminatory
modifications and additions to these standards. In the case of any conflict
between these standards and the Lease, the Lease shall be controlling. Subject
to all of the provisions of the Lease, including but not limited to the
restrictions contained in Section 6.1, the following shall apply:

1. Landlord shall furnish to the Premises during the hours of 8:00 a.m.
to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on Saturday,
generally recognized national holidays and Sundays excepted, reasonable air
conditioning, heating and ventilation services. Subject to the provisions set
forth below, Landlord shall also furnish the Building with elevator service (if
applicable), reasonable amounts of electric current for normal lighting by
Landlord's standard overhead fluorescent and incandescent fixtures and for
fractional horsepower office machines, and water for lavatory and drinking
purposes. Tenant will not, without the prior written consent of Landlord,
consume electricity in the Premises at a level in excess of 3 watts per square
foot or otherwise increase the amount of electricity, gas or water usually
furnished or supplied for use of the Premises as general office space; nor
shall Tenant connect any apparatus, machine or device with water pipes or
electric current (except through existing electrical outlets in the Premises)
for the purpose of using electric current or water. This paragraph shall at all
times be subject to applicable governmental regulations.

3. If any lights, machines or equipment (including without limitation
electronic data processing machines) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air conditioning
system, or generate substantially more heat in the Premises than would be
generated by the building standard lights and usual fractional horsepower
office equipment, Landlord shall have the right at its election to install or
modify any machinery and equipment to the extent Landlord reasonably deems
necessary to restore temperature balance. The cost of installation, and any
additional cost of operation and maintenance, shall be paid by Tenant to
Landlord promptly upon demand.

4. Landlord shall furnish water for drinking, personal hygiene and
lavatory purposes only. If Tenant requires or uses water for any purposes in
addition to ordinary drinking, cleaning and lavatory purposes, Landlord may, in
its discretion, install a water meter to measure Tenant's water consumption.
Tenant shall pay Landlord for the cost of the meter and the cost of its
installation, and for consumption throughout the duration of Tenant's occupancy.
Tenant shall keep the meter and installed equipment in good working order and
repair at Tenant's own cost and expense, in default of which Landlord may
cause the meter to be replaced or repaired at Tenant's expense. Tenant agrees
to pay for water consumed, as shown on the meter and when bills are rendered,
and on Tenant's default in making that payment Landlord may pay the charges on
behalf of Tenant. Any costs or expenses or payments made by Landlord for any of
the reasons or purposes stated above shall be deemed to be additional rent
payable by Tenant to Landlord upon demand.

5. In the event that any utility service to the Premises is separately
metered or billed to Tenant, Tenant shall pay all charges for that utility
service to the Premises and the cost of furnishing the utility to tenant suites
shall be excluded from the Operating Expenses as to which reimbursement from
Tenant is required in the Lease. If any utility charges are not paid when due
Landlord may pay them, and any amounts paid by Landlord shall immediately
become due to Landlord from Tenant as additional rent. If Landlord elects to
furnish any utility services to the Premises, Tenant shall purchase its
requirements of that utility from Landlord as long as the rates charged by
Landlord do not exceed those which Tenant would be required to pay if the
utility service were furnished it directly by a public utility.

6. Landlord shall provide janitorial services, Monday through Friday,
equivalent to that furnished in comparable buildings and window washing as
reasonably required; provided, however, that Tenant shall pay for any
additional or unusual janitorial services required by reason of any nonstandard
improvements in the Premises, including without limitation wall coverings and
floor coverings installed by or for Tenant, or by reason of any use of Premises
other than exclusively as offices. The cleaning services provided by Landlord
shall also exclude refrigerators, eating utensils (plates, drinking containers
and silverware), and interior glass partitions. Tenant shall pay to Landlord
the cost of removal of any of Tenant's refuse and rubbish, to the extent that
they exceed the refuse and rubbish usually attendant with general office usage.

7. Tenant shall have access to the Building 24 hours per day, 7 days per
week, 52 weeks per year; provided that Landlord may install access control
systems as it deems advisable for the Building. Such systems may, but need not,
include full or part-time lobby supervision, the use of a sign-in sign-out log,
a card identification access system, building parking and access pass system,
closing hours procedures, access control stations, fire stairwell exit door
alarm system, electronic guard system, mobile paging system, elevator control
system or any other access controls. In the event that Landlord elects to
provide any or all of these services, Landlord may discontinue providing them
at any time with or without notice. Landlord may impose a reasonable charge for
access control cards and/or keys issued to Tenant. Landlord shall have no
liability to Tenant for the provision by Landlord of improper access control
services, for any breakdown in service, or for the failure by Landlord to
provide access control services. Tenant further acknowledges that Landlord's
access systems may be temporarily inoperative during building emergency and
system repair periods. Tenant agrees to assume responsibility for compliance by
its employees with any regulations established by Landlord with respect to any
card key access or any other system of building access as Landlord may
establish. Tenant shall be liable to Landlord for any loss or damage resulting
from its or its employees use of any access system.

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<PAGE> 19
EXHIBIT C

PARKING

The following parking regulations shall be in effect at the Building.
Landlord reserves the right to adopt reasonable, nondiscriminatory modifications
and additions to the regulations by written notice to Tenant. In the case of any
conflict between these regulations and the Lease, the Lease shall be
controlling.

1. Landlord agrees to maintain, or cause to be maintained, an automobile
parking area ("Parking Area") in reasonable proximity to the Building for the
benefit and use of the visitors and patrons and, except as otherwise provided,
employees of Tenant, and other tenants and occupants of the Building. The
Parking Area shall include, whether in a surface parking area or a parking
structure, the automobile parking stalls, driveways, entrances, exits, sidewalks
and attendant pedestrian passageways and other areas designated for parking.
Landlord shall have the right and privilege of determining the nature and extent
of the automobile Parking Area, whether it shall be surface, underground or
other structure, and of making such changes to the Parking Area from time to
time which in its opinion are desirable and for the best interests of all
persons using the Parking Area. Landlord shall keep the Parking Area in a neat,
clean and orderly condition, and shall repair any damage to its facilities.
Landlord shall not be liable for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord. Unless
otherwise instructed by Landlord, every parker shall park and lock his or her
own motor vehicle. Landlord shall also have the right to establish, and from
time to time amend, and to enforce against all users of the Parking Area all
reasonable rules and regulations (including the designation of areas for
employee parking) as Landlord may deem necessary and advisable for the proper
and efficient operation and maintenance of the Parking Area.

3. Tenant shall, upon request of Landlord from time to time, furnish
Landlord with a list of its employees' names and of Tenant's and its employees'
vehicle license numbers. Tenant agrees to acquaint its employees with those
regulations and assumes responsibility for compliance by its employees with
these parking provisions, and shall be liable to Landlord for all unpaid parking
charges incurred by its employees. Any amount due from Tenant shall be deemed
additional rent. If Tenant or its employees park in other than designated
parking areas, if any such areas have been so designated by Landlord, then
Landlord may charge Tenant, as additional rent, Ten Dollars ($10.00) per day for
each day or partial day each vehicle is parked in any part of the Parking Area
(or other portion of the Common Areas) other than that designated. Tenant
authorizes Landlord to tow away from the Building any vehicle belonging to
Tenant or Tenant's employees parked in violation of these provisions, and/or to
attach violation stickers or notices to these vehicles. In the event Landlord
elects or is required to limit or control parking by tenants, employees,
visitors or invitees of the Building, whether by validation of parking tickets,
parking meters or any other method of assessment, Tenant agrees to participate
in the validation or assessment program under reasonable rules and regulations
as are established by Landlord and/or any applicable governmental agency.

4. Landlord may establish an identification system for vehicles of Tenant
and its employees which may consist of stickers, magnetic parking cards or other
identification devices supplied by Landlord. All identification devices shall
remain the property of Landlord, shall be displayed as required by Landlord or
upon request and may not be mutilated or obliterated in any manner. Those
devices shall not be transferable and any such device in the possession of an
unauthorized holder shall be void and may be confiscated. Landlord may impose a
deposit fee for identification devices and a replacement charge for devices
which are lost or stolen. Each identification device shall be returned to
Landlord promptly following the Expiration Date or sooner termination of this
Lease. Loss or theft of parking identification devices shall be reported to
Landlord or its Parking Area operator immediately and a written report of the
loss filed if requested by Landlord or its Parking Area operator. Deposits for
identification devices shall be forfeited if the identification devices are
lost, but shall be returned, without interest, at the time the holder ceases
using the Parking Area and surrenders the device to Landlord or its Parking Area
operator.

6. Parking Areas shall be used only for parking vehicles. Washing, waxing,
cleaning or servicing of vehicles, or the storage of vehicles for twenty-four
hour periods, in the Parking Area (other than emergency services) by any parker
or his or her agents or employees is prohibited unless otherwise authorized by
Landlord. Tenant shall have no right to install any fixtures, equipment or
personal property (other than vehicles) in the Parking Area, nor shall Tenant
make any alteration to the Parking Area.

7. It is understood that the employees of Tenant and the other tenants of
Landlord within the Building and Project shall not be permitted to park their
automobiles in the portions of the Parking Area which may from time to time be
designated for patrons of the Building and/or Project and that Landlord shall at
all times have the right to establish rules and regulations for employee
parking. Landlord shall furnish for employees of Tenant, either within or
reasonably close to the Parking Area, sixty-nine (69) parking spaces, up to
eighteen (18) of which shall be reserved stalls; provided that any of said
reserved stalls not so leased by Tenant at any time during the Term shall
thereafter be subject to availability as determined by Landlord. Tenant
understands that at least fifty percent (50%) of its unreserved parking shall be
located on the freeway side of the Building, and Tenant shall so direct its
employees. Employees shall pay to Landlord or its agents for the use of employee
parking spaces the amounts as Landlord shall from time to time determine.
Landlord may authorize persons other than those described above, including
occupants of other buildings, to utilize the Parking Area. In the event of the
use of the Parking Area by other persons, those persons shall pay for that use
in accordance with the terms established above; provided, however, Landlord may
allow those persons to use the Parking Area on weekends, holidays, and at other
non-office hours without payment. Notwithstanding the foregoing, provided Tenant
is not in default under the Lease, the monthly stall charge for the parking
spaces allotted herein to Tenant's employees shall be waived during the initial
Lease Term.

<PAGE> 20
8. Notwithstanding the foregoing paragraphs 1 through 7, Landlord shall be
entitled to pass on to Tenant its proportionate share of any charges or parking
surcharge or transportation management costs levied by any governmental agency.
The foregoing parking provisions are further subject to any governmental
regulations which limit parking or otherwise seek to encourage the use of
carpools, public transit or other alternative transportation forms or traffic
reduction programs. Tenant agrees that it will use its best efforts to
cooperate, including registration and attendance, in programs which may be
undertaken to reduce traffic. Tenant acknowledges that as a part of those
programs, it may be required to distribute employee transportation information,
participate in employee transportation surveys, allow employees to participate
in commuter activities, designate a liaison for commuter transportation
activities, distribute commuter information to all employees, and otherwise
participate in other programs or services initiated under a transportation
management program.

9. Should any parking spaces be allotted by Landlord to Tenant, either on
a reserved or nonreserved basis, Tenant shall not assign or sublet any of these
spaces, either voluntarily or by operation of law, without the prior written
consent of Landlord, except in connection with an authorized assignment of this
Lease or subletting of the Premises.

<PAGE> 21
EXHIBIT D

TENANT'S INSURANCE

The following standards for Tenant's insurance shall be in effect at the
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to those standards. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.

1. Tenant shall, at its sole cost and expense, commencing on the
date Tenant is given access to the Premises for any purpose and during the
entire Term, procure, pay for and keep in full force and effect: (i) commercial
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in, on or about the Premises, including but not limited
to personal injury, nonowned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold, served or consumed within the Premises), and
cross liability and severability of interest clauses, which policy(ies) shall
be written on an "occurrence" basis and for not less than $1,000,000.00
combined single limit (with a $50,000 minimum limit on fire legal liability)
per occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, which
liability limit shall be subject to increase by Landlord should Tenant elect to
extend the Term of this Lease; (ii) workers' compensation insurance coverage as
required by law, together with employers' liability insurance coverage; (iii)
with respect to improvements, alterations, and the like required or permitted
to be made by Tenant under this Lease, builder's all-risk insurance, in amounts
satisfactory to Landlord; (iv) insurance against fire, vandalism, malicious
mischief and such other additional perils as may be included in a standard "all
risk" form in general use in Orange County, California, insuring the leasehold
improvements, trade fixtures, furnishings, equipment and items of personal
property in the Premises, in an amount equal to not less than ninety percent
(90%) of their actual replacement cost (with replacement cost endorsement),
which policy shall also include loss of income/business interruption/extra
expense coverage in an amount not less than three months loss of income from
Tenant's business in the Premises. In no event shall the limits of any policy
be considered as limiting the liability of Tenant under this Lease.

2. All policies of insurance required to be carried by Tenant
pursuant to this Exhibit D shall be written by responsible insurance companies
authorized to do business in the State of California and with a Best's
policyholder rating of not less than A-X subject to final acceptance and
approval by Landlord. Any insurance required of Tenant may be furnished by
Tenant under any blanket policy carried by it or under a separate policy. A
true and exact copy of each paid up policy evidencing the insurance
(appropriately authenticated by the insurer) or a certificate of insurance,
certifying that the policy has been issued, provides the coverage required by
this Exhibit D and contains the required provisions, shall be delivered to
Landlord prior to the date Tenant is given the right of possession of the
Premises. Proper evidence of the renewal of any insurance coverage shall also
be delivered to Landlord not less than thirty (30) days prior to the expiration
of the coverage. Landlord may at any time, and from time to time, inspect
and/or copy any and all insurance policies required by this Lease.

3. Each policy evidencing insurance required to be carried by
Tenant pursuant to this Exhibit D shall contain the following provisions and/or
clauses satisfactory to Landlord: (i) a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant; (ii) a
provision including Landlord and any other parties in interest designated by
Landlord as an additional insured, except as to workers compensation insurance;
(iii) a waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors and representatives which arises or might arise
by reason of any payment under the policy or by reason of any act or omission
of Landlord, its agents, employees, contractors or representatives; and (iv) a
provision that the insurer will not cancel or change the coverage provided by
the policy without first giving Landlord thirty (30) days prior written notice.

4. In the event that Tenant fails to procure, maintain and/or pay
for, at the times and for the durations specified in this Exhibit D, any
insurance required by this Exhibit D, or fails to carry insurance required by
any governmental authority, Landlord may at its election procure that insurance
and pay the premiums, in which event Tenant shall repay Landlord all sums paid
by Landlord, together with interest at the maximum rate permitted by law and
any related costs or expenses incurred by Landlord, within ten (10) days
following Landlord's written demand to Tenant.

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<PAGE> 22
EXHIBIT E

RULES AND REGULATIONS

The following Rules and Regulations shall be in effect at the Building.
Landlord reserves the right to adopt reasonable nondiscriminatory modifications
and additions at any time. In the case of any conflict between these
regulations and the Lease, the Lease shall be controlling.

1. Except with the prior written consent of Landlord, Tenant shall
not sell, or permit the retail sale of, newspapers, magazines, periodicals, or
theater tickets, in or from the Premises, nor shall Tenant carry on, or permit
or allow any employee or other person to carry on, the business of stenography,
typewriting or any similar business in or from the Premises for the service or
accommodation of occupants of any other portion of the Building. Tenant shall
not allow the Premises to be utilized for any manufacturing of any kind, or the
business of a public barber shop, beauty parlor, or a manicuring and
chiropodist business, or any business other than that specifically provided for
in the Lease.

2. The sidewalks, halls, passages, elevators, stairways, and other
common areas shall not be obstructed by Tenant or used by it for storage or for
any purpose other than for ingress to and egress from the Premises. The halls,
passages, entrances, elevators, 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 to these areas 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. Nothing contained in this Lease
shall be construed to prevent 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
those persons are engaged in illegal activities. Neither Tenant nor any
employee or contractor of Tenant shall go upon the roof of the Building without
the prior written consent of Landlord.

3. The sashes, sash doors, windows, glass lights, solar film
and/or screen, 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 shall be thrown in those facilities, and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by Tenant.

4. No sign, advertisement or notice visible from the exterior of
the Premises 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 its consent at any time, whether before or after the
execution of this Lease, that consent shall in no way operate as a waiver or
release of any of the provisions 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 any
subsequent sign, advertisement or notice. If Landlord, by a notice in writing
to Tenant, shall object to any curtain, blind, tinting, shade or screen attached
to, or hung in, or used in connection with, any window or door of the Premises,
the use of that curtain, blind, tinting, shade or screen shall be immediately
discontinued by Tenant. No awnings shall be permitted on any part of the
Premises.

5. Tenant shall not do or permit anything to be done in the
Premises, or bring or keep anything in the Premises, which shall in any way
increase the rate of fire insurance on the Building, or on the property kept in
the Building, 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 portion of the Building or its contents, or with any rules and ordinances
established by the Board of Health or other governmental authority.

6. The installation and location of any unusually heavy equipment
in the Premises, including without limitation file storage units, safes and
electronic data processing equipment, shall require the prior written approval
of Landlord. Landlord may restrict the weight and position of any equipment
that may exceed the weight load limits for the structure of the Building, and
may further require, at Tenant's expense, the reinforcement of any flooring on
which such equipment may be placed and/or an engineering study to be performed
to determine whether the equipment may safely be installed in the Building and
the necessity of any reinforcement. The moving of large or heavy objects shall
occur only between those hours as may be designated by, and only upon previous
written notice to, Landlord, and the persons employed to move those objects in
or out of the Building must be reasonably acceptable to Landlord. No freight,
furniture or bulky matter of any description shall be received into or moved out
of the lobby of the Building or carried into the elevators during normal
business hours (i.e., Monday through Friday, 8:00 a.m. to 6:00 p.m.) unless
approved in writing by Landlord.

7. 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 that
purpose. Tenant shall not cause unnecessary labor by reason of Tenant's
carelessness and indifference in the preservation of good order and
cleanliness.

8. Tenant shall not 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 either tenants or those having business with other
tenants, nor shall any animals or birds be kept by Tenant in or about the
Building. Smoking or carrying of lighted cigars, cigarettes, pipes or similar
products anywhere within the elevators, restrooms, common corridors, lobbies or
other common areas of the Building is strictly prohibited. Any such activity
within the Premises shall, until further notice, be permitted only absent
written notification to Landlord from another tenant of the Building that such
activity is creating fumes or odors that are offensive or objectionable; in the
event such notice is given to Landlord, Landlord may prohibit smoking within
the Premises and may enforce such prohibition pursuant to Landlord's leasehold
remedies. Smoking is permitted outside the Building and within the project only
in areas designated by Landlord.

9. No cooking shall be done or permitted by Tenant on the premises,
except pursuant to the normal use of a microwave oven and coffee maker for the
benefit of Tenant's employees and invitees, nor shall the Premises be used for
the storage of merchandise or for lodging.

10. Tenant shall not use or keep in 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.

1
<PAGE> 23
11. 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 otherwise shall be made without directions from
Landlord.

12. Upon the termination of its tenancy, Tenant shall deliver to
Landlord all the keys to offices, rooms and toilet rooms and all access cards
which shall have been furnished to Tenant or which Tenant shall have had made.
In the event of the loss of any keys or cards so furnished, Tenant shall pay
Landlord for those items.

13. Tenant shall not affix any floor covering 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 floor covering shall be subject
to approval by Landlord. The expense of repairing any damage resulting from a
violation of this rule shall be borne by Tenant.

14. On Saturdays, Sundays and legal holidays, and on other days
between the hours of 6:00 p.m. and 8:00 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 complies with any access control
system that Landlord may establish. 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 Rules 2 or 18 of this Exhibit. In case
of invasion, mob, riot, public excitement, or other commotion, or in the event
of any other situation reasonably requiring the evacuation of the Building,
Landlord reserves the right at its election and without liability to Tenant to
prevent access to the Building by closing the doors or otherwise, for the
safety of the tenants and protection of property in the Building.

15. Tenant shall see that the windows, transoms and doors of the
Premises are closed and securely locked before leaving the Building and shall
not leave windows open, if applicable, when it rains. Tenant shall cause all
water faucets or water apparatus to be shut off before Tenant or Tenant's
employees leave the Building, and that all electricity, gas or air shall
likewise be 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.

18. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person. In the event any such person
is a guest or invitee of Tenant, Tenant shall notify Landlord in advance of
each desired entry, and Landlord shall authorize the person so designated to
enter the Premises, provided that in the sole and absolute discretionary
judgment of Landlord, such person will not be involved in general solicitation
activities, or the proselytizing, petitioning, or disturbance of other tenants
or their customers or invitees, or engaged or likely to engage in conduct which
may in Landlord's opinion distract from the use of the Premises for its
intended purpose. Notwithstanding the foregoing, Landlord reserves the absolute
right and discretion to limit or prevent access to the Buildings by any food or
beverage vendor, whether or not invited by Tenant, and Landlord may condition
such access upon the vendor's execution of an entry permit agreement which may
contain provisions for insurance coverage and/or the payment of a fee to
Landlord.

19. Tenant shall be required to utilize the third party contractor
designated by Landlord for the Building to provide any telephone wiring
services from the minimum point of entry of the telephone cable in the Building
to the Premises. Notwithstanding the foregoing, however, in the event Tenant
does not have a telephone switch within the Premises, Tenant may, with
Landlord's approval and supervision, use a trained contractor to provide such
wiring services, but only from the Premises to the telephone room on the floor
on which the Premises are situated.

20. Landlord may from time to time grant tenants individual and
temporary variances from these Rules, provided that any variance does not have a
material adverse effect on the use and enjoyment of the Premises by Tenant.

<PAGE> 1
EXHIBIT 10.10

June 24, 1996

Board of Directors
Midrange Information Systems, Inc.
2600 Michelson Avenue - Suite 1100
Irvine, CA 92715

Re: Subscription to Purchase 188 Shares of the Common Stock, no par value
per share, of Midrange Information Systems, Inc. (the "Company").

Gentlemen:

(1) Subscription:

The undersigned hereby subscribes to purchase 188 shares (the "Shares") of
the common stock, no par value, of the Company (the "Common Stock") at $2,130.08
per Share (the "Purchase Price") and hereby tenders payment for the subscribed
for number of Shares by check or bank draft made payable to The "TimeCapital
Securities Corporation, Special Customer Account", in the amount of $400,455.04.
Upon receipt by TimeCapital Securities Corporation ("TimeCapital") of
subscription funds totaling in the aggregate two million five hundred thousand
seven hundred thirteen dollars and ninety two cents ($2,500,713.92), or such
lesser amount as mutually determined by the Company and TimeCapital in their
discretion (the "Offering Amount"), and the acceptance by the Company of
Subscriptions representing the Offering Amount, a closing of this offering (the
"Offering") shall be held at the offices of the Company or such other place as
the Company and TimeCapital shall mutually agree (the "Closing"). At the
Closing, TimeCapital shall deliver to the Company by certified check or wire
transfer the entire Offering Amount, without reduction for escrow fees,
commissions, costs or expenses of any nature. Upon receipt of the Purchase Price
for the Shares subscribed for herein, the Company shall deliver to the
undersigned subscriber a certificate representing the number of Shares purchased
pursuant to the terms of this Subscription Agreement. In connection with this
subscription, the undersigned hereby executes this Subscription Agreement and
hereby acknowledges that the undersigned has received, read, understands and is
familiar with:

(i) the Company's Business Plan prepared February 14, 1996 as
revised March 13, 1996 (the "Business Plan");

(ii) the Company's Product Plan prepared February 19, 1996 (the
"Product Plan");

(iii) Financial Statements (unaudited) for the year ended December 31,
1995 consisting of balance sheet, statement of cash flows and
statement of operating results (the "Annual Report");

(iv) the Company's 1st Quarter 1996 Financial Results, Four Year
Financial Projections and Company Valuation prepared April 30,
1996 (the "Quarterly Report"); and

(v) the Company's 1996 Marketing Plan dated January, 1996 (the
"Marketing Plan"). The Product Plan and the Marketing Plan are
hereinafter referred to collectively as the "Plans".

<PAGE> 2

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 2

The undersigned further acknowledges that, except as set forth in such
Business Plan, Annual Report, Quarterly Report and Plans (together, the "Company
Materials") made available to the undersigned by the Company, no representations
or warranties have been made to the undersigned, or to the undersigned's
advisors by the Company, or by any person acting on behalf of the Company, with
respect to the offer or sale of the Shares and/or the economic, tax, or any
other aspects or consequences of a purchase of the Shares and/or the investment
made thereby. Further, the undersigned has not relied upon any information
concerning the Company, written or oral, other than that contained in the
aforementioned Company Materials.

The undersigned hereby acknowledges that the undersigned has had an
opportunity to ask questions of, and receive answers from persons acting on
behalf of the Company to verify the accuracy and completeness of the information
set forth in such Company Materials prior to sale and the undersigned hereby
acknowledges that the undersigned has not requested the Company to provide any
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy and
completeness of the information made available.

(2) Subscriber's Representations and Warranties.

The undersigned subscriber represents and warrants to the
Company:

(a) The Shares are being issued to the undersigned by the
Company for investment only, for the undersigned's own account, and are not
being purchased by the undersigned with a view to distribution of such Shares,
or for the offer and/or sale in connection with any distribution thereof. The
undersigned is not participating, directly or indirectly, in an underwriting of
the Shares or in any similar undertaking. The undersigned has no present plans
to enter into any contract, undertaking, agreement or arrangement which would
entail an underwriting of such Shares or any similar distribution thereof,

(b) The undersigned is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission, in that

(i) the undersigned is a natural person whose net worth or
joint net worth, taking the undersigned's spouse into
consideration, at the time of the undersigned's
purchase of the Shares herein, exceeds One Million
Dollars ($1,000,000); or

(ii) the undersigned is a natural person whose income in
each of the last two years exceeded Two Hundred
Thousand Dollars ($200,000) (Three Hundred Thousand
Dollars ($300,000) joint

<PAGE> 3

Board of Directors
Midrange Information Systems, Inc.
June __ , 1996
Page 3

income taking the undersigned's spouse into
consideration) and the undersigned has a reasonable
expectation of reaching the same income level in this
current year; or

(iii) as otherwise defined in Regulation D (see Annex A);

(c) The undersigned understands that there is no guarantee of profits
or against loss as a result of purchasing the Shares and the undersigned hereby
states that the undersigned can afford a complete loss of the investment in such
Shares. The undersigned further warrants that the undersigned's present
financial condition is such that the undersigned has no present or perceived
future need to dispose of any portion of the Shares to satisfy any existing or
contemplated undertaking, obligation, need or indebtedness. Consequently, the
undersigned represents that the undersigned has sufficient liquid assets to pay
the full purchase price for the Shares, has adequate means for providing for the
undersigned's current needs and possible contingencies and has no current need
to liquidate any of the undersigned's investment in the Company.

(d) The undersigned has had the opportunity to be represented by such
legal counsel and other advisors personally selected by the undersigned, as the
undersigned has found necessary to consult, concerning the purchase of the
Shares. The undersigned, alone and/or together with its advisors, if any, has
made an examination of applicable documents and an analysis of all relevant tax,
financial, and securities law aspects of an investment in the Shares. The
undersigned, the undersigned's counsel, advisors, and such other persons with
whom the undersigned has found it necessary or advisable to consult, have
represented to the undersigned that they have knowledge or experience in
business and financial matters to evaluate the information set forth in the
Company Materials, and/or other public information statements issued by the
Company, the risks associated with this investment, and to make an informed
investment decision with respect hereto. To the extent that the undersigned has
found it necessary to consult with any such counsel and/or advisors concerning
the purchase of the Shares, the undersigned has relied upon their advice and
counsel in making such investment decision.

(e) The undersigned is a resident of the jurisdiction set forth below
the undersigned's name on the signature page of this Subscription Agreement.

(f) The undersigned understands that this subscription is subject to
acceptance by the Company and subject further to the Company's acceptance of
subscriptions for the purchase of an aggregate of 1,174 Shares on the terms and
conditions hereof (the "Offering"). Accordingly, the undersigned authorizes the
placement of this Subscription and the undersigned's subscription funds
thereunder to be deposited with other Subscriptions and subscription funds for
the Shares into trust with TimeCapital Securities Corporation pending acceptance
by the Company and a closing pursuant to the terms and conditions hereof.

<PAGE> 4
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 4

(3) Company's Representations and Warranties

The Company represents and warrants to the undersigned subscriber:

(a) The information contained in the Company Materials distributed by
the Company as described in paragraph (1) of this Subscription Agreement contain
no untrue statements of material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, except that the Company Materials
contain certain projections and forward-looking statements as to which the
Company provides no representation or warranty other than that such projections
and forward-looking statements were prepared based upon assumptions that the
Company believed reasonable at the time they were made;

(b) As of the dates of the execution of this Subscription Agreement,
the Company's acceptance thereof and closing of the Subscription, there will
have been no material, adverse changes in the Company's operations or financial
condition since the applicable dates of the aforementioned Company Materials
distributed by the Company.

(4) Restrictions on Transfers.

(a) Securities Law Restrictions. The undersigned understands that the
offer and/or sale of the Shares to the undersigned is not required to be
registered under the Securities Act of 1933 (the "1933 Act") by reason of
specific exemptions for the offer and sale of the Shares under Section 4 (2) of
the 1933 Act and the provisions of Regulation D promulgated by the Securities
and Exchange Commission. The undersigned further understands that, except as
provided in paragraph 5 hereof, the Company has not agreed to register the
Shares for distribution and/or resale in accordance with the provisions of the
1933 Act or the Securities Exchange Act of 1934 (the "1934 Act"), or to register
the Shares for distribution and/or resale under any applicable state securities
laws. Hence it is the undersigned's understanding that by virtue of the
provisions of certain rules respecting "restricted securities" promulgated under
such federal and/or state laws, unless such secondary distribution and/or resale
is registered as provided in herein the Shares which the undersigned is
purchasing by virtue of this Subscription Agreement must be held indefinitely
and may not be sold, transferred, pledged, hypothecated or otherwise encumbered
for value, unless and until such secondary distribution and/or state securities
laws or unless an exemption from registration is available, in which case the
undersigned still may be limited as to the amount of the Shares that may be
sold, transferred, pledged and/or encumbered for value.

<PAGE> 5
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 5

(b) Other Restrictions on Transfers. Until the closing of the
Company's initial underwritten public offering, the Shares sold pursuant to this
Subscription Agreement shall not be sold, assigned, transferred or in any way
disposed of without the prior written consent of the Company, which consent
shall not be unreasonably withheld.

(c) Legends. The undersigned, therefore, agrees that any certificates
evidencing the Shares received by the undersigned by virtue of this Subscription
Agreement shall be stamped or otherwise imprinted with conspicuous legends to
give notice of the transfer restrictions set forth herein and the undersigned
acknowledges that the Company may cause stop transfer orders to be placed on the
undersigned's account.

(5) Registration Rights.

(a) Registration Rights; Requests for Registration.

For purposes of the rights to registration, the Shares actually
sold in the Offering are referred to as the "Registrable Shares". Up to and
including May 31, 2001, whenever the Company proposes to register (either on its
own behalf or on behalf of holders of its equity securities other than the
holders of Registerable Shares in their capacity as holders of the Registerable
Shares) any of its equity securities under the 1933 Act and the registration
form to be used may be used for a registration of the Registerable Shares, the
Company will give prompt written notice to all holders of the Registerable
Shares of its intention to effect such a registration and will include in such
registration all Registerable Shares with respect to which the Company has
received written request by the holders thereof for inclusion therein within 15
days after the mailing of the Company's notice. Any registrations requested
pursuant to this paragraph (5)(a) are referred to herein as "Piggyback
Registrations." If the registration to which this paragraph 5 (a) relates is
effected pursuant to an underwriting, the right to registration contained herein
is conditioned upon the Company and the holder(s) of the Registrable Shares
entering into an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting by the Company. If any holder of
Registrable Shares disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the underwriter
received ten business days prior to effectiveness of the registration statement
relating to such registration.

(b) Piggyback Registrations.

(1) Priority on Primary Registrations.

If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise the
Company in writing that, in their opinion, the number of equity securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) first,
the equity securities the Company proposes to sell, (ii)

<PAGE> 6
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 6

second, such number of the Registerable Shares requested to be included in such
Piggyback Registration as when sold thereunder at the offering price therein
shall produce gross proceeds up to the Offering Amount hereunder, pro rata among
the holders of such Registerable Shares based upon a fraction, with respect to
each holder, the numerator of which is the number of Registerable Shares
requested to be sold by such holder, and the denominator of which is the number
of Registerable Shares requested to be included in such Piggyback Registration
by all holders of the Registerable Shares, (iii) third, such number of equity
securities requested to be included in such Piggyback Registration by management
securityholders of the Company as when sold thereunder at the offering price
therein shall produce gross proceeds in an amount up to the Offering Amount; and
(iv) fourth, any other securities requested to be included in such Piggyback
Registration allocated equally between (x) securityholders whose securities are
included pursuant to subparagraph 5 (b) (1) (ii) above and (y) securityholders,
whose securities are included pursuant to subparagraph 5 (b) (1) (iii) above,
respectively and among the securityholders represented in each of subparagraph 5
(b) (1) (iv) (x) on the one hand and subparagraph 5 (b) (1) (iv) (y) on the
other hand pro rata as to each such group based upon a fraction the numerator of
which is the number of shares requested to be sold by such securityholder and
the denominator of which is the number of shares requested to be included in the
Piggyback Registration by all securityholders pursuant to subparagraph 5 (b) (1)
(iv) (x) or subparagraph 5 (b) (1) (iv) (y), as the case may be. Anything in
subparagraph 5 (b) (1) (iii) or subparagraph 5 (b) (1) (iv) (y) to the contrary
not withstanding, if equity securities of management securityholders of the
Company are not included in the Piggyback Registration to the maximum amount
provided in subparagraph 5 (b) (1) (iii) or subparagraph 5 (b) (1) (iv) (y),
whether voluntarily or involuntarily, such fact shall not preclude the holders
of Registrable Shares from requesting inclusion in such Piggyback Registration
of Registrable Shares pursuant to subparagraph 5 (b) (1) (iv) (x) above. The
initial Piggyback Registration shall not include less than such number of
Registrable Shares as shall be sold thereunder for gross proceeds at the
offering price equal to the Offering Amount, except with the written consent of
TimeCapital, acting on behalf of all of the subscribers, which consent may not
be unreasonably withheld. THE UNDERSIGNED SUBSCRIBER HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS TIMECAPITAL SECURITIES CORPORATION ("TIMECAPITAL") ITS
ATTORNEY-IN-FACT TO CONSENT OR WITHHOLD CONSENT TO THE INITIAL PIGGYBACK
REGISTRATION INCLUDING LESS THAN SUCH NUMBER OF REGISTRABLE SHARES AS WOULD, IF
SOLD, PRODUCE GROSS PROCEEDS AT THE OFFERING PRICE EQUAL TO THE OFFERING AMOUNT
AS TIMECAPITAL SHALL IN ITS SOLE DISCRETION DETERMINE.

(2) Priority on Secondary Registrations.

If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's equity securities (other than
holders of the Registerable Shares in their capacity as holders of the
Registerable Shares), and the managing underwriters advise the Company in
writing that, in their opinion, the number of equity securities requested to be
included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i) first, the equity
securities to be sold in the secondary offering by the holders of the Company's
equity

<PAGE> 7

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 7

securities, (ii) second, the Registerable Shares requested to be included in
such Piggyback Registration, pro rata among the holders of such Registerable
Shares based upon a fraction, with respect to each holder, the numerator of
which is the number of Registerable Shares requested to be sold by such holder,
and the denominator of which is the number of Registerable Shares requested to
be included in such Piggyback Registration by all holders of Registerable
Shares, and (iii) third, any other equity securities requested to be included in
such registration.

(3) Expenses of Piggyback Registrations.

The Company shall pay all expenses incident to Piggyback
Registrations, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent, certified public accountants, underwriters
(excluding discounts and commissions) and any other persons retained by the
Company in connection with such Piggyback Registrations. The holders of the
Registerable Shares requesting the Piggyback Registration(s) will be required to
pay their pro rata share of any underwriter and/or brokerage commissions
attributable to the inclusion of the Registerable Shares in the Piggyback
Registration(s).

If the Company has previously filed a registration statement with
respect to the Registerable Shares pursuant to a Piggyback Registration and if
such previous registration has not been withdrawn or abandoned, the Company will
not file or cause to be effective any other registration statement with respect
to any of its equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the 1933 Act (except with respect
to securities to be sold under a Company employee benefit plans registered on
Form S-8), whether on its own behalf or at the request of any holder or holders
of such securities, until a period of at least three months has elapsed from the
effective date of such previous Piggyback Registration.

(d) Holdback Agreement.

(1) Each holder of Registerable Shares agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the ninety day period beginning on the
effective date of any underwritten Piggyback Registration (except as part of
such underwritten Registration), unless the underwriters managing the registered
Piggyback public offering otherwise agree. This restriction shall not apply in
the case of Registerable Shares which have been registered previously in a
Piggyback Registration.

<PAGE> 8

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 8

(2) The Company agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the ninety day period beginning on the effective date of any underwritten
Piggyback Registration (except as part of such underwritten registration or with
respect to sales of its securities under any employee benefit plan pursuant to
registration on Form S-8), unless the underwriters managing the registered
Piggyback public offering otherwise agree.

(e) Scope of Registration Rights; Registration Procedures.

The Company's registration obligations under this Subscription
Agreement are "best efforts" obligations provided, however, that if the Company
determines in the good faith judgment of the Board of Directors that it would be
detrimental to the Company and its shareholders for a registration statement to
be filed, or an offering to proceed, the Company may defer the filing of such
registration statement, or withdraw a registration statement which has been
filed, and the Company shall have no further obligations to the holders of
Registrable Shares with respect to such deferred or withdrawn registration
statement. Subject hereto, whenever the holders of Registerable Shares have
requested that any Registerable Shares be registered, the Company will use its
best efforts to effect the registration and the sale of such Registerable Shares
with the intended method of disposition thereof, and pursuant thereto the
Company will as expeditiously as possible:

(1) Prepare and file with the Securities and Exchange Commission
a registration statement with respect to such Registerable Shares and use its
best efforts to cause such registration statement to become effective.

(2) Prepare and file with the Securities and Exchange Commission
such amendments with supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 30 days and
comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration statement during such period in
accordance with the intended method of distribution by the sellers thereof set
forth in such registration statement;

(3) Furnish to each seller of the Registerable Shares such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus, if any) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Registerable
Shares owned by such seller;

<PAGE> 9

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 9

(4) Use its best efforts to register or qualify such
Registerable Shares under such jurisdiction as any seller reasonably requests
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registerable Shares owned by such seller provided that the
Company will not be required to:

(i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but
for this subparagraph;

(ii) subject itself to taxation in any jurisdiction where it
would not otherwise be subject to taxation but for this
subparagraph;

(iii) consent to general service of process in any
jurisdiction where it would not otherwise be subject to
process but for this subparagraph;

(5) notify each seller of such Registerable Shares, at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and, at the request of
any such seller, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registerable Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading;

(6) enter into any such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of the Registerable Shares being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
registered Registerable Shares;

(7) make available for inspection by any seller of the
Registerable Shares, any underwriter participating in any disposition pursuant
to such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement.

<PAGE> 10
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 10

(f) Indemnification.

(1) The Company agrees to indemnify, to the extent permitted by
law, each holder of the Registerable Shares, its officers and directors and each
person who controls such holder (within the meaning of the 1933 Act) against all
losses, claims, damages, liabilities and expenses (but excluding special,
incidental or consequential damages) caused by any untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereto or supplement thereto or any omission of a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with the sufficient number of copies of the
same;

(2) In connection with any registration statement in which a
holder of Registerable Shares is participating, each such holder will furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages, liabilities and
expenses (but excluding special, incidental or consequential damages) resulting
from any untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any statement thereof, or
supplement thereto or any omission of a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder; provided that the obligation
to indemnify as set forth herein will be several, not joint and several, among
such holders of Registerable Shares and the liability of each such holder of
Registerable Shares will be in proportion to and limited to the net amount
received by such holder from the sale of the Registerable Shares pursuant to
such registration statement;

(3) Any person entitled to indemnification hereunder will:

(i) give prompt written notice to the indemnifying party of
any claim with respect to which such person seeks
indemnification, and

(ii) unless in such indemnified party's reasonable judgment,
a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such
claim, permit the indemnifying party to assume the
defense of

<PAGE> 11

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 11

such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability
for any settlement made by the indemnified party without
its consent, but such consent will not be unreasonably
withheld. An indemnifying party who is not entitled to
or elects not to assume the defense of the claim, will
not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such
indemnifying party with respect to such claim unless in
the reasonable judgment of any indemnified party, a
conflict of interest may exist between such indemnified
party and any other party and/or other of such
indemnified parties with respect to such claim. The
provisions of this paragraph 5 (f) (3) (ii) to the
contrary notwithstanding, in the event the Company is an
indemnifying party pursuant hereto, separate counsel for
an indemnified party shall be permitted only upon the
Company's prior written consent, which consent shall not
be unreasonably withheld or delayed.

(6) Put Agreement

(a) Put Notice

If the Company has not registered shares of the Common Stock under the
1933 Act by May 1, 2000, then, in such event, the holder of the Shares shall
have the right to deliver to the Company at any time(s) on or before May 31,
2001 a notice (a "Put Notice,") stating such holder's intent to put to the
Company such amount of the Shares (as adjusted pursuant to paragraph 7 hereof),
as holder shall elect. The amount of Shares so specified in a Put Notice
is hereinafter referred to as the "Put Shares". A Put Notice shall be delivered
in the manner provided for notices hereunder and shall be irrevocable except as
expressly provided in paragraph (b) below.

(b) Company's Obligation to Purchase

Provided funds of the Company are legally available therefor, the
Company shall purchase from the holder the number of Put Shares specified by
such holder in a Put Notice delivered to the Company in accordance with
paragraph (a) above. If funds of the Company are not legally available to
purchase Put Shares, the Put Notice shall become revocable but, unless revoked,
the Company shall purchase the Put Shares at such future date as funds of the
Company shall first become legally available therefor. The purchase price per
share for such Put Shares shall be an amount equal to the holder's purchase
price for each such Put Share together with interest thereon from date of
holder's purchase

<PAGE> 12

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 12

to date of the Put Notice at a rate equal to the fixed interest rate for United
States Treasury Bonds of thirty (30) year duration issued on or the trading date
nearest the date of the Put Notice. Such payment shall be made within thirty
(30) days of the Put Notice by check payable to such holder against delivery by
such holder of a certificate or certificates representing such Put Shares duly
endorsed for transfer with signature guaranteed by a national bank or a member
firm of the New York Stock Exchange. The Company promptly shall cause to be
delivered to such holder a balance certificate for any Shares represented by the
certificate(s) tendered by such holder which were not the subject of the Put
Notice.

The Company represents that it is not a party to and hereby agrees
that it will not enter into any agreement or other obligation which would
prohibit it from complying with it's obligations under this paragraph 6.

(7) Adjustment of Number of Shares of Common Stock

(a) If on or prior to the earlier of (i) the effective date of the
registration of shares of the Company's Common Stock pursuant to the 1933 Act or
(ii) May 31, 2001, the Company shall issue any Common Stock as a stock dividend
to holders of any securities of the Company other than Common Stock, or issue or
sell any Common Stock or any security convertible into Common Stock for a
consideration per share of Common Stock less than the Purchase Price (as
adjusted for any subdivisions, splits, combinations or reclassifications of the
Shares) (each such occurrence hereinafter called an "Event"), then, and
thereafter upon each further Event, the Company shall issue to holder, without
additional consideration therefor, such number of additional shares of Common
Stock in order that the aggregate of such additional shares together with the
number of holder's shares of Common Stock held prior to such Event (but as
adjusted for prior Events), shall represent a percentage of the total
outstanding shares of Common Stock on a fully diluted basis after the Event
equal to the percentage of the total outstanding shares of Common Stock on a
fully diluted basis held by the holder prior to the Event.

(b) If the Company's Total Revenue for 1996 is less than $10,072,500,
the Company shall issue to holder, without additional consideration therefor,
such number of additional shares of Common Stock as shall be determined by the
product of multiplying (x) the number of holder's shares of Common Stock held on
December 31, 1996 by (y) a quotient. Such quotient is determined by dividing (1)
the remainder of (a) 11,850,000 less (b) the Company's 1996 Total Revenue by
(2) the Company's 1996 Total Revenue.

(8) Sale of Company

If, prior to the earlier of (a) the effective date of the registration of
shares of the Company's Common Stock pursuant to the 1933 Act (provided such
number of the Registrable Shares are included therein as will produce on the
sale thereof proceeds at

<PAGE> 13

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 13

least equal to the Offering Amount) or (b) May 31, 2001, the Company or
substantially all of its assets shall be sold, the holder shall receive from the
consideration paid the greater of (i) his aliquot shares of the consideration
determined by a fraction the numerator of which shall be the number of shares of
Common Stock held by the holder as of the date of sale of the Company or its
assets and the denominator of which shall be the total number of shares of
Common Stock issued and outstanding as of the date of sale of the Company or its
assets or (ii) the amount that would be due had holder given a Put Notice
pursuant to paragraph (6) hereof for all of holder's shares on the date of sale
of the Company or its assets.

(9) Notices.

Any notices or other communication required or permitted herein shall be
sufficiently given if sent by registered or certified mail, postage prepaid,
return receipt requested or by reputable overnight courier service (e.g.,
Federal Express) if to the Company, to the address set forth above, and if to
the undersigned, to the address set forth below the undersigned's signature
hereto, or to such other addresses as the Company or the undersigned shall
designate to the other by notice in writing.

(10) Successors and Assigns.

This subscription for Shares and Subscription Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and to the successors
and assigns of the Company and to the personal and legal representatives of the
undersigned, and to the extent applicable, his spouse or children. This
Subscription Agreement may only be assigned by the undersigned Subscriber to an
"accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission and then only with the
prior written consent of the Company, which consent shall not be unreasonably
withheld. For the purposes of this Subscription Agreement, the term "holder"
means, where the context so indicates, the subscriber and any permitted assignee
thereof.

(11) Applicable Law.

Except when an interpretation of federal and/or state securities laws is
necessary or such law governs, this Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

(12) Certification with Respect to Federal Dividend and Interest Payments;
Back-up Withholding

<PAGE> 14

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 14

Under penalties of perjury, the undersigned hereby certifies to the Company
as follows:

(a) The number shown below is the undersigned's Social Security or
other taxpayer identification number and such number is the
undersigned's correct taxpayer identification number; and

(b) The undersigned is not subject to back-up withholding either
because the undersigned has not been notified by the Internal
Revenue Service that the undersigned is subject to back-up
withholding as a result of failure to report all interest or
dividends, or the Internal Revenue Service has notified the
undersigned that the undersigned is no longer subject to back-up
withholding.

<PAGE> 15

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 15

IMPORTANT NOTICES TO INVESTORS CONCERNING CERTAIN RISKS

THE SECURITIES OFFERED HEREBY ARE OFFERED PURSUANT TO EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND STATE
SECURITIES LAWS AND, CONSEQUENTLY, HAVE NOT BEEN REGISTERED UNDER THE ACT AND
MAY NOT BE RESOLD UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. A LEGEND SHALL BE PLACED ON THE
CERTIFICATES REPRESENTING THE SHARES HEREBY OFFERED SETTING FORTH THESE
RESTRICTIONS. THE COMPANY HAS AGREED TO REGISTER THE SECURITIES OFFERED HEREBY
UNDER CERTAIN CIRCUMSTANCES.

---------

THE SECURITIES OFFERED HEREIN HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION AND THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT OTHERWISE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AGREEMENT OR THE
COMPANY MATERIALS RELATED HERETO OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

---------

THIS OFFERING HAS NOT BEEN REVIEWED BY THE REGULATORY OFFICIALS OF ANY STATE,
AND NO SUCH OFFICIAL HAS PASSED ON OR ENDORSED THE ACCURACY OR ADEQUACY OF THIS
AGREEMENT OR THE COMPANY MATERIALS RELATED HERETO OR ENDORSED THE MERITS OF THIS
OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

<PAGE> 16

Board of Directors
Midrange Information Systems, Inc.
June 24, 1996
Page 16

IN WITNESS WHEREOF, the undersigned has executed and delivered this
Subscription Agreement this 24 day of June, 1996.

Subscription One Hundred Eighty eight (188) Shares of the Common Stock at
$2,130.08 per Share for an aggregate of $400,455.04

/s/ [ILLEGIBLE] ONE ROOSEVELT AVENUE
- ------------------------------- ---------------------------------
Signature of Subscriber Residence and/or Business Address

NEW MILLENIUM INVESTMENT ASSOCIATES PORT JEFFERSON ???? NY 11776
- ------------------------------- ---------------------------------
Typed or Printed Name City State Zip Code

NY
- -------------------------------
Subscriber's State of Residence

11-3279020
- -------------------------------
Social Security or
Tax Identification No. of Subscriber

ACCEPTED:

MIDRANGE INFORMATION SYSTEMS, INC.

By:
-------------------------------
President

DATED:
-------------------------------

<PAGE> 17

June 24, 1996

Board of Directors
Midrange Information Systems, Inc.
2600 Michelson Avenue - Suite 1100
Irvine, CA 92715

Re: Subscription to Purchase 940 Shares of the Common Stock, no par value
per share, of Midrange Information Systems, Inc. (the "Company"),

Gentlemen:

(1) Subscription

The undersigned hereby subscribes to purchase 940 shares (the "Shares") of
the common stock, no par value, of the Company (the "Common Stock") at
$2,130.08 per Share (the "Purchase Price") and hereby tenders payment for the
subscribed for number of Shares by check or bank draft made payable to The
"TimeCapital Securities Corporation, Special Customer Account", in the amount
of $2,000,275.20. Upon receipt by TimeCapital Securities Corporation
("TimeCapital") of subscription funds totaling in the aggregate two million
five hundred thousand seven hundred thirteen dollars and ninety two cents
($2,500,713.92), or such lesser amount as mutually determined by the Company
and TimeCapital in their discretion (the "Offering Amount"), and the acceptance
by the Company of Subscriptions representing the Offering Amount, a closing of
this offering (the "Offering") shall be held at the offices of the Company or
such other place as the Company and TimeCapital shall mutually agree (the
"Closing") At the Closing, TimeCapital shall deliver to the Company by
certified check or wire transfer the entire Offering Amount, without reduction
for escrow fees, commissions, costs or expenses of any nature. Upon receipt of
the Purchase Price for the Shares subscribed for herein, the Company shall
deliver to the undersigned subscriber a certificate representing the number of
Shares purchased pursuant to the terms of this Subscription Agreement. In
connection with this subscription, the undersigned hereby executes this
Subscription Agreement and hereby acknowledges that the undersigned has
received, read, understands and is familiar with:

(i) the Company's Business Plan prepared February 14, 1996 as
revised March 13, 1996 (the "Business Plan");

(ii) the Company's Product Plan prepared February 19, 1996 (the
"Product Plan");

(iii) Financial Statements (unaudited) for the year ended December 31,
1995 consisting of balance sheet, statement of cash flows and
statement of operating results (the "Annual Report");

(iv) the Company's 1st Quarter 1996 Financial Results, Four Year
Financial Projections and Company Valuation prepared April 30,
1996 (the "Quarterly Report"); and

(v) the Company's 1996 Marketing Plan dated January, 1996 (the
"Marketing Plan"). The Product Plan and the Marketing Plan are
hereinafter referred to collectively as the "Plans".

<PAGE> 18

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 2

(2) Subscriber's Representations and Warranties.

The undersigned subscriber represents and warrants to the Company:

(a) The Shares are being issued to the undersigned by the Company for
investment only, for the undersigned's own account, and are not being purchased
by the undersigned with a view to distribution of such Shares, or for the offer
and/or sale in connection with any distribution thereof. The undersigned is not
participating, directly or indirectly, in an underwriting of the Shares or in
any similar undertaking. The undersigned has no present plans to enter into any
contract, undertaking, agreement or arrangement which would entail an
underwriting of such Shares or any similar distribution thereof;

(b) The undersigned is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission, in that

(i) the undersigned is a natural person whose net worth or joint
net worth, taking the undersigned's spouse into
consideration, at the time of the undersigned's purchase of
the Shares herein, exceeds One Million Dollars ($1,000,000);
or

(ii) the undersigned is a natural person whose income in each of
the last two years exceeded Two Hundred Thousand Dollars
($200,000) (Three Hundred Thousand Dollars ($300,000) joint

<PAGE> 19

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 3

income taking the undersigned's spouse into consideration)
and the undersigned has a reasonable expectation of reaching
the same income level in this current year; or

(iii) as otherwise defined in Regulation D (see Annex A);

(e) The undersigned is a resident of the jurisdiction set forth below
the undersigned's name on the signature page of this Subscription Agreement.

<PAGE> 20

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 4

(3) Company's Representations and Warranties

The Company represents and warrants to the undersigned subscriber:

(4) Restrictions on Transfers.

(a) Securities Law Restrictions. The undersigned understands that the
offer and/or sale of the Shares to the undersigned is not required to be
registered under the Securities Act of 1933 (the "1933 Act") by reason of
specific exemptions for the. offer and sale of the Shares under Section 4 (2) of
the 1933 Act and the provisions of Regulation D promulgated by the Securities
and Exchange Commission. The undersigned further understands that, except as
provided in paragraph 5 hereof, the Company has not agreed to register the
Shares for distribution and/or resale in accordance with the provisions of the
1933 Act or the Securities Exchange Act of 1934 (the "1934 Act"), or to register
the Shares for distribution and/or resale under any applicable state securities
laws. Hence it is the undersigned's understanding that by virtue of the
provisions of certain rules respecting "restricted securities" promulgated under
such federal and/or state laws, unless such secondary distribution and/or resale
is registered as provided in herein the Shares which the undersigned is
purchasing by virtue of this Subscription Agreement must be held indefinitely
and may not be sold, transferred, pledged, hypothecated or otherwise encumbered
for value, unless and until such secondary distribution and/or state securities
laws or unless an exemption from registration is available, in which case the
undersigned still may be limited as to the amount of the Shares that may be
sold, transferred, pledged and/or encumbered for value.

<PAGE> 21
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 5

(b) Other Restrictions on Transfers. Until the closing
of the Company's initial underwritten public offering, the Shares sold pursuant
to this Subscription Agreement shall not be sold, assigned, transferred or in
any way disposed of without the prior written consent of the Company, which
consent shall not be unreasonably withheld.

(c) Legends. The undersigned, therefore, agrees that any
certificates evidencing the Shares received by the undersigned by virtue of
this Subscription Agreement shall be stamped or otherwise imprinted with
conspicuous legends to give notice of the transfer restrictions set forth
herein and the undersigned acknowledges that the Company may cause stop
transfer orders to be placed on the undersigned's account.

(5) Registration Rights.

(a) Registration Rights; Requests for Registration.

For purposes of the rights to registration, the
Shares actually sold in the Offering are referred to as the "Registrable
Shares". Up to and including May 31, 2001, whenever the Company proposes to
register (either on its own behalf or on behalf of holders of its equity
securities other than the holders of Registerable Shares in their capacity as
holders of the Registerable Shares) any of its equity securities under the 1933
Act and the registration form to be used may be used for a registration of the
Registerable Shares, the Company will give prompt written notice to all holders
of the Registerable Shares of its intention to effect such a registration and
will include in such registration all Registerable Shares with respect to which
the Company has received written request by the holders thereof for inclusion
therein within 15 days after the mailing of the Company's notice. Any
registrations requested pursuant to this paragraph (5)(a) are referred to
herein as "Piggyback Registrations." If the registration to which this
paragraph 5 (a) relates is effected pursuant to an underwriting, the right to
registration contained herein is conditioned upon the Company and the holder(s)
of the Registrable Shares entering into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. If any holder of Registrable Shares disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter received ten business days prior to effectiveness
of the registration statement relating to such registration.

(b) Piggyback Registrations.

(1) Priority on Primary Registrations.

If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that, in their opinion, the number
of equity securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) first, the equity securities the Company proposes to sell,
(ii)
<PAGE> 22
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 6

second, such number of the Registerable Shares requested to be included in such
Piggyback Registration as when sold thereunder at the offering price therein
shall produce gross proceeds up to the Offering Amount hereunder, pro rata
among the holders of such Registerable Shares based upon a fraction, with
respect to each holder, the numerator of which is the number of Registerable
Shares requested to be sold by such holder, and the denominator of which is the
number of Registerable Shares requested to be included in such Piggyback
Registration by all holders of the Registerable Shares, (iii) third, such
number of equity securities requested to be included in such Piggyback
Registration by management securityholders of the Company as when sold
thereunder at the offering price therein shall produce gross proceeds in an
amount up to the Offering Amount; and (iv) fourth, any other securities
requested to be included in such Piggyback Registration allocated equally
between (x) securityholders whose securities are included pursuant to
subparagraph 5 (b) (1) (ii) above and (y) securityholders whose securities are
included pursuant to subparagraph 5 (b) (1) (iii) above, respectively and among
the securityholders represented in each of subparagraph 5 (b) (1) (iv) (x) on
the one hand and subparagraph 5 (b) (1) (iv) (y) on the other hand pro rata as
to each such group based upon a fraction the numerator of which is the number
of shares requested to be sold by such securityholder and the denominator of
which is the number of shares requested to be included in the Piggyback
Registration by all securityholders pursuant to subparagraph 5 (b) (1) (iv) (x)
or subparagraph 5 (b) (1) (iv) (y), as the case may be. Anything in
subparagraph 5 (b) (1) (iii) or subparagraph 5 (b) (1) (iv) (y) to the contrary
not withstanding, if equity securities of management securityholders of the
Company are not included in the Piggyback Registration to the maximum amount
provided in subparagraph 5 (b) (1) (iii) or subparagraph 5 (b) (1) (iv) (y),
whether voluntarily or involuntarily, such fact shall not preclude the holders
of Registrable Shares from requesting inclusion in such Piggyback Registration
of Registrable Shares pursuant to subparagraph 5 (b) (1) (iv) (x) above. The
initial Piggyback Registration shall not include less than such number of
Registrable Shares as shall be sold thereunder for gross proceeds at the
offering price equal to the Offering Amount, except with the written consent of
TimeCapital, acting on behalf of all of the subscribers, which consent may not
be unreasonably withheld. THE UNDERSIGNED SUBSCRIBER HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS TIMECAPITAL SECURITIES CORPORATION ("TIMECAPITAL")
ITS ATTORNEY-IN-FACT TO CONSENT OR WITHHOLD CONSENT TO THE INITIAL PIGGYBACK
REGISTRATION INCLUDING LESS THAN SUCH NUMBER OF REGISTRABLE SHARES AS WOULD, IF
SOLD, PRODUCE GROSS PROCEEDS AT THE OFFERING PRICE EQUAL TO THE OFFERING AMOUNT
AS TIMECAPITAL SHALL IN ITS SOLE DISCRETION DETERMINE.

(2) Priority on Secondary Registrations.

If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Company's equity securities
(other than holders of the Registerable Shares in their capacity as holders of
the Registerable Shares), and the managing underwriters advise the Company in
writing that, in their opinion, the number of equity securities requested to be
included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i) first, the equity
securities to be sold in the secondary offering by the holders of the Company's
equity
<PAGE> 23
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 7

(3) Expenses of Piggyback Registrations.

The Company shall pay all expenses incident
to Piggyback Registrations, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and all independent, certified public accountants,
underwriters (excluding discounts and commissions) and any other persons
retained by the Company in connection with such Piggyback Registrations. The
holders of the Registerable Shares requesting the Piggyback Registration(s)
will be required to pay their pro rata share of any underwriter and/or
brokerage commissions attributable to the inclusion of the Registerable Shares
in the Piggyback Registration(s).

If the Company has previously filed a registration statement
with respect to the Registerable Shares pursuant to a Piggyback Registration
and if such previous registration has not been withdrawn or abandoned, the
Company will not file or cause to be effective any other registration statement
with respect to any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the 1933 Act
(except with respect to securities to be sold under a Company employee benefit
plans registered on Form S-8), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least three
months has elapsed from the effective date of such previous Piggyback
Registration.
(d) Holdback Agreement.

(1) Each holder of Registerable Shares agrees not to
effect any public sale or distribution of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the ninety day period beginning
on the effective date of any underwritten Piggyback Registration (except as
part of such underwritten Registration), unless the underwriters managing the
registered Piggyback public offering otherwise agree. This restriction shall
not apply in the case of Registerable Shares which have been registered
previously in a Piggyback Registration.
<PAGE> 24
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 8

(2) The Company agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the ninety day period beginning on the effective date of any underwritten
Piggyback Registration (except as part of such underwritten registration or
with respect to sales of its securities under any employee benefit plan
pursuant to registration on Form S-8), unless the underwriters managing the
registered Piggyback public offering otherwise agree.

(e) Scope of Registration Rights; Registration Procedures.

The Company's registration obligations under this Subscription
Agreement are "best efforts" obligations provided, however, that if the Company
determines in the good faith judgment of the Board of Directors that it would
be detrimental to the Company and its shareholders for a registration statement
to be filed, or an offering to proceed, the Company may defer the filing of
such registration statement, or withdraw a registration statement which has
been filed, and the Company shall have no further obligations to the holders of
Registrable Shares with respect to such deferred or withdrawn registration
statement. Subject hereto, whenever the holders of Registerable, Shares have
requested that any Registerable Shares be registered, the Company will use its
best efforts to effect the registration and the sale of such Registerable
Shares with the intended method of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:

(1) Prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registerable Shares
and use its best efforts to cause such registration statement to become
effective.

(2) Prepare and file with the Securities and Exchange
Commission such amendments with supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 30 days and
comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration statement during such period in
accordance with the intended method of distribution by the sellers thereof set
forth in such registration statement;

(3) Furnish to each seller of the Registerable Shares
such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus, if any) and such other documents as
such seller may reasonably request in order to facilitate the disposition of
the Registerable Shares owned by such seller;
<PAGE> 25
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 9

(i) qualify generally to do business in any
jurisdiction where it would not otherwise be
required to qualify but for this subparagraph;

(ii) subject itself to taxation in any jurisdiction
where it would not otherwise be subject to
taxation but for this subparagraph;

(iii) consent to general service of process in any
jurisdiction where it would not otherwise be
subject to process but for this subparagraph;

(5) notify each seller of such Registerable Shares, at
any time when a prospectus relating thereto is required to be delivered under
the 1933 Act, of the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading, and,
at the request of any such seller, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registerable Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading;

(f) Indemnification.

(1) The Company agrees to indemnify, to the
extent permitted by law, each holder of the Registerable Shares, its officers
and directors and each person who controls such holder (within the meaning of
the 1933 Act) against all losses, claims, damages, liabilities and expenses
(but excluding special, incidental or consequential damages) caused by any
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereto or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by such holder expressly for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with the
sufficient number of copies of the same;

(2) In connection with any registration statement
in which a holder of Registerable Shares is participating, each such holder
will furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify the
Company, its directors and officers and each person who controls the Company
(within the meaning of the 1933 Act) against any losses, claims, damages,
liabilities and expenses (but excluding special, incidental or consequential
damages) resulting from any untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any statement
thereof, or supplement thereto or any omission of a material fact required to
be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, but only
to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder; provided that
the obligation to indemnify as set forth herein will be several, not joint and
several, among such holders of Registerable Shares and the liability of each
such holder of Registerable Shares will be in proportion to and limited to the
net amount received by such holder from the sale of the Registerable Shares
pursuant to such registration statement;

(3) Any person entitled to indemnification
hereunder will:

(i) give prompt written notice to the
indemnifying party of any claim with
respect to which such person seeks
indemnification, and

(ii) unless in such indemnified party's
reasonable judgment, a conflict of
interest between such indemnified and
indemnifying parties may exist with
respect to such claim, permit the
indemnifying party to assume the
defense of
<PAGE> 27
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 11

such claim with counsel reasonably
satisfactory to the indemnified
party. If such defense is assumed,
the indemnifying party will not be
subject to any liability for any
settlement made by the indemnified
party without its consent, but such
consent will not be unreasonably
withheld. An indemnifying party who
is not entitled to or elects not to
assume the defense of the claim,
will not be obligated to pay the
fees and expenses of more than one
counsel for all parties indemnified
by such indemnifying party with
respect to such claim unless in the
reasonable judgment of any
indemnified party, a conflict of
interest may exist between such
indemnified party and any other
party and/or other of such
indemnified parties with respect to
such claim. The provisions of this
paragraph 5(f)(3)(ii) to the
contrary notwithstanding, in the
event the Company is an indemnifying
party pursuant hereto, separate
counsel for an indemnified party
shall be permitted only upon the
Company's prior written consent,
which consent shall not be
unreasonably withheld or delayed.

(6) Put Agreement

(a) Put Notice

If the Company has not registered shares of the
Common Stock under the 1933 Act by May 1, 2000, then, in such event, the holder
of the Shares shall have the right to deliver to the Company at any time(s) on
or before May 31, 2001 a notice (a "Put Notice") statting such holder's intent
to put to the Company such amount of the Shares (as adjusted pursuant to
paragraph 7 hereof), as holder shall elect. The amount of Shares so specified
in a Put Notice is hereinafter referred to as the "Put Shares". A Put Notice
shall be delivered in the manner provided for notices hereunder and shall be
irrevocable except as expressly provided in paragraph (b) below.

(b) Company's Obligation to Purchase

Provided funds of the Company are legally available
therefor, the Company shall purchase from the holder the number of Put Shares
specified by such holder in a Put Notice delivered to the Company in accordance
with paragraph (a) above. If funds of the Company are not legally available to
purchase Put Shares, the Put Notice shall become revocable but, unless revoked,
the Company shall purchase the Put Shares at such future date as funds of the
Company shall first become legally available therefor. The purchase price per
share for such Put Shares shall be an amount equal to the holder's purchase
price for each such Put Share together with interest thereon from date of
holder's purchase
<PAGE> 28
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 12

to date of the Put Notice at a rate equal to the fixed interest rate for United
States Treasury Bonds of thirty (30) year duration issued on or the trading
date nearest the date of the Put Notice. Such payment shall be made within
thirty (30) days of the Put Notice by check payable to such holder against
delivery by such holder of a certificate or certificates representing such Put
Shares duly endorsed for transfer with signature guaranteed by a national bank
or a member firm of the New York Stock Exchange. The Company promptly shall
cause to be delivered to such holder a balance certificate for any Shares
represented by the certificate(s) tendered by such holder which were not the
subject of the Put Notice.

The Company represents that it is not a party to and hereby
agrees that it will not enter into any agreement or other obligation which
would prohibit it from complying with its obligations under this paragraph 6.

(7) Adjustment of Number of Shares of Common Stock

(a) If on or prior to the earlier of (i) the effective
date of the registration of shares of the Company's Common Stock pursuant to
the 1933 Act or (ii) May 31, 2001, the Company shall issue any Common Stock as
a stock dividend to holders of any securities of the Company other than Common
Stock, or issue or sell any Common Stock or any security convertible into
Common Stock for a consideration per share of Common Stock less than the
Purchase Price (as adjusted for any subdivisions, splits, combinations or
reclassifications of the Shares) (each such occurrence hereinafter called an
"Event"), then, and thereafter upon each further Event, the Company shall issue
to holder, without additional consideration therefor, such number of additional
shares of Common Stock in order that the aggregate of such additional shares
together with the number of holder's shares of Common Stock held prior to such
Event (but as adjusted for prior Events), shall represent a percentage of the
total outstanding shares of Common Stock on a fully diluted basis after the
Event equal to the percentage of the total outstanding shares of Common Stock
on a fully diluted basis held by the holder prior to the Event.

(b) If the Company's Total Revenue for 1996 is less than
$10,072,500, the Company shall issue to holder, without additional
consideration therefor, such number of additional shares of Common Stock as
shall be determined by the product of multiplying (x) the number of holder's
shares of Common Stock held on December 31, 1996 by (y) a quotient. Such
quotient is determined by dividing (1) the remainder of (a) 11,850,000 less
(b) the Company's 1996 Total Revenue by (2) the Company's 1996 Total Revenue.

(8) Sale of Company

If, prior to the earlier of (a) the effective date of the registration
of shares of the Company's Common Stock pursuant to the 1933 Act (provided such
number of the Registrable Shares are included therein as will produce on the
sale thereof proceeds at
<PAGE> 29
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 13

least equal to the Offering Amount) or (b) May 31, 2001, the Company or
substantially all of its assets shall be sold, the holder shall receive from
the consideration paid the greater of (i) his aliquot shares of the
consideration determined by a fraction the numerator of which shall be the
number of shares of Common Stock held by the holder as of the date of sale of
the Company or its assets and the denominator of which shall be the total
number of shares of Common Stock issued and outstanding as of the date of sale
of the Company or its assets or (ii) the amount that would be due had holder
given a Put Notice pursuant to paragraph (6) hereof for all of holder's shares
on the date of sale of the Company or its assets.

(9) Notices.

Any notices or other communication required or permitted herein shall
be sufficiently given if sent by registered or certified mail, postage prepaid,
return receipt requested or by reputable overnight courier service (e.g.,
Federal Express) if to the Company, to the address set forth above, and if to
the undersigned, to the address set forth below the undersigned's signature
hereto, or to such other addresses as the Company or the undersigned shall
designate to the other by notice in writing.

(10) Successors and Assigns.

This subscription for Shares and Subscription Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and to the
successors and assigns of the Company and to the personal and legal
representatives of the undersigned, and to the extent applicable, his spouse or
children. This Subscription Agreement may only be assigned by the undersigned
Subscriber to an "accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission and then
only with the prior written consent of the Company, which consent shall not be
unreasonably withheld. For the purposes of this Subscription Agreement, the
term "holder" means, where the context so indicates, the subscriber and any
permitted assignee thereof.

(11) Applicable Law.

(12) Certification with Respect to Federal Dividend and Interest
Payments: Back-up Withholding
<PAGE> 30
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 14

Under penalties of perjury, the undersigned hereby certifies to the
Company as follows:

(a) The number shown below is the undersigned's Social
Security or other taxpayer identification
number and such number is the undersigned's
correct taxpayer identification number; and

(b) The undersigned is not subject to back-up withholding
either because the undersigned has not been notified
by the Internal Revenue Service that the undersigned
is subject to back-up withholding as a result of
failure to report all interest or dividends, or the
Internal Revenue Service has notified the undersigned
that the undersigned is no longer subject to back-up
withholding.
<PAGE> 31
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 15

IMPORTANT NOTICES TO INVESTORS CONCERNING CERTAIN RISKS

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

THIS OFFERING HAS NOT BEEN REVIEWED BY THE REGULATORY OFFICIALS OF ANY STATE,
AND NO SUCH OFFICIAL HAS PASSED ON OR ENDORSED THE ACCURACY OR ADEQUACY OF THIS
AGREEMENT OR THE COMPANY MATERIALS RELATED HERETO OR ENDORSED THE MERITS OF
THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE> 32
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 16

IN WITNESS WHEREOF, the undersigned has executed and delivered this
Subscription Agreement this 24 day of June, 1996.

Subscription: $2,002,275.20 (940) Shares of the Common Stock at $213.00 per
Share for an aggregate of $2,002,275.20.

Craig Kirsch, Edmond T. Stein 201 North Service Rd.
- ----------------------------- ---------------------------------
Signature of Subscriber Residence and/or Business Address

Interlink Associates L.P. Melville, NY 11747
- ----------------------------- ---------------------------------
Typed or Printed Name City State Zip Code

New York
- -------------------------------
Subscriber's State of Residence

11-3325283
- ------------------------------
Social Security or
Tax Identification No. of Subscriber

ACCEPTED:

MIDRANGE INFORMATION SYSTEMS, INC.

By: [Signature]
------------------------------
President

DATED: [Date]
---------------------------
<PAGE> 33
June 24, 1996

Board of Directors
Midrange Information Systems, Inc.
2600 Michelson Avenue - Suite 1100
Irvine, CA 92715

Re: Subscription to Purchase 25 Shares of the Common Stock, no par value
per share, of Midrange Information Systems, Inc. (the "Company").

Gentlemen:

(1) Subscription:

The undersigned hereby subscribes to purchase 25 shares (the "Shares")
of the common stock, no par value, of the Company (the "Common Stock") at
$2,130.08 per Share (the "Purchase Price") and hereby tenders payment for the
subscribed for number of Shares by check or bank draft made payable to The
"TimeCapital Securities Corporation, Special Customer Account", in the amount
of $53,252.00. Upon receipt by TimeCapital Securities Corporation
("TimeCapital") of subscription funds totaling in the aggregate two million
five hundred thousand seven hundred thirteen dollars and ninety two cents
($2,500,713.92), or such lesser amount as mutually determined by the Company
and TimeCapital in their discretion (the "Offering Amount"), and the acceptance
by the Company of Subscriptions representing the Offering Amount, a closing of
this offering (the "Offering") shall be held at the offices of the Company or
such other place as the Company and TimeCapital shall mutually agree (the
"Closing"). At the Closing, TimeCapital shall deliver to the Company by
certified check or wire transfer the entire Offering Amount, without reduction
for escrow fees, commissions, costs or expenses of any nature. Upon receipt of
the Purchase Price for the Shares subscribed for herein, the Company shall
deliver to the undersigned subscriber a certificate representing the number of
Shares purchased pursuant to the terms of this Subscription Agreement. In
connection with this Subscription, the undersigned hereby executes this
Subscription Agreement and hereby acknowledges that the undersigned has
received, read, understands and is familiar with:

(i) the Company's Business Plan prepared February 14, 1996
as revised March 13, 1996 (the "Business Plan");

(ii) the Company's Product Plan prepared February 19, 1996
(the "Product Plan");

(iii) Financial Statements (unaudited) for the year ended
December 31, 1995 consisting of balance sheet,
statement of cash flows and statement of operating
results (the "Annual Report");

(iv) the Company's lst Quarter l996 Financial Results,
Four Year Financial Projections and Company Valuation
prepared April 30, 1996 (the "Quarterly Report"); and

(v) the Company's 1996 Marketing Plan dated January, 1996
(the "Marketing Plan"). The Product Plan and the
Marketing Plan are hereinafter referred to
collectively as the "Plans".
<PAGE> 34
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 2

The undersigned further acknowledges that, except as set forth in such
Business Plan, Annual Report, Quarterly Report and Plans (together, the
"Company Materials") made available to the undersigned by the Company, no
representations or warranties have been made to the undersigned, or to the
undersigned's advisors by the Company, or by any person acting on behalf of the
Company, with respect to the offer or sale of the Shares and/or the economic,
tax, or any other aspects or consequences of a purchase of the Shares and/or
the investment made thereby. Further, the undersigned has not relied upon any
information concerning the Company, written or oral, other than that contained
in the aforementioned Company Materials.

The undersigned hereby acknowledges that the undersigned has had an
opportunity to ask questions of, and receive answers from persons acting on
behalf of the Company to verify the accuracy and completeness of the
information set forth in such Company Materials prior to sale and the
undersigned hereby acknowledges that the undersigned has not requested the
Company to provide any additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to verify
the accuracy and completeness of the information made available.

(2) Subscribers Representations and Warranties.

The undersigned subscriber represents and warrants to the
Company:

(b) The undersigned is an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission, in that

(i) the undersigned is a natural person whose net
worth or joint net worth, taking the
undersigned's spouse into consideration, at
the time of the undersigned's purchase of the
Shares herein, exceeds One Million Dollars
($1,000,000); or

(ii) the undersigned is a natural person whose
income in each of the last two years exceeded
Two Hundred Thousand Dollars ($200,000) (Three
Hundred Thousand Dollars ($300,000)joint
<PAGE> 35
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 3

income taking the undersigned's spouse into
consideration) and the undersigned has a
reasonable expectation of reaching the same
income level in this current year; or

(iii) as otherwise defined in Regulation D (see
Annex A);

(c) The undersigned understands that there is no guarantee of
profits or against loss as a result of purchasing the Shares and the
undersigned hereby states that the undersigned can afford a complete loss of
the investment in such Shares. The undersigned further warrants that the
undersigned's present financial condition is such that the undersigned has no
present or perceived future need to dispose of any portion of the Shares to
satisfy any existing or contemplated undertaking, obligation, need or
indebtedness. Consequently, the undersigned represents that the undersigned
has sufficient liquid assets to pay the full purchase price for the Shares, has
adequate means for providing for the undersigned's current needs and possible
contingencies and has no current need to liquidate any of the undersigned's
investment in the Company.

(d) The undersigned has had the opportunity to be represented by
such legal counsel and other advisors personally selected by the undersigned,
as the undersigned has found necessary to consult, concerning the purchase of
the Shares. The undersigned, alone and/or together with its advisors, if any,
has made an examination of applicable documents and an analysis of all relevant
tax, financial, and securities law aspects of an investment in the Shares. The
undersigned, the undersigned's counsel, advisors, and such other persons with
whom the undersigned has found it necessary or advisable to consult, have
represented to the undersigned that they have knowledge or experience in
business and financial matters to evaluate the information set forth in the
Company Materials, and/or other public information statements issued by the
Company, the risks associated with this investment, and to make an informed
investment decision with respect hereto. To the extent that the undersigned
has found it necessary to consult with any such counsel and/or advisors
concerning the purchase of the Shares, the undersigned has relied upon their
advice and counsel in making such investment decision.

(e) The undersigned is a resident of the jurisdiction set forth
below the undersigned's name on the signature page of this Subscription
Agreement.

(f) The undersigned understands that this subscription is subject
to acceptance by the Company and subject further to the Company's acceptance of
subscriptions for the purchase of an aggregate of 1,174 Shares on the terms and
conditions, hereof (the "Offering"). Accordingly, the undersigned authorizes
the placement of this Subscription and the undersigned's subscription funds
thereunder to be deposited with other Subscriptions and subscription funds for
the Shares into trust with TimeCapital Securities Corporation pending
acceptance by the Company and a closing pursuant to the terms and conditions
hereof.
<PAGE> 36
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 4

(3) Company's Representations and Warranties

The Company represents and warrants to the undersigned subscriber:

(a) The information contained in the Company Materials distributed by the
Company as described in paragraph (1) of this Subscription Agreement contain no
untrue statements of material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, except that the Company Materials
contain certain projections and forwardlooking statements as to which the
Company provides no representation or warranty other than that such projections
and forward-looking statements were prepared based upon assumptions that the
Company believed reasonable at the time they were made;

(b) As of the dates of the execution of this Subscription
Agreement, the Company's acceptance thereof and closing of the Subscription,
there will have been no material, adverse changes in the Company's operations
or financial condition since the applicable dates of the aforementioned Company
Materials distributed by the Company.

(4) Restrictions on Transfers.

(a) Securities Law Restrictions. The undersigned
understands that the offer and/or sale of the Shares to the undersigned is not
required to be registered under the Securities Act of 1933 (the "1933 Act") by
reason of specific exemptions for the offer and sale of the Shares under
Section 4 (2) of the 1933 Act and the provisions of Regulation D promulgated by
the Securities and Exchange Commission. The undersigned further understands
that, except as provided in paragraph 5 hereof, the Company has not agreed to
register the Shares for distribution and/or resale in accordance with the
provisions of the 1933 Act or the Securities Exchange Act of 1934 (the "1934
Act"), or to register the Shares for distribution and/or resale under any
applicable state securities laws. Hence it is the undersigned's understanding
that by virtue of the provisions of certain rules respecting to "restricted
securities" promulgated under such federal and/or state laws, unless such
secondary distribution and/or resale is registered as provided in herein the
Shares which the undersigned is purchasing by virtue of this Subscription
Agreement must be held indefinitely and may not be sold, transferred, pledged,
hypothecated or otherwise encumbered for value, unless and until such secondary
distribution and/or state securities laws or unless an exemption from
registration is available, in which case the undersigned still may be limited
as to the amount of the Shares that may be sold, transferred, pledged and/or
encumbered for value.
<PAGE> 37
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 5

(b) Other Restrictions on Transfers. Until the closing
of the Company's initial underwritten public offering, the Shares sold pursuant
to this Subscription Agreement shall not be sold, assigned, transferred or in
any way disposed of without the prior written consent of the Company, which
consent shall not be unreasonably withheld.

(c) Legends. The undersigned, therefore, agrees that any
certificates evidencing the Shares received by the undersigned by virtue of
this Subscription Agreement shall be stamped or otherwise imprinted with
conspicuous legends to give notice of the transfer restrictions set forth
herein and the undersigned acknowledges that the Company may cause stop
transfer orders to be placed on the undersigned's account.

(5) Registration Rights.

(a) Registration Rights; Requests for Registration.

For purposes of the rights to registration, the
Shares actually sold in the Offering are referred to as the "Registrable
Shares". Up to and including May 31, 2001, whenever the Company proposes to
register (either on its own behalf or on behalf of holders of its equity
securities other than the holders of Registerable Shares in their capacity as
holders of the Registerable Shares) any of its equity securities under the 1933
Act and the registration form to be used may be used for a registration of the
Registerable Shares, the Company will give prompt written notice to all holders
of the Registerable Shares of its intention to effect such a registration and
will include in such registration all Registerable Shares with respect to which
the Company has received written request by the holders thereof for inclusion
therein within 15 days after the mailing of the Company's notice. Any
registrations requested pursuant to this paragraph (5)(a) are referred to
herein as "Piggyback Registrations." If the registration to which this
paragraph 5 (a) relates is effected pursuant to an underwriting, the right to
registration contained herein is conditioned upon the Company and the holder(s)
of the Registrable Shares entering into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. If any holder of Registrable Shares disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter received ten business days prior to effectiveness
of the registration statement relating to such registration.

(b) Piggyback Registrations.

(1) Priority on Primary Registrations.

If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that, in their opinion, the number
of equity securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) first, the equity securities the Company proposes to sell,
(ii)
<PAGE> 38
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 6

second, such number of the Registerable Shares requested to be included in such
Piggyback Registration as when sold thereunder at the offering price therein
shall produce gross proceeds up to the Offering Amount hereunder, pro rata
among the holders of such Registerable Shares based upon a fraction, with
respect to each holder, the numerator of which is the number of Registerable
Shares requested to be sold by such holder, and the denominator of which is the
number of Registerable Shares requested to be included in such Piggyback
Registration by all holders of the Registerable Shares, (iii) third, such
number of equity securities requested to be included in such Piggyback
Registration by management securityholders of the Company as when sold
thereunder at the offering price therein shall produce gross proceeds in an
amount up to the Offering Amount; and (iv) fourth, any other securities
requested to be included in such Piggyback Registration allocated equally
between (x) securityholders whose securities are included pursuant to
subparagraph 5 (b) (1) (ii) above and (y) securityholders whose securities are
included pursuant to subparagraph 5 (b) (1) (iii) above, respectively and among
the securityholders represented in each of subparagraph 5 (b) (1) (iv) (x) on
the one hand and subparagraph 5 (b) (1) (iv) (y) on the other hand pro rata as
to each such group based upon a fraction the numerator of which is the number
of shares requested to be sold by such securityholder and the denominator of
which is the number of shares requested to be included in the Piggyback
Registration by all securityholders pursuant to subparagraph 5 (b) (1) (iv) (x)
or subparagraph 5 (b) (1) (iv) (y), as the case may be. Anything in
subparagraph 5 (b) (1) (iii) or subparagraph 5 (b) (1) (iv) (y) to the contrary
not withstanding, if equity securities of management securityholders of the
Company are not included in the Piggyback Registration to the maximum amount
provided in subparagraph 5 (b) (1) (iii) or subparagraph 5 (b) (1) (iv) (y),
whether voluntarily or involuntarily, such fact shall not preclude the holders
of Registrable Shares from requesting inclusion in such Piggyback Registration
of Registrable Shares pursuant to subparagraph 5 (b) (1) (iv) (x) above. The
initial Piggyback Registration shall not include less than such number of
Registrable Shares as shall be sold thereunder for gross proceeds at the
offering price equal to the Offering Amount, except with the written consent of
TimeCapital, acting on behalf of all of the subscribers, which consent may not
be unreasonably withheld. THE UNDERSIGNED SUBSCRIBER HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS TIMECAPITAL SECURITIES CORPORATION ("TIMECAPITAL") ITS
ATTORNEY-IN-FACT TO CONSENT OR WITHHOLD CONSENT TO THE INITIAL PIGGYBACK
REGISTRATION INCLUDING LESS THAN SUCH NUMBER OF REGISTRABLE SHARES AS WOULD, IF
SOLD, PRODUCE GROSS PROCEEDS AT THE OFFERING PRICE EQUAL TO THE OFFERING AMOUNT
AS TIMECAPITAL SHALL IN ITS SOLE DISCRETION DETERMINE.

(2) Priority on Secondary Registrations.

If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Company's equity securities
(other than holders of the Registerable Shares in their capacity as holders of
the Registerable Shares), and the managing underwriters advise the Company in
writing that, in their opinion, the number of equity securities requested to be
included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i) first, the equity
securities to be sold in the secondary offering by the holders of the Company's
equity
<PAGE> 39
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 7

(3) Expenses of Piggyback Registrations.

The Company shall pay all expenses incident to
Piggyback Registrations, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and all independent, certified public accountants,
underwriters (excluding discounts and commissions) and any other persons
retained by the Company in connection with such Piggyback Registrations. The
holders of the Registerable Shares requesting the Piggyback Registration(s)
will be required to pay their pro rata share of any underwriter and/or
brokerage commissions attributable to the inclusion of the Registerable Shares
in the Piggyback Registration(s).

If the Company has previously filed a registration statement
with respect to the Registerable Shares pursuant to a Piggyback Registration
and if such previous registration has not been withdrawn or abandoned, the
Company will not file or cause to be effective any other registration statement
with respect to any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the 1933 Act
(except with respect to securities to be sold under a Company employee benefit
plans registered on Form S-8), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least three
months has elapsed from the effective date of such previous Piggyback
Registration.

(d) Holdback Agreement.

(1) Each holder of Registerable Shares agrees
not to effect any public sale or distribution of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and the ninety day period
beginning on the effective date of any underwritten Piggyback Registration
(except as part of such underwritten Registration), unless the underwriters
managing the registered Piggyback public offering otherwise agree. This
restriction shall not apply in the case of Registerable Shares which have been
registered previously in a Piggyback Registration.
<PAGE> 40
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 8

(2) The Company agrees not to effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the seven days
prior to and the ninety day period beginning on the effective date of any
underwritten Piggyback Registration (except as part of such underwritten
registration or with respect to sales of its securities under any employee
benefit plan pursuant to registration on Form S-8), unless the underwriters
managing the registered Piggyback public offering otherwise agree.

(e) Scope of Registration Rights; Registration Procedures.

The Company's registration obligations under this Subscription
Agreement are "best efforts" obligations provided, however, that if the Company
determines in the good faith judgment of the Board of Directors that it would
be detrimental to the Company and its shareholders for a registration statement
to be filed, or an offering to proceed, the Company may defer the filing of
such registration statement, or withdraw a registration statement which has
been filed, and the Company shall have no further obligations to the holders of
Registrable Shares with respect to such deferred or withdrawn registration
statement. Subject hereto, whenever the holders of Registerable Shares have
requested that any Registerable Shares be registered, the Company will use its
best efforts to effect the registration and the sale of such Registerable
Shares with the intended method of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:

(1) Prepare and file with the Securities and
Exchange Commission a registration statement with respect to such Registerable
Shares and use its best efforts to cause such registration statement to become
effective.

(2) Prepare and file with the Securities and
Exchange Commission such amendments with supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for a period of not less than 30
days and comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended method of distribution by the
sellers thereof set forth in such registration statement;

(3) Furnish to each seller of the Registerable
Shares such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus, if any) and such other documents as
such seller may reasonably request in order to facilitate the disposition of
the Registerable Shares owned by such seller;
<PAGE> 41
Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 9

(i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but
for this subparagraph;

(ii) subject itself to taxation in any jurisdiction where it
would not otherwise be subject to taxation but for this
subparagraph;

(iii) consent to general service of process in any
jurisdiction where it would not otherwise be subject to
process but for this subparagraph;

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 10

(f) Indemnification.

(2) In connection with any registration statement in which a
holder of Registerable Shares is participating, each such holder will furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages, liabilities and
expenses (but excluding special, incidental or consequential damages) resulting
from any untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any statement thereof, or
supplement thereto or any omission of a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder, provided that the obligation
to indemnify as set forth herein will be several, not joint and several, among
such holders of Registerable Shares and the liability of each such holder of
Registerable Shares will be in proportion to and limited to the net amount
received by such holder from the sale of the Registerable Shares pursuant to
such registration statement:

(3) Any person entitled to indemnification hereunder will:

(i) give prompt written notice to the indemnifying party of
any claim with respect to which such person seeks
indemnification, and

<PAGE> 43

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 11

such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability
for any settlement made by the indemnified party without
its consent, but such consent will not be unreasonably
withheld. An indemnifying party who is not entitled to
or elects not to assume the defense of the claim, will
not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such
indemnifying party with respect to such claim unless in
the reasonable judgment of any indemnified party, a
conflict of interest may exist between such indemnified
party and any other party and/or other of such
indemnified parties with respect to such claim. The
provisions of this paragraph 5(f)(3)(ii) to the contrary
notwithstanding, in the event the Company is an
indemnifying party pursuant hereto, separate counsel for
an indemnified party shall be permitted only upon the
Company's prior written consent, which consent shall not
be unreasonably withheld or delayed.

(6) Put Agreement

(a) Put Notice

If the Company has not registered shares of the Common Stock under the
1933 Act by May 1, 2000, then, in such event, the holder of the Shares shall
have the right to deliver to the Company at any time(s) on or before May 31,
2001 a notice (a "Put Notice") stating such holder's intent to put to the
Company such amount of the Shares (as adjusted pursuant to paragraph 7 hereof),
as holder shall elect. The amount of Shares so specified in a Put Notice is
hereinafter referred to as the "Put Shares". A Put Notice shall be delivered in
the manner provided for notices hereunder and shall be irrevocable except as
expressly provided in paragraph (b) below.

(b) Company's Obligation to Purchase

<PAGE> 44

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 12

(7) Adjustment of Number of Shares of Common Stock

(8) Sale of Company

12
<PAGE> 45

Board of Directors
Midrange information Systems, Inc.
June __, 1996
Page 13

least equal to the Offering Amount) or (b) May 31, 2001, the Company or
substantially all of its assets shall be sold, the holder shall receive from
the consideration paid the greater of (i) his aliquot shares of the
consideration determined by a fraction the numerator of which shall be the
number of shares of Common Stock held by the holder as of the date of sale of
the Company or its assets and the denominator of which shall be the total number
of shares of Common Stock issued and outstanding as of the date of sale of the
Company or its assets or (ii) the amount that would be due had holder given a
Put Notice pursuant to paragraph (6) hereof for all of holder's shares on the
date of sale of the Company or its assets.

(9) Notices.

(10) Successors and Assigns.

(11) Applicable Law.

(12) Certification with Respect to Federal Dividend and Interest Payments:
Back-up Withholding

<PAGE> 46

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 14

Under penalties of perjury, the undersigned hereby certifies to the Company
as follows:

(a) The number shown below is the undersigned's Social Security or
other taxpayer identification number and such number is the
undersigned's correct taxpayer identification number; and

<PAGE> 47

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 15

IMPORTANT NOTICES TO INVESTORS CONCERNING CERTAIN RISKS

<PAGE> 48

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 16

IN WITNESS WHEREOF, the undersigned has executed and delivered the
Subscription Agreement this 24 day of June, 1996.

Subscription: Twenty-five (25) Shares of the Common Stock at $2130.08 per Share
for an aggregate of $53,252.00

ANCHOR ASSET MANAGEMENT CORP, GENERAL PARTNER
ONE ROOSEVELT AVE.
by: /s/????, PRES. PORT JEFFERSON STA, NY 11776
- ------------------------------- ------------------------------------------
Signature of Subscriber) Residence and/or Business Address

GREAT BAY MULTI-MGR. FUND L.P.
- ------------------------------- ------------------------------------------
Typed or Printed Name City State Zip Code

N.Y.
- -------------------------------
Subscriber's State of Residence

###-##-####
- -------------------------------
Social Security or
Tax Identification Subscriber

ACCEPTED:

MIDRANGE INFORMATION SYSTEMS, INC.

By:
-------------------------------
President

DATED:
-------------------------------

<PAGE> 49

June 24, 1996

Board of Directors
Midrange Information Systems, Inc.
2600 Michelson Avenue - Suite 1100
Irvine, CA 92715

Re: Subscription to Purchase 21 Shares of the Common Stock, no par value
per share, of Midrange Information Systems, Inc. (the "Company").

Gentlemen:

(1) Subscription:

The undersigned hereby subscribes to purchase 21 shares (the "Shares") of
the common stock, no par value, of the Company (the "Common Stock") at $2,130.08
per Share (the "Purchase Price") and hereby tenders payment for the subscribed
for number of Shares by check or bank draft made payable to The "TimeCapital
Securities Corporation, Special Customer Account", in the amount of $44,731.68.
Upon receipt by TimeCapital Securities Corporation ("TimeCapital") of
subscription funds totaling in the aggregate two million five hundred thousand
seven hundred thirteen dollars and ninety cents ($2,500,713.92), or such lesser
amount as mutually determined by the Company and TimeCapital in their discretion
(the "Offering Amount"), and the acceptance by the Company of Subscriptions
representing the Offering Amount, a closing of this offering (the "Offering")
shall be held at the offices of the Company or such other place as the Company,
and TimeCapital shall mutually agree (the "Closing"). At the Closing,
TimeCapital shall deliver to the Company by certified check or wire transfer the
entire Offering Amount without reduction for escrow fees, commissions, costs or
expenses of any nature. Upon receipt of the Purchase Price for the Shares
subscribed for herein, the Company shall deliver to the undersigned subscriber a
certificate representing the number of shares purchased pursuant to the terms of
this Subscription Agreement. In connection with the subscription, the
undersigned hereby executes this Subscription Agreement and hereby acknowledges
that the undersigned has received, read, understands and is familiar with:

(i) the Company's Business Plan prepared February 14, 1996 as revised
March 13, 1996 (the "Business Plan");

(ii) the Company's Product Plan prepared February 19, 1996 (the
"Product Plan");

(iii) Financial Statements (unaudited) for the year ended December 31,
1995 consisting of balance sheet, statement of cash flows and
statement operating results (the "Annual Report");

(iv) the Company's 1st Quarter 1996 Financial Results, Four Year
Financial Projections and Company Valuation prepared April 30,
1996 (the "Quarterly Report"); and

(v) the Company's 1996 Marketing Plan dated January, 1996 (the
"Marketing Plan"). The Product Plan and the Marketing Plan are
hereinafter referred to collectively as the "Plans".

<PAGE> 50

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 2

(2) Subscriber's Representations and Warranties.

The undersigned subscriber represents and warrants to the Company:

(a) The Shares are being issued to the undersigned by the Company for
investment only, for the undersigned's own account, and are not being purchased
by the undersigned with a view to distribution of such Shares, or for the offer
and/or sale in connection with any distribution thereof. The undersigned is not
participating, directly or indirectly, in an underwriting of the Shares or in
any similar undertaking. The undersigned has no present plans to enter into any
contract, undertaking, agreement or arrangement which would entail an
underwriting of such Shares or any similar distribution thereof;

(b) The undersigned is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission, in that

(i) the undersigned is a natural person whose net worth or joint
net worth, taking the undersigned's spouse into
consideration, at the time of the undersigned's purchase of
the Shares herein, exceeds One Million Dollars ($1,000,000);
or

(ii) the undersigned is a natural person whose income in each of
the last two years exceeded Two Hundred Thousand Dollars
($200,000) (Three Hundred Thousand Dollars ($300,000) joint

<PAGE> 51

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 3

income taking the undersigned's spouse into consideration)
and the undersigned has a reasonable expectation of reaching
the same income level in this current year; or

(iii) as otherwise defined in Regulation D (see Annex A);

(e) The undersigned is a resident of the jurisdiction set forth below
the undersigned's name on the signature page of this Subscription Agreement.

<PAGE> 52

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 4

(3) Company's Representations and Warranties

The Company represents and warrants to the undersigned subscriber:

(4) Restrictions on Transfers.

(a) Securities Law Restrictions. The undersigned understands that the
offer and/or sale of the Shares to the undersigned is not required to be
registered under the Securities Act of 1933 (the "1933 Act") by reason of
specific exemptions for the offer and sale of the Shares under Section 4 (2) of
the 1933 Act and the provisions of Regulation D promulgated by the Securities
and Exchange Commission. The undersigned further understands that, except as
provided in paragraph 5 hereof, the Company has not agreed to register the
Shares for distribution and/or resale in accordance with the provisions of the
1933 Act or the Securities Exchange Act of 1934 (the 1934 Act"), or to register
the Shares for distribution and/or resale under any applicable state securities
laws. Hence it is the undersigned's understanding that by virtue of the
provisions of certain rules respecting "restricted securities" promulgated under
such federal and/or state laws, unless such secondary distribution and/or resale
is registered as provided in herein the Shares which the undersigned is
purchasing by virtue of this Subscription Agreement must be held indefinitely
and may not be sold, transferred, pledged, hypothecated or otherwise encumbered
for value, unless and until such secondary distribution and/or state securities
laws or unless an exemption from registration is available, in which case the
undersigned still may be limited as to the amount of the Shares that may be
sold, transferred, pledged and/or encumbered for value.

<PAGE> 53

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 5

(5) Registration Rights.

(a) Registration Rights; Requests for Registration.

For purposes of the rights to registration, the Shares actually
sold in the Offering are referred to as the "Registrable Shares". Up to and
including May 31, 2001 whenever the Company proposes to register (either on its
own behalf or on behalf of holders of its equity securities other than the
holders of Registerable, Shares in their capacity as holders of the Registerable
Shares) any of its equity securities under the 1933 Act and the registration
form to be used may be used for a registration of the Registerable Shares, the
Company will give prompt written notice to all holders of the Registerable
Shares of its intention to effect such a registration and will include in such
registration all Registerable Shares with respect to which the Company has
received written request by the holders thereof for inclusion therein within 15
days after the mailing of the Company's notice. Any registrations requested
pursuant to this paragraph (5)(a) are referred to herein as "Piggyback
Registrations." If the registration to which this paragraph 5 (a) relates is
effected pursuant to an underwriting, the right to registration contained herein
is conditioned upon the Company and the holder(s) of the Registrable Shares
entering into an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting by the Company. If any holder of
Registrable Shares disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the underwriter
received ten business days prior to effectiveness of the registration statement
relating to such registration.

(b) Piggyback Registrations.

(1) Priority on Primary Registrations.

<PAGE> 54

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 6

second, such number of the Registerable Shares requested to be included in such
Piggyback Registration as when sold thereunder at the offering price therein
shall produce gross proceeds up to the Offering Amount hereunder, pro rata among
the holders of such Registerable Shares based upon a fraction, with respect to
each holder, the numerator of which is the number of Registerable Shares
requested to be sold by such holder, and the denominator of which is the number
of Registerable Shares requested to be included in such Piggyback Registration
by all holders of the Registerable Shares, (iii) third, such number of equity
securities requested to be included in such Piggyback Registration by management
securityholders of the Company as when sold thereunder at the offering price
therein shall produce gross proceeds in an amount up to the Offering Amount; and
(iv) fourth, any other securities requested to be included in such Piggyback
Registration allocated equally between (x) securityholders whose securities are
included pursuant to subparagraph 5(b)(1)(ii) above and (y) securityholders
whose securities are included pursuant to subparagraph 5(b)(1)(iii) above,
respectively and among the securityholders represented in each of subparagraph
5(b)(1)(iv)(x) on the one hand and subparagraph 5(b)(1)(iv)(y) on the other hand
pro rata as to each such group based upon a fraction the numerator of which is
the number of shares requested to be sold by such securityholder and the
denominator of which is the number of shares requested to be included in the
Piggyback Registration by all securityholders, pursuant to subparagraph
5(b)(1)(iv)(x) or subparagraph 5(b)(1)(iv)(y), as the case may be. Anything in
subparagraph 5(b)(1)(iii) or subparagraph 5(b)(1)(iv)(y) to the contrary not
withstanding, if equity securities of management securityholders of the Company
are not included in the Piggyback Registration to the maximum amount provided in
subparagraph 5(b)(1)(iii) or subparagraph 5(b)(1)(iv)(y), whether voluntarily or
involuntarily, such fact shall not preclude the holders of Registrable Shares
from requesting inclusion in such Piggyback Registration of Registrable Shares
pursuant to subparagraph 5(b)(1)(iv)(x) above. The initial Piggyback
Registration shall not include less than such number of Registrable Shares as
shall be sold thereunder for gross proceeds at the offering price equal to the
Offering Amount, except with the written consent of TimeCapital, acting on
behalf of all of the subscribers, which consent may not be unreasonably
withheld. THE UNDERSIGNED SUBSCRIBER HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS
TIMECAPITAL SECURITIES CORPORATION ("TIMECAPITAL") ITS ATTORNEY-IN-FACT TO
CONSENT OR WITHHOLD CONSENT TO THE INITIAL PIGGYBACK REGISTRATION INCLUDING LESS
THAN SUCH NUMBER OF REGISTRABLE SHARES AS WOULD, IF SOLD, PRODUCE GROSS PROCEEDS
AT THE OFFERING PRICE EQUAL TO THE OFFERING AMOUNT AS TIMECAPITAL SHALL IN ITS
SOLE DISCRETION DETERMINE.

(2) Priority on Secondary Registrations.

If a Piggyback Registration is an underwritten secondary
registration or behalf of holders of the Company's equity securities (other than
holders of the Registerable Shares in their capacity as holders of the
Registerable Shares), and the managing underwriters advise the Company in
writing that, in their opinion, the number of equity securities requested to be
included in such registration exceeds the number which can sold in such
offering, the Company will include in such registration (i) first, the equity
securities to be sold in the secondary offering by the holders of the Company's
equity

<PAGE> 55

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 7

(3) Expenses of Piggyback Registrations.

(d) Holdback Agreement.

<PAGE> 56

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 8

(e) Scope of Registration Rights; Registration Procedures.

<PAGE> 57

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 9

(i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but
for this subparagraph;

(ii) subject itself to taxation in any jurisdiction where it
would not otherwise be subject to taxation but for this
subparagraph;

(iii) consent to general service of process in any
jurisdiction where it would not otherwise be subject to
process but for this subparagraph;

<PAGE> 58

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 10

(f) Indemnification.

(3) Any person entitled to indemnification hereunder will:

(i) give prompt written notice to the indemnifying party of
any claim with respect to which such person seeks
indemnification, and

<PAGE> 59

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 11

(6) Put Agreement

(a) Put Notice

If the Company has not registered shares of the Common Stock under the
1933 Act by May 1, 2000, then, in such event, the holder of the Shares shall
have the right to deliver to the Company at any time(s) on or before May 31,
2001 a notice (a "Put Notice") stating such holder's intent to put to the
Company such amount of the Shares (as adjusted pursuant to paragraph 7 hereof),
as holder shall elect. The amount of Shares so specified in a Put Notice is
hereinafter referred to as the "Put Shares". A Put Notice shall be delivered in
the manner provided for notices hereunder and shall be irrevocable except as
expressly provided in paragraph (b) below.

(b) Company's Obligation to Purchase

<PAGE> 60

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 12

to date of the Put Notice at a rate equal to the fixed interest rate for United
States Treasury Bonds of thirty (30) year duration issued on or the trading date
nearest the date of the Put Notice. Such payment shall be made within thirty
(30) days of the Put Notice by check payable to such holder against delivery by
such holder of a certificate or certificates representing such Put Shares duly
endorsed for transfer with signature guaranteed by a national bank or a member
firm of the New York Stock Exchange. The Company promptly shall cause to be
delivered to such holder a balance certificate for any Shares represented by the
certificate (s) tendered by such holder which were not the subject of the Put
Notice.

(7) Adjustment of Number of Shares of Common Stock

(8) Sale of Company

<PAGE> 61

Board of Directors
Midrange Information Systems, Inc.
June ___, 1996
Page 13

least equal to the Offering Amount) or (b) May 31, 2001, the Company or
substantially all of its assets shall be sold, the holder shall receive from
the consideration paid the greater of (i) his aliquot shares of the
consideration determined by a fraction the numerator of which shall be the
number of shares of Common Stock held by the holder as of the date of sale of
the Company or its assets and the denominator of which shall be the total number
of shares of Common Stock issued and outstanding as of the date of sale of the
Company or its assets or (ii) the amount that would be due had holder given a
Put Notice pursuant to paragraph (6) hereof for all of holder's shares on the
date of sale of the Company or its assets.

(9) Notices.

(10) Successors and Assigns.

(11) Applicable Law.

(12) Certification with Respect to Federal Dividend and Interest Payments:
Backed-up Withholding

<PAGE> 62

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 14

Under penalties of perjury, the undersigned hereby certifies to the Company
as follows:

(a) The number shown below is the undersigned's Social Security or
other taxpayer identification number and such number is the
undersigned's correct taxpayer identification number; and

<PAGE> 63

Board of Directors
Midrange Information Systems, Inc.
June __, 1996
Page 15

IMPORTANT NOTICES TO INVESTORS CONCERNING CERTAIN RISKS

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

<PAGE> 64

Board of Directors
Midrange Information Systems, Inc.
June 24, 1996
Page 16

IN WITNESS WHEREOF, the undersigned has executed and delivered this
Subscription Agreement this 24 day of June, 1996.

Subscription: Twenty-one (21) Shares of the Common Stock at $2130.08 per Share
for an aggregate of $44,731.68.

by: /s/ STEPHEN F. MAILLARD ONE ROOSEVELT AVENUE
- -------------------------------- ------------------------------------------
Signature of Subscriber) Residence and/or Business Address

STEPHEN F. MAILLARD PORT JEFFERSON STA, NY 11776
- -------------------------------- ------------------------------------------
Typed or Printed Name City State Zip Code

NEW YORK
- --------------------------------
Subscriber's State of Residence

###-##-####
- --------------------------------
Social Security or Tax
Identification No. of Subscriber

ACCEPTED:

MIDRANGE INFORMATION SYSTEMS, INC.

By: /s/ ILLEGIBLE
-------------------------------
President

DATED: July [ILLEGIBLE]
-------------------------------

<PAGE> 1
EXHIBIT 11.1

STATEMENT REGARDING COMPUTATION
OF PROFORMA NET INCOME PER SHARE

<TABLE>
<S> <C> <C>
Weighted average common shares outstanding: 6,225,653

Stock options issued within one year of filing 267,840
Weighted average option price $ 7.84
Proceeds 2,100,638
Mid range of estimated offering price 11
Common share repurchased 190,967
Common equivalent shares 76,873
----------
Total common and common equivalent shares 6,302,525
Net income 242,700
----------
Proforma net income per share $ 0.04
==========
</TABLE>

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement on Form S-1 of Vision
Solutions, Inc. of our report dated February 10, 1997, (except for Note 9 as to
which the date is March 12, 1997 and paragraph 1 of Note 1 and paragraph 5 of
Note 7 as to which the date is March , 1997) appearing in the Prospectus which
is part of this Registration Statement and to the references to us under the
headings, "Selected Financial Data" and "Experts", in such Prospectus.

Our audits of the financial statements referenced to in our aforementioned
report also included the financial statement schedule of Vision Solutions, Inc.,
listed in Item 16. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

Costa Mesa, California
March , 1997

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

The foregoing consent and report is in the form which will be signed by Deloitte
& Touche LLP upon the consummation of the stock exchange in connection with the
reincorporation in the State of Delaware which is described in Note 1 of the
notes to the financial statements.

DELOITTE & TOUCHE LLP
Costa Mesa, California
March 13, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS TO REGISTRATION STATEMENT ON FORM S-1 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 704,500
<SECURITIES> 992,300
<RECEIVABLES> 3,459,400
<ALLOWANCES> 230,400
<INVENTORY> 0
<CURRENT-ASSETS> 5,533,000
<PP&E> 1,106,100
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,443,100
<CURRENT-LIABILITIES> 4,327,900
<BONDS> 0
0
0
<COMMON> 2,730,800
<OTHER-SE> 222,800
<TOTAL-LIABILITY-AND-EQUITY> 7,443,100
<SALES> 0
<TOTAL-REVENUES> 10,180,400
<CGS> 0
<TOTAL-COSTS> 1,376,100
<OTHER-EXPENSES> 8,378,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 454,800
<INCOME-TAX> 212,100
<INCOME-CONTINUING> 242,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 242,700
<EPS-PRIMARY> .04
<EPS-DILUTED> .03

</TABLE>