LANDMARK SYSTEMS CORP, S-1, 1997-09-15

LANDMARK SYSTEMS CORP
S-1, 1997-09-15

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1997.

REGISTRATION NO. 333-
================================================================================

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

LANDMARK SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
VIRGINIA 7372, 7379 54-1221302
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NO.)
</TABLE>

LANDMARK SYSTEMS CORPORATION
8000 TOWERS CRESCENT DRIVE
VIENNA, VIRGINIA 22182
(703) 902-8000
(ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

RALPH E. ALEXANDER
PRESIDENT, CHIEF OPERATING OFFICER AND CHIEF FINANCIAL OFFICER
LANDMARK SYSTEMS CORPORATION
8000 TOWERS CRESCENT DRIVE
VIENNA, VIRGINIA 22182
(703) 902-8000
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT OF SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
THOMAS H. MCCORMICK, ESQ. BRUCE S. MENDELSOHN, ESQ.
DANIELLE R. SROUR, ESQ. KAY TATUM, ESQ.
SHAW PITTMAN POTTS & TROWBRIDGE AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
2300 N STREET, N.W. 1333 NEW HAMPSHIRE AVE., N.W.
WASHINGTON, D.C. 20037 WASHINGTON, D.C. 20036
(202) 663-8000 (202) 887-4000
</TABLE>

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
TITLE OF EACH CLASS OF PROPOSED PROPOSED
SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED(1) PRICE PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value................. 3,680,000 $10.00 $36,800,000.00 $11,153.00
============================================================================================================
</TABLE>

(1) Includes 480,000 shares that the Underwriters have the option to purchase to
cover over-allotments, if any.

(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act.
------------------------

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
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, DATED SEPTEMBER 15, 1997
PROSPECTUS

3,200,000 SHARES

LANDMARK SYSTEMS CORPORATION

COMMON STOCK

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

Of the 3,200,000 shares of Common Stock offered hereby, 2,000,000 shares
are being offered by the Company and 1,200,000 shares are being offered by the
selling stockholders (the "Selling Stockholders"). The Company will not receive
any proceeds from the sale of shares by the Selling Stockholders. See "Principal
and Selling Stockholders."

Prior to this offering (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 will be between $ and $ per share. See "Underwriting"
for a discussion of the factors to be considered in determining the initial
public offering price. The Company has applied to have the Common Stock approved
for quotation on the Nasdaq National Market under the symbol "LDMK."

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

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

<TABLE>
<CAPTION>
===============================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
- -----------------------------------------------------------------------------------------------
Total(4)............... $ $ $ $
===============================================================================================
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated to be $620,000.
(3) The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Stockholders.
(4) The Selling Stockholders have granted to the Underwriters an option,
exercisable within 30 days of the date of this Prospectus, to purchase up to
480,000 additional shares of Common Stock solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Selling Stockholders will be
$ , $ and $ , respectively. See "Underwriting."

The Common Stock offered by the Underwriters is subject to receipt and
acceptance by them. The Underwriters reserve the right to reject any order in
whole or in part. It is expected that the Common Stock will be ready for
delivery on or about , 1997.

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

UNTERBERG HARRIS WHEAT FIRST BUTCHER SINGER

, 1997
<PAGE> 3

[ARTWORK]

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

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES AND THE IMPOSITION OF A PENALTY BID IN CONNECTION WITH THE OFFERING.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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

PerformanceWorks and The Monitor are registered trademarks of the Company.
This Prospectus also contains trademarks and trade names of companies other than
the Company.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The shares of the Company's common
stock, $.01 par value per share (the "Common Stock"), offered hereby involve a
high degree of risk. See "Risk Factors." Unless otherwise indicated, the
information in this Prospectus (i) assumes no exercise of the Underwriters'
over-allotment option, (ii) reflects a 3-for-2 split of the Common Stock to take
effect immediately prior to the date of this Prospectus, (iii) reflects the
mandatory redemption on August 1, 1997 of 54,946 shares of Series A Preferred
Stock, (iv) reflects the conversion, upon the closing of the Offering, of
910,109 shares of Series A Preferred Stock into 690,166 shares of Common Stock
and of 395,195 shares of Series B Preferred Stock into 592,793 shares of Common
Stock and (v) reflects the lapse, upon the closing of the Offering, of the
rights of certain holders of 123,155 shares of Common Stock and options to
acquire 313,635 shares of Common Stock to require the Company to repurchase such
shares (collectively, the "Redeemable Common Stock Instruments"). References in
this Prospectus to "Landmark" or the "Company" mean Landmark Systems Corporation
and its subsidiaries.

THE COMPANY

Landmark is a leading provider of performance management software products
which measure, analyze, report and predict performance for both mainframe and
client/server computing environments. Landmark's PerformanceWorks product family
is distinct in its ability to monitor the key components of a computing
environment, provide early warning of potential system problems and enable
effective planning for changes in the computing environment. The Company
believes these capabilities improve user productivity, reduce computing costs,
increase system availability and optimize use of system resources. Landmark's
products address performance management across leading hardware platforms,
operating systems from DEC, Hewlett-Packard, IBM, Microsoft and Sun and
databases consisting of DB2, Oracle, SQL Server and Sybase. As of June 30, 1997,
Landmark had licensed over 14,700 copies of its products to over 3,900 customers
worldwide.

Businesses and other organizations are increasingly relying upon computer
systems to run and manage their key business processes. As a result of the
growing dependence on, and increasing complexity of, computing environments
(consisting of both mainframe and client/server systems) to run
business-critical applications, demand has increased for comprehensive software
solutions capable of planning, implementing and optimizing these information
technology resources. According to International Data Corporation ("IDC"),
revenues from the overall system management software market are expected to rise
to $17 billion by 2000. Performance management is the largest sector of this
market and is expected by IDC to grow from $1.8 billion in 1996 to $3.1 billion
by 2000.

The ability to monitor performance data, or "metrics," from each system
component in a complex, heterogeneous computing environment is a key feature of
Landmark's software, particularly because performance problems in these
environments can originate from any one or a combination of components. The
Company's PerformanceWorks products use software agents to gather performance
metrics automatically from a system's pressure points -- including the central
processing unit ("CPU"), memory and storage, input/output ("I/O"), disk space,
workload, operating system and network. The agent-based architectures of the
Company's products allow users to manage computing environments that are
large-scale, distributed and multi-platform. By monitoring performance data from
each component of a system from real-time, recent past and historical
perspectives, Landmark's products allow users to identify the source of a
problem so a solution can be implemented and to anticipate potential problems so
that they can be avoided.

Landmark's solutions are based on its "lifecycle" view of performance
management and are designed to allow customers to address each stage of the
application lifecycle: planning, development and production. The Company's
PerformanceWorks products cover a broad range of functionality, including
monitoring, reporting, exception handling, trending, tuning and capacity
planning. Landmark's products provide its customers with the ability to
transform raw data into useful information through an intelligent aggregation
and automatic summarization process which collects data on a continuous basis
and generates summary information at prescribed intervals.

3
<PAGE> 5

The Company's strategy is to enhance, extend and expand its product
offerings, to capitalize on its large installed customer base, to strengthen its
distribution capability and to grow through acquisitions and partnering
arrangements.

The Company's customers consist of organizations across a wide variety of
industries that are developing or have deployed business-critical applications
in complex, multi-user environments. Representative customers of the Company
include ABN-AMRO, Amoco, BMW, Foundation Health Corporation, HBO & Company, IBM,
Kodak, Lockheed Martin, Wachovia Bank, Wells Fargo and Whirlpool. See
"Business -- Customers." Historically, over 90% of Landmark's customers have
renewed their maintenance and support arrangements with the Company.

The Company was incorporated in Virginia on November 3, 1982. The Company's
principal executive offices are located at 8000 Towers Crescent Drive, Vienna,
Virginia 22182. Its telephone number is (703) 902-8000.

THE OFFERING

Common Stock offered by the
Company............................. 2,000,000 shares

Common Stock offered by the Selling
Stockholders...................... 1,200,000 shares

Common Stock to be outstanding after
the Offering........................ 10,761,051 shares (1)

Use of proceeds..................... For general corporate purposes,
including sales and marketing, working
capital, research and development,
capital expenditures and potential
acquisitions. See "Use of Proceeds."

Proposed Nasdaq National Market
symbol.............................. LDMK
- ---------------
(1) Based on the number of shares of Common Stock outstanding as of June 30,
1997. Excludes a total of 3,313,352 shares subject to outstanding options
and warrants and 301,215 shares available for future issuance pursuant to
the Company's stock option plans as of June 30, 1997. The sale of certain of
these shares in the public market is limited by restrictions under the
Securities Act of 1933 and lock-up agreements with the Underwriters. See
"Shares Eligible for Future Sale," "Management" and Notes 10 and 12 of Notes
to Consolidated Financial Statements.

4
<PAGE> 6

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

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- -------------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues........................... $32,674 $34,460 $36,556 $17,281 $19,955
Gross profit........................ 24,830 26,797 27,643 12,485 17,048
Operating expenses
Sales and marketing................. 11,716 13,092 11,671 5,675 6,739
Product research and development.... 9,094 12,490 13,924 7,540 6,688
General and administrative.......... 7,800 6,872 4,776 2,308 2,898
------- ------- ------- ------- -------
Total operating expenses....... 28,610 32,454 30,371 15,523 16,325
------- ------- ------- ------- -------
Operating (loss) income.................. (3,780) (5,657) (2,728) (3,038) 723
Net (loss) income........................ (1,921) (4,169) (1,202) (1,575) 527
Pro forma net (loss) income per
share(1)............................... $ (0.13) $ (0.17) $ 0.05
Shares used to compute pro forma net
(loss) income per share(1)............. 9,368 9,368 9,946
OTHER FINANCIAL DATA:
EBITDA(2)................................ $ 406 $(1,700) $ 3,138 $ 343 $ 1,965
Cash flow from operations................ 1,311 (362) 4,144 2,334 1,940
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
ACTUAL AS ADJUSTED(3)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................... $ 2,575 $ 18,695
Working capital (deficit)........................................... (2,755) 13,365
Total assets........................................................ 27,946 44,060
Long-term debt (less current portion)............................... 327 327
Mandatorily redeemable securities(4)................................ 10,326 --
Stockholders' (deficit) equity...................................... (6,604) 19,466
</TABLE>

- ---------------
(1) See Note 2 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used to compute pro
forma net (loss) income per share.

(2) EBITDA represents earnings before net interest and other income, income
taxes, depreciation and amortization expense. EBITDA does not represent cash
flows as defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all the
Company's cash needs. EBITDA should not be considered in isolation or as a
substitute for net income, cash flows from operations or other measures of
liquidity determined in accordance with generally accepted accounting
principles. EBITDA may not be comparable to other similarly titled measures
of other companies.

(3) Adjusted to reflect the sale of the 2,000,000 shares offered by the Company
hereby at an assumed initial public offering price of $9.00 per share and
the application of the estimated net proceeds therefrom as set forth under
"Use of Proceeds." Includes the effect of the mandatory redemption on August
1, 1997 of 54,946 shares of Series A Preferred Stock, and, upon the closing
of the Offering, the conversion of the Series A and Series B Preferred Stock
into Common Stock and the lapse of the rights of holders of the Redeemable
Common Stock Instruments to require the Company to repurchase the Redeemable
Common Stock Instruments.

(4) Includes Series A Preferred Stock, Series B Preferred Stock and Redeemable
Common Stock Instruments.

5
<PAGE> 7

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.

Risk of Significant Fluctuations in Operating Results; Timing of
Revenues. The Company has experienced, and expects to continue to experience,
significant fluctuations in operating results, on an annual and a quarterly
basis, which may result in volatility in the price of the Company's Common
Stock. Such fluctuations may result from a number of factors, many of which are
outside of the Company's control. These factors include the size and timing of
customer orders; changes in the level of operating expenses; customer budget
cycles; the timing of introductions or enhancements of products by the Company
or its competitors; customer order deferrals in anticipation of new products or
product enhancements; customer renewal of maintenance and support agreements;
changes in pricing policy of the Company or its competitors; the mix of
distribution channels and products sold; increased competition; technological
changes; the ability of Landmark to develop or acquire, introduce and market on
a timely basis new products or enhancements to its existing products; the
quality of products sold; market acceptance of new products and product
enhancements; seasonality of revenues; the Company's ability to expand its sales
and marketing programs; personnel changes; foreign currency exchange rates;
costs or other nonrecurring charges in connection with the acquisition of or
investment in companies, products or technologies; and general economic
conditions.

Order backlog at the beginning of any quarter has represented only a small
portion of that quarter's total revenues because products are typically shipped
on a trial basis prior to the receipt of customer orders. As a result, the
Company's quarterly operating results are likely to be significantly affected by
the number and size of customer orders the Company is able to obtain in any
particular quarter. Total revenues in any quarter are substantially dependent on
orders obtained during that quarter. Landmark's expense levels are based in
significant part on expectations as to future revenues and as a result are
relatively fixed in the short run. If near-term demand for the Company's
products weakens or if sales do not close in any quarter as anticipated, the
Company's results of operations for that quarter would be adversely affected.
Historically, Landmark has often recognized a significant portion of its
revenues in the last weeks of a quarter. As a result, the magnitude of quarterly
fluctuations may not become evident until late in, or after the close of, a
particular quarter. Landmark believes that its annual and quarterly revenues,
expenses and operating results may vary significantly in the future, that
period-to-period comparisons of its results of operations are not necessarily
meaningful and that, in any event, such comparisons should not be relied upon as
indications of future performance. See "Selected Consolidated Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

History of Operating Losses. Although the Company had operating profits in
the fourth quarter of 1996 and the first and second quarters of 1997, the
Company has experienced operating losses for the years ended December 31, 1992,
1993, 1994, 1995 and 1996. In recent years, the Company has expanded its product
line to include products for the client/server computing environment, has
increased its research and development expenditures, has established an
international direct sales force to supplement or replace certain third party
distributors and has instituted company-wide cost controls. As a result of these
various initiatives and their potential impact on the Company's financial
condition, prediction of the Company's future operating results is difficult.
There can be no assurance that the Company will be able to continue generating
operating profits on a quarterly basis or achieve consistent operating
profitability on an annual basis. See "-- Risk of Significant Fluctuations in
Operating Results; Timing of Revenues" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

Intense Competition. The market for the Company's performance management
software products is highly competitive, fragmented and characterized by
increasingly rapid technological developments, evolving standards and rapid
changes in customer requirements. To maintain and improve its position in this
market, the Company must continue to enhance current products and develop new
products in a timely fashion. The Company competes primarily with vendors that
provide mainframe performance management software and vendors that provide
performance management software for client/server computing environments.
Landmark believes that its principal competitors with respect to mainframe
performance management software products

6
<PAGE> 8

include Candle Corporation and Boole and Babbage, Inc. In the client/server
market, the Company believes that its principal competitors include BMC
Software, Inc., Compuware Corporation, BGS Systems Inc. and Platinum
technologies, inc. See "Business -- Competition."

Some of Landmark's competitors have longer operating histories and
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger customer base, than
those of the Company. The Company's current and future competitors could
introduce products with more features, greater scalability, increased
functionality and lower prices than the Company's products. These competitors
could also bundle existing or new products with other, more established products
in order to compete with Landmark. In addition, current and potential
competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with third parties, thereby increasing the
ability of their products to address the needs of the Company's prospective
customers. Moreover, there can be no assurance that the Company will be able to
differentiate its products from the products of its competitors. Due to
potentially lower barriers to entry for platform-specific niche products in the
performance management software market, the Company believes that emerging
companies may enter this market, particularly in the client/server environment.
Increased competition may result in price reductions, reduced gross margins and
loss of market share, any of which could materially and adversely affect the
Company's business, financial condition and results of operations. Any material
reductions in the prices of Landmark's products would negatively affect gross
margins and would require the Company to increase sales in order to maintain
gross profits. There can be no assurance that the Company will be able to
compete successfully against current or future competitors, and the failure to
do so could have a material adverse effect upon Landmark's business, financial
condition and results of operations. See "Business -- Competition."

Rapid Technological Change; Product Development. The market for
performance management software products is increasingly characterized by rapid
technological advances, changes in customer requirements and frequent new
product introductions and product enhancements. Landmark's future success will
depend in large part on its ability to enhance its current products and to
develop and introduce new products that keep pace with technological
developments, achieve market acceptance and respond to increasingly complex
customer requirements. Landmark believes that its future operating results will
be dependent upon the continued market acceptance of its products, the timing of
orders for such products and the level and effectiveness of research and
development expenses incurred in connection with the Company's ongoing and
planned product development programs. Responding to rapid technological change
and the need to develop and introduce new products quickly to meet its
customers' evolving needs will require the Company to make substantial
investments in research and product development. Any failure by the Company to
anticipate or respond adequately to technological developments and customer
requirements or any significant delays in product development or introduction
could result in a loss of competitiveness and could materially and adversely
affect the Company's business, financial condition and results of operations.
There can be no assurance that new products will be successfully developed or
marketed by the Company, that any new products will achieve market acceptance or
that other software vendors will not develop and market products which are
superior to Landmark's products or that such products will not achieve greater
market acceptance. See "Business -- Product Development."

Dependence on Certain Products. Landmark has historically derived, and in
the foreseeable future expects to continue to derive, a substantial majority of
its revenues from performance management software products and services for use
in mainframe-based computing environments. The Company derived 93.0%, 90.3%,
89.2% and 87.0% of its revenues from mainframe products and services in fiscal
years 1994, 1995 and 1996 and the six months ended June 30, 1997, respectively.
Accordingly, Landmark's future success will depend in part on the continued
market acceptance of its performance management software products and services
for mainframe-based systems. A decline in demand for these products and
services, whether as a result of an actual or a perceived decline in the use of
mainframe-based systems, new product introductions, increased competition,
technological change, failure of the Company's existing and new products to
address customer requirements or otherwise, could have a material adverse effect
on the Company's business, financial condition and results of operations.

Dependence on New Products and Markets. Landmark has recently introduced a
number of performance management software products for use in client/server
computing environments. The Company expects

7
<PAGE> 9

these products to generate a significant portion of the Company's future revenue
growth. Landmark's client/server products are designed for use in complex,
distributed computing environments comprised of a variety of hardware platforms,
operating systems and databases, each of which may come from a different vendor.
The market for performance management software in the client/server computing
environment is relatively new and still emerging. The Company's future financial
performance will depend in part on continued growth in the market for
performance management products in complex, heterogeneous environments, which in
turn will depend on growth in the number of large and medium sized organizations
with such computing environments which deploy performance management solutions.
There can be no assurance that the market for performance management products in
the client/server computing environment will continue to grow or that Landmark
will be able to respond effectively to the evolving requirements of this market.
Moreover, if the Company's recently introduced products for client/server
computing environments, or future releases of new products or product
enhancements for client/server systems, do not achieve meaningful market
acceptance, Landmark's business, financial condition and results of operations
could be materially and adversely affected.

Need to Attract and Retain Qualified Technical Personnel. The Company's
future success will depend in large part on its ability to hire, train and
retain technical personnel who have expertise in a wide array of network and
computer systems and a broad understanding of the markets Landmark serves.
Competition for such technical personnel is intense, and there can be no
assurance that the Company will be successful in attracting and retaining such
personnel. Although the Company to date has not experienced significant employee
turnover, there can be no assurance that it will not experience such turnover in
the future. Any inability of the Company to hire, train and retain a sufficient
number of qualified technical personnel could, among other things, impair the
Company's ability to develop new products and enhance existing products in a
timely manner, which, in turn, would have a material adverse effect on the
Company's business, financial condition and results of operations.

Dependence on Key Personnel. Landmark's future success will depend on the
continued contributions of its executive officers and key employees. The loss of
the services of any one of the Company's executive officers or other key
employees or the decision of one or more of such officers or employees to join a
competitor or otherwise compete directly or indirectly with the Company could
have a material adverse effect on the business, financial condition and results
of operations of the Company. With the exception of Ralph E. Alexander, who is
President, Chief Operating Officer and Chief Financial Officer of the Company,
Landmark does not have employment contracts with any of its executive officers.
Mr. Alexander's employment agreement is for a term of three years beginning
April 9, 1997.

The Company's future success will also depend on its continuing ability to
identify, hire, train and retain highly qualified sales, marketing and
managerial personnel. Competition for such personnel is intense, and there can
be no assurance that Landmark will be able to attract, assimilate or retain such
highly skilled personnel in the future. The inability to attract, hire and
retain the necessary sales, marketing and managerial personnel could have a
material adverse effect upon the Company's business, financial condition and
results of operations. See "Business -- Employees" and "Management."

Potential Acquisitions. As part of its business strategy, the Company
intends to acquire or invest in complementary companies, products and
technologies, although the Company is not engaged in any negotiations and has no
current or pending arrangements, agreements or understandings with respect to
any acquisitions or investments. Any such future transactions would be
accompanied by the risks commonly encountered in making acquisitions of
companies, products and technologies. Such risks include, among other things,
the difficulty associated with assimilating the personnel and operations of the
acquired companies, the potential disruption of the Company's ongoing business,
the distraction of management and other resources, the inability of management
to maximize the financial and strategic position of the Company through the
successful integration of acquired personnel and technology rights, the
maintenance of uniform standards, controls, procedures and policies and the
impairment of relationships with employees and customers of both the Company and
the acquired business as a result of the integration of new management
personnel. There can be no assurance that the Company will be successful in
overcoming these risks or any other problems encountered in connection with any
such acquisitions. In addition, future acquisitions by the Company could result
in the issuance of dilutive equity securities, the incurrence of debt or
contingent liabilities and the

8
<PAGE> 10

amortization of goodwill and other intangible assets, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations and on the market price of the Company's Common Stock. See
"Business -- Strategy."

International Sales. Revenues from customers outside the United States and
Canada were 27.6%, 32.4%, 32.4% and 33.6% of total revenues for fiscal years
1994, 1995 and 1996 and the six months ended June 30, 1997, respectively.
Landmark intends to continue to expand its operations outside of the United
States and Canada and to enter additional international markets, which will
require significant management attention and financial resources. The Company
intends to establish additional international operations and hire additional
personnel in order to increase its sales levels and gross margins on products
sold in these markets. To the extent that the Company is unable to do so, the
Company's growth, if any, in international sales could be limited, and the
Company's business, financial condition and results of operations could be
materially and adversely affected. There can be no assurance that the Company
will be able to maintain or increase international market demand for its
products. The Company's products are priced in the currency of the country in
which they are sold. Revenues reported and amounts remitted from international
sales are converted into U.S. dollars based upon the applicable exchange rate.
Any future unfavorable changes in the exchange rates of foreign currencies would
reduce the U.S. dollar amount of the Company's revenues from international
sales, and would therefore adversely affect the year to year comparisons of the
Company's results of operations. Additional risks inherent in Landmark's
international business activities generally include unexpected changes in
regulatory requirements, tariffs and other trade barriers, costs and risks of
localizing products for foreign countries, longer accounts receivable payment
cycles in certain territories, adverse tax consequences, restrictions on
repatriating earnings and the burdens of complying with a wide variety of
foreign laws. There can be no assurance that such factors will not have a
material adverse effect upon the Company's future international revenues and,
consequently, the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Sales and Marketing."

Reliance on Third Party Distributors. Landmark has historically relied
primarily on third-party distributors to market its products internationally.
Revenues attributable to such distributors were 27.6%, 28.9%, 27.5% and 20.2% of
total revenues for fiscal years 1994, 1995 and 1996 and the six months ended
June 30, 1997, respectively. Any material increase in the Company's sales
through such third-party distributors as a percentage of total revenues will
adversely affect the Company's average selling prices and gross margins due to
the lower unit prices the Company receives when selling through such
distributors. The Company's agreements with its distributors generally permit
the distributor to market software products in addition to Landmark's. As a
result, there can be no assurance that these distributors will give a priority
to marketing the Company's products or that they will continue to carry the
Company's products. In addition, some agreements allow the distributor to
terminate the relationship without cause or restrict Landmark's ability to
terminate the relationship. There can be no assurance that Landmark will retain
any of its current distributors or that the Company could successfully replace
such distributors. Any of the foregoing changes in Landmark's distribution
channels could materially adversely affect the Company's business, financial
condition and results of operations. See "Business -- Sales and Marketing." In
addition, although the Company employs certain controls to ensure an accurate
accounting of revenues generated by distributors, there can be no assurance that
all such revenues will be properly reported to the Company.

Trademarks and Proprietary Rights; Risks of Infringement. The Company
regards its products and technology as proprietary and attempts to protect them
with licensing agreements, patents, trademark and trade secret laws, copyrights,
restrictions on disclosure and confidentiality procedures. Although Landmark
generally enters into license agreements with its customers, distributors and
corporate partners, and confidentiality agreements with its employees and other
third parties and controls access to and distribution of its documentation and
other proprietary information, there can be no assurance that any such person
will not copy or otherwise obtain and use the Company's proprietary technology
or products without its permission, or develop similar technology independently.
Landmark pursues the registration of its trademarks in the United States and
internationally, and has registered certain of its trademarks, including
"PerformanceWorks" and "The Monitor." Landmark also pursues U.S. registrations
of certain of its copyrights, particularly of the Company's software products.
It is difficult to police unauthorized use of Landmark's technology, products

9
<PAGE> 11

and trademarks and the Company is unable to determine the extent to which piracy
and misappropriation of its products, technology and trademarks occur. Software
piracy and misappropriation may adversely affect the Company's results of
operations. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to the same extent as do the laws of the United
States. The Company may in the future rely on "shrink wrap" licenses that are
not signed by licensees and, therefore, may be unenforceable under the laws of
certain jurisdictions. Accordingly, there can be no assurance that the steps
taken by the Company to protect its proprietary rights will be adequate or that
third parties will not infringe or misappropriate the Company's trademarks,
trade secrets and proprietary technology and rights.

The Company is not aware that any of its software products infringe the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not claim infringement by the Company with respect to its
current or future products. The Company expects that software product developers
will increasingly be subject to infringement claims as the number of products
and competitors in the Company's industry segment grows and the functionality of
products in different industry segments overlaps. Any such claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Intellectual Property."

Risk of Software Defects. Software products as complex as those offered by
Landmark may contain errors or defects, especially when first introduced or when
new versions or enhancements are released. The Company has in the past
discovered software errors in certain of its products and has experienced delays
in shipments of products during the period required to correct these errors.
Despite testing by the Company and by current and potential customers, there can
be no assurance that defects and errors will not be found in new versions or
enhancements of existing products or in new products, after commencement of
commercial shipments. Any such defects and errors could result in adverse
customer reactions, delays in market acceptance, expensive product changes or
loss of revenues, any of which could have a material adverse effect upon the
Company's business, financial condition and results of operations.

Control by Existing Stockholders. Following the Offering, the Company's
officers, directors and their affiliated entities together will beneficially own
approximately 68.8% of the outstanding shares of Common Stock (64.7% if the
Underwriters' over-allotment option is exercised in full). Accordingly, such
persons, if they were to act as a group, would be able to elect all of the
Company's directors and to otherwise control the outcome of corporate actions
requiring stockholder approval, regardless of how other stockholders of the
Company may vote. In addition, this concentration of ownership may have the
effect of delaying or preventing a change of control of the Company. See
"Principal and Selling Stockholders."

Shares Eligible for Future Sale; Registration Rights. Sales of a
substantial number of shares of Common Stock in the public market following the
Offering could adversely affect the market price for the Company's Common Stock.
The sale of Common Stock in the public market is limited by restrictions under
the Securities Act of 1933, as amended (the "Securities Act"), and lock-up
agreements (the "Lock-Up Agreements") under which the holders of such shares
have agreed not to sell or otherwise dispose of any of their shares for a period
of 180 days after the date of this Prospectus (the "Lock-Up Period") without the
prior written consent of Unterberg Harris. However, Unterberg Harris may, in its
sole discretion and at any time without notice, release all or any portion of
the securities subject to the Lock-Up Agreements. Any such release could have a
material adverse effect upon the market price of Landmark's Common Stock.

Based on shares of Common Stock outstanding as of September 1, 1997 and
assuming the date of this Prospectus is November 1, 1997, on the date of this
Prospectus, shares are not subject to Lock-Up Agreements and will be
eligible for sale in the public market in reliance or Rule 144(k) and
shares will be eligible for sale in the public market beginning 90 days after
the date of this Prospectus in reliance on Rule 701. Upon expiration of the
Lock-Up Period, shares will be eligible for sale in the public market
subject to compliance with Rule 144 or Rule 701, of which are held by
affiliates of the Company and will be subject to the volume and other resale
limitations of Rule 144, other than the one-year holding period. The remaining
shares not held by Affiliates will be freely tradeable after
expiration

10
<PAGE> 12

of the Lock-Up Period. On September 1, 1997, options to acquire a total of
shares of Common Stock were outstanding. Of this amount, options to
acquire shares are subject to Lock-Up Agreements, and options to
acquire the remaining shares are not subject to the Lock-Up Agreements and
will be eligible for sale in the public market beginning 90 days after the date
of this Prospectus, subject to applicable vesting requirements and compliance
with the Securities Act and applicable state securities laws.

The Company intends to file a registration statement on Form S-8 under the
Securities Act (the "Form S-8") covering approximately shares issued
or reserved under its stock incentive and stock purchase plans. Of the shares
covered by the Form S-8, shares are subject to vested options as of
September 1, 1997. Of these options, options to acquire shares are subject
to Lock-Up Agreements and options to acquire shares are not subject to
Lock-Up Agreements. The Form S-8 is expected to be filed approximately 90 days
after the date of this Prospectus and will become effective automatically upon
filing.

Further, upon expiration of the Lock-Up Period, holders of approximately
shares of Common Stock will be entitled to certain demand and
piggyback registration rights with respect to such shares. If such holders, by
exercising their registration rights, cause a large number of shares to be
registered and sold in the public market, such sales could have a material
adverse effect on the market price of the Company's Common Stock. See
"Description of Capital Stock -- Registration Rights" and "Shares Eligible for
Future Sale."

No Prior Public Market; Potential Volatility of Stock Price. Prior to this
Offering, there has been no public market for the Company's Common Stock, and
there can be no assurance that an active trading market will develop or be
sustained after the Offering. The public offering price has been determined
through negotiations among the Company, the Selling Stockholders and the
representatives of the Underwriters based on several factors and may not be
indicative of the market price of the Common Stock after the Offering. The
market price of the shares of Common Stock is likely to be highly volatile and
may be significantly affected by factors such as actual or anticipated
fluctuations in the Company's results of operations, announcements of
technological innovations or new products by the Company or its competitors,
developments with respect to patents, copyrights or proprietary rights,
conditions and trends in the mainframe and client/server computing environments
and other technology industries, general market conditions and other factors. In
addition, the stock market has from time to time experienced significant price
and volume fluctuations that have particularly affected the market prices for
the common stock of technology companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock. See
"Underwriting."

Dilution. Investors participating in the Offering will incur immediate and
substantial dilution. To the extent outstanding options or warrants to purchase
Common Stock are exercised, there will be further dilution. See "Dilution" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

Anti-Takeover Effects of Certain Charter Provisions. Landmark's Board of
Directors has the authority to issue up to 8,000,000 shares of Preferred Stock
and to determine the price, rights, preferences and privileges of those shares
without any further vote or action by the stockholders of the Company. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, also could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. Landmark currently has
two series of Preferred Stock outstanding, including 910,109 shares of Series A
Preferred Stock and 395,195 shares of Series B Preferred Stock. Upon completion
of the Offering, all shares of Series A and Series B Preferred Stock will be
converted into Common Stock and, as a result, no Preferred Stock will be
outstanding after the Offering. The Company has no present intention to issue
additional shares of Preferred Stock. In addition, certain provisions of the
Company's Articles of Incorporation and Bylaws and of Virginia law could delay
or make more difficult a merger, tender offer or proxy contest involving the
Company. See "Management" and "Description of Capital Stock."

11
<PAGE> 13

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered hereby at an assumed initial public offering price of $9.00
per share are estimated to be approximately $16,120,000, after deducting the
underwriting discount and estimated offering expenses.

The Company intends to use the net proceeds of the Offering primarily for
working capital and other general corporate purposes, including expansion of the
Company's product development and sales and marketing efforts and potential
acquisitions. The amounts actually expended by the Company for working capital
purposes will vary significantly depending upon a number of factors, including
future revenue growth, the amount of cash generated by the Company's operations
and the progress of the Company's product development efforts. The principal
purposes of the Offering include increasing the Company's equity capital,
creating a public market for the Common Stock and facilitating future access by
the Company to public equity markets. In addition, the Company may acquire or
invest in complementary technologies, products or businesses to broaden or
enhance the Company's current product offerings. However, the Company is not
engaged in any negotiations and has no current or pending arrangements,
agreements or understandings with respect to any such acquisition or investment.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

Pending the uses described above, the net proceeds from the Offering will
be invested in deposits with banks and in short-term investment grade,
interest-bearing securities, including government obligations and money market
instruments.

The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Stockholders. See "Principal and Selling
Stockholders."

DIVIDEND POLICY

The Company has never paid or declared any cash dividends and does not
anticipate paying cash dividends on its Common Stock in the foreseeable future.
The Company currently intends to retain its future earnings, if any, to fund the
development and finance the growth of its business. The amount and timing of any
future dividends will depend on general business conditions encountered by the
Company, as well as the financial condition, earnings and capital requirements
of the Company and such other factors as the Board of Directors (the "Board")
may deem relevant.

12
<PAGE> 14

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997 (i) on an actual basis after giving effect to the 3-for-2 split of the
Company's Common Stock, (ii) on a pro forma basis after giving effect to the
mandatory redemption on August 1, 1997 of 54,946 shares of Series A Preferred
Stock and, upon the closing of the Offering, the conversion of the remaining
910,109 shares of Series A Preferred Stock into 690,166 shares of Common Stock,
the conversion of 395,195 shares of Series B Preferred Stock into 592,793 shares
of Common Stock and the lapse of the rights of the holders of the Redeemable
Common Stock Instruments to require the Company to repurchase the Redeemable
Common Stock Instruments, and (iii) as adjusted to reflect the receipt of the
estimated net proceeds from the sale of 2,000,000 shares of Common Stock in the
Offering at an assumed initial public offering price of $9.00 per share, after
deducting the underwriting discount and estimated offering expenses.

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Short-term debt..................................... $ 516,538 $ 516,538 $ 516,538
Long-term debt, net of current portion.............. 327,259 327,259 327,259
Redeemable common stock instruments(1).............. 1,179,234 -- --
Mandatorily redeemable Series A Preferred Stock,
$0.01 par value; 1,300,000 shares authorized;
965,055 shares issued and outstanding, actual..... 6,586,500 -- --
Mandatorily redeemable Series B Preferred Stock,
$0.01 par value; 1,580,779 shares authorized;
395,195 shares issued and outstanding, actual..... 2,559,778 -- --
Stockholders' equity (deficit):
Common Stock, $.01 par value; 30,000,000 shares
authorized; 7,354,940 shares issued and
outstanding, actual; 8,761,051 shares issued
and outstanding, pro forma; 10,761,051 shares
issued and outstanding, pro forma and as
adjusted(2).................................. 73,550 87,612 107,612
Additional paid-in capital..................... 827,640 10,764,084 26,864,084
Accumulated deficit............................ (7,511,243) (7,511,243) (7,511,243)
Foreign currency translation................... 5,977 5,977 5,977
---------- ----------- -----------
Total stockholders' equity..................... (6,604,076) 3,346,430 19,466,430
---------- ----------- -----------
Total capitalization...................... $ 4,565,233 $ 4,190,227 $20,310,227
========== =========== ===========
</TABLE>

- ---------------
(1) The Redeemable Common Stock Instruments represent 123,155 shares of Common
Stock and options to acquire 313,635 shares of Common Stock issued by the
Company to certain employees pursuant to agreements whereby each holder has
the right to require the Company to repurchase such shares at then current
fair market value as determined by the Board. The right of holders of
Redeemable Common Stock Instruments to require the Company to repurchase
such shares automatically lapses on the closing of the Offering.

(2) Excludes shares of Common Stock reserved for future issuance pursuant to the
Company's stock option plans, other option arrangements and an outstanding
warrant. As of June 30, 1997, 3,614,567 shares were reserved for issuance
under the Company's stock option plans, other option arrangements and an
outstanding warrant, of which options and warrants to purchase 3,313,352
shares at a weighted average exercise price of $3.73 per share were
outstanding. The sale of certain of these shares in the public market is
limited by restrictions under the Securities Act and Lock-Up Agreements. See
"Shares Eligible for Future Sale," "Management," and Notes 10 and 12 of
Notes to Consolidated Financial Statements.

13
<PAGE> 15

DILUTION

As of June 30, 1997, the pro forma net tangible book value of the Company
(the "net tangible book value") was approximately $842,903, or $0.10 per share.
Net tangible book value per share represents the amount of total tangible assets
of the Company reduced by the amount of total liabilities, divided by the pro
forma number of shares of Common Stock outstanding. After giving effect to the
sale of 2,000,000 shares of Common Stock by the Company at an assumed initial
public offering price of $9.00 per share and after deducting the underwriting
discount and estimated offering expenses payable by the Company, the net
tangible book value of the Company at June 30, 1997 would have been $16,962,903,
or $1.58 per share. This represents an immediate increase in net tangible book
value of $1.48 per share to existing stockholders and an immediate dilution of
$7.42 per share to new investors purchasing Common Stock in the Offering.
Dilution per share represents the difference between the price per share to be
paid by new investors and the net tangible book value per share after the
Offering. The following table illustrates this per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share....................... $9.00
-----
Pro forma net tangible book value per share as of June 30,
1997............................................................ $0.10
Net tangible book value per share attributable to new
investors....................................................... 1.48
-----
Net tangible book value per share after the Offering.................. 1.58
-----
Dilution per share to new investors................................... $7.42
=====
</TABLE>

The following table sets forth, as of June 30, 1997, the differences in the
total consideration paid and the average price per share paid by the Company's
existing stockholders and the purchasers of shares in the Offering (at an
assumed initial public offering price of $9.00 per share):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 8,761,051 81.4% $ 3,085,962 14.6% $0.35
New investors................ 2,000,000 18.6% 18,000,000 85.4% 9.00
---------- ----- ----------- -----
Total.............. 10,761,051 100.0% $21,085,962 100.0%
========== ===== =========== =====
</TABLE>

- ---------------
The above computations assume the pro forma adjustments described in
"Capitalization" and no exercise of options or warrants after June 30, 1997. At
June 30, 1997, there were outstanding options and warrants to purchase an
aggregate of 3,313,352 shares of Common Stock at a weighted average exercise
price of $3.73 per share. If all of such options and warrants were exercised,
the net tangible book value of the Company as of June 30, 1997 would have been
$13,205,820 or $1.09 per share, the increase in net tangible book value to
existing stockholders would have been $0.99 per share and the dilution in net
tangible book value to purchasers of Common Stock in the Offering would have
been $6.92 per share. See "Capitalization," "Management -- Executive
Compensation," "Management -- Stock Option Plans" and Notes 10 and 12 of Notes
to Consolidated Financial Statements.

14
<PAGE> 16

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data of the Company are qualified by
reference to and should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere herein. The
consolidated statements of operations data for the years ended December 31,
1994, 1995 and 1996 and the consolidated balance sheet data at December 31, 1995
and 1996 are derived from, and are qualified by reference to, Consolidated
Financial Statements of the Company which were audited by Price Waterhouse LLP
and are included elsewhere in this Prospectus. The consolidated statements of
operations data for the years ended December 31, 1992 and 1993 and the
consolidated balance sheet data at December 31, 1992, 1993 and 1994 are derived
from the Company's audited financial statements not included in this Prospectus.
The data at June 30, 1997 and for the six month periods ended June 30, 1996 and
1997 are derived from the Company's unaudited financial statements for such
periods and, in the opinion of the Company's management, contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position at June 30, 1997 and the results of operations for such
interim periods.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues
License revenues..................... $13,221 $11,643 $11,268 $10,392 $11,268 $ 4,756 $ 6,832
Services revenues.................... 18,684 18,860 21,406 24,068 25,288 12,525 13,123
------- ------- ------- ------- ------- ------- -------
Total revenues.................. 31,905 30,503 32,674 34,460 36,556 17,281 19,955
Cost of revenues......................... 6,878 7,267 7,844 7,663 8,913 4,796 2,907
------- ------- ------- ------- ------- ------- -------
Gross profit......................... 25,027 23,236 24,830 26,797 27,643 12,485 17,048
------- ------- ------- ------- ------- ------- -------
Operating expenses
Sales and marketing.................. 10,819 13,219 11,716 13,092 11,671 5,675 6,739
Product research and development..... 7,539 7,780 9,094 12,490 13,924 7,540 6,688
General and administrative........... 7,528 7,319 7,800 6,872 4,776 2,308 2,898
------- ------- ------- ------- ------- ------- -------
Total operating expenses........ 25,886 28,318 28,610 32,454 30,371 15,523 16,325
------- ------- ------- ------- ------- ------- -------
Operating (loss) income.................. (859) (5,082) (3,780) (5,657) (2,728) (3,038) 723
Net interest and other income............ 1,537 12,059 701 548 713 534 156
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes........ 678 6,977 (3,079) (5,109) (2,015) (2,504) 879
Provision for (benefit from) income
taxes.................................. 274 2,651 (1,158) (940) (813) (929) 352
------- ------- ------- ------- ------- ------- -------
Net income (loss)........................ $ 404 $ 4,326 $(1,921) $(4,169) $(1,202) $(1,575) $ 527
======= ======= ======= ======= ======= ======= =======
Pro forma net income (loss) per share
(1).................................... $ (0.13) $ (0.17) $ 0.05
Shares used to compute pro forma net
income (loss) per share (1)............ 9,368 9,368 9,946
OTHER FINANCIAL DATA:
EBITDA (2)............................... $ 2,859 $ (999) $ 406 $(1,700) $ 3,138 $ 343 $ 1,965
Cash flow from operations................ $ 6,552 $ 9,876 $ 1,311 $ (362) $ 4,144 $ 2,334 $ 1,940
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, JUNE
------------------------------------------------------- 30,
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................... $ 677 $ 1,197 $ 800 $ 316 $ 339 $ 2,575
Working capital (deficit)........................... (7,327) (3,160) (1,544) (5,985) (4,138) (2,755)
Total assets........................................ 28,294 31,487 33,172 31,479 25,076 27,946
Long-term debt (less current portion)............... 18 4 -- 1,084 592 327
Redeemable Common Stock Instruments................. 261 311 319 1,049 704 1,179
Mandatorily redeemable preferred stock.............. 6,500 5,391 5,391 5,865 5,865 9,147
Stockholders' (deficit) equity...................... (1,313) 1,852 (204) (4,915) (6,290) (6,604)
</TABLE>

15
<PAGE> 17

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

OVERVIEW

Landmark commenced operations in 1983 with the release of its first
product, a performance monitor for IBM's on-line transaction processing system,
CICS. Since 1983, the Company has introduced a number of additional performance
management products for a variety of mainframe computing environments. In 1993,
financed by the sale of a complementary product line to another software vendor,
Landmark broadened the scope of the environments supported by its performance
management products when it released products which operate in certain
client/server computing environments. Since inception, the Company has financed
its product development activities using cash generated from operations and bank
financing.

During 1996, Landmark re-focused its development efforts in support of
client/server computing environments with the goal of introducing new and
enhanced products, broader platform coverage and additional functionality. In
addition, the Company increased its mainframe development activities, commencing
several new product offerings. Concurrent with these development investments,
the Company's management implemented several initiatives to improve Landmark's
financial performance, including re-negotiation of property leases and employee
benefit plans and tighter cost controls. The Company also refined its sales and
marketing strategy, particularly related to its client/server products, and
accelerated the amortization of capitalized software costs to reflect the
increasingly rapid pace of technology change in the software industry. These
efforts resulted in increased license revenues, increased cost of license
revenues, reduced operating expenses and improved operating results beginning in
1996.

The Company derives its revenues from software licensing and related
services. Service revenues include fees for software maintenance and support,
consulting and training provided by the Company. The Company's maintenance fees
have provided a stable and recurring revenue stream due to relatively high
maintenance renewal rates, which have exceeded 90% each year since inception.
Service revenues were $21.4 million, $24.1 million and $25.3 million, or 65.5%,
69.8% and 69.2% of total revenues, in 1994, 1995 and 1996, respectively.

Revenues are recognized in accordance with AICPA Statement of Position
91-1, "Software Revenue Recognition." Accordingly, sales of perpetual software
licenses are recognized as license revenues when performance under the related
contract is completed, collection is probable and no significant vendor
obligations remain. Service revenues, which primarily consist of maintenance
fees collected prior to the performance of the related services, are recorded as
deferred revenue and recognized ratably over the period during which the
services are performed, generally twelve months.

In certain instances, primarily where the Company is replacing its
competitors' mainframe products, the Company enters into a long-term payment
arrangement with a licensee. Under this type of arrangement, licensees may pay
the license fees plus service fees over a three to five year period, generally
in annual installments. If collectibility by the Company is probable, the
Company recognizes the present value of the contracted stream of payments as an
unbilled receivable in its financial statements. Of this amount, the Company
recognizes the underlying license fee as license revenues and defers the
underlying service fees. As installments are invoiced to the licensee in
accordance with the payment arrangement, the Company reflects a reduction in its
unbilled receivable and an increase in its accounts receivable. In addition, the
Company records service revenues over the related maintenance service period.
Historically, the Company has not granted concessions nor experienced any
significant bad debts associated with these long-term arrangements.

16
<PAGE> 18

technology in the market, (ii) the changes implemented by management in early
1996 regarding the Company's pace of development efforts and product
enhancements and introductions, (iii) the fact that shortened development cycles
do not afford the opportunity to use a detail program design, and (iv) the
increased need for the Company to constantly update its products for the latest
technological innovations. Amortization expense recorded in 1996 and the six
months ended June 30, 1997 would have been $2.3 million lower and $380,000
higher, respectively, if this change had not been made.

The Company classifies revenue transactions occurring within the United
States and Canada as "North American" transactions and all other transactions as
"international" transactions. The Company records international revenues net of
commissions paid to distributors. International revenues are denominated in
local currencies, but reported and remitted to the Company in U.S. dollars based
on the applicable exchange rate. The Company presently does not attempt to hedge
its exposure to fluctuations in foreign currency exchange rates. International
revenues generated by the Company during 1994, 1995 and 1996 totaled $9.0
million, $11.2 million and $11.8 million, respectively, contributing 27.6%,
32.4% and 32.4% of total revenues in 1994, 1995 and 1996, respectively.

The Company replaced certain of its international distributors with direct
international operations through wholly owned subsidiaries in Australia and
Southeast Asia effective January 1, 1995, in Spain effective April 1, 1996, and
in Austria, the Benelux countries, Germany and Switzerland effective January 1,
1997. The Company's direct international operations contributed $1.2 million and
$1.8 million in revenues in 1995 and 1996, respectively.

RESULTS OF OPERATIONS

The following table sets forth the Company's Consolidated Statements of
Operations expressed as percentages of total revenues for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- ----------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues
License revenues.................. 34.5% 30.2% 30.8% 27.5% 34.3%
Service revenues.................. 65.5 69.8 69.2 72.5 65.7
----- ----- ----- ----- -----
Total revenues............... 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Cost of revenues
Cost of license revenues.......... 13.6 12.4 15.8 18.8 6.5
Cost of service revenues.......... 10.4 9.8 8.6 9.0 8.1
----- ----- ----- ----- -----
Total cost of revenues....... 24.0 22.2 24.4 27.8 14.6
----- ----- ----- ----- -----
Gross profit...................... 76.0 77.8 75.6 72.2 85.4
----- ----- ----- ----- -----
Operating expenses
Sales and marketing............... 35.9 38.0 31.9 32.8 33.8
Product research and
development..................... 27.8 36.3 38.1 43.6 33.5
General and administrative........ 23.9 19.9 13.1 13.4 14.5
----- ----- ----- ----- -----
Total operating expenses..... 87.6 94.2 83.1 89.8 81.8
----- ----- ----- ----- -----
Operating (loss) income................ (11.6) (16.4) (7.5) (17.6) 3.6
Net interest and other income.......... 2.2 1.6 2.0 3.1 0.8
----- ----- ----- ----- -----
(Loss) income before income taxes...... (9.4) (14.8) (5.5) (14.5) 4.4
(Benefit from) provision for income
taxes................................ (3.5) (2.7) (2.2) (5.4) 1.8
----- ----- ----- ----- -----
Net (loss) income...................... (5.9)% (12.1)% (3.3)% (9.1)% 2.6%
</TABLE>

17
<PAGE> 19

SIX MONTHS ENDED JUNE 30, 1996 AND 1997

Total revenues. Total revenues increased 15.5% from $17.3 million for the
six months ended June 30, 1996, to $20.0 million for the six months ended June
30, 1997. The increase was attributable to increases in both license and service
revenues.

License revenues. License revenues increased 43.6% from $4.8 million for
the six months ended June 30, 1996, to $6.8 million for the six months ended
June 30, 1997. The increase in license revenues is attributable to increased
customer acceptance of existing products, impacted by additional personnel
involved in direct sales activities, the introduction of new products and
product enhancements, and the commencement of direct operations in Austria, the
Benelux countries, Germany and Switzerland on January 1, 1997.

Service revenues. Service revenues increased 4.8% from $12.5 million for
the six months ended June 30, 1996, to $13.1 million for the six months ended
June 30, 1997. This increase is a result of growth in North American service
revenues, due to normal price increases and maintenance renewals on prior year's
license transactions, which were partially offset by reduced international
service revenues.

Cost of license revenues. Cost of license revenues includes amortization
of capitalized software costs, product royalties, materials and packaging
expenses. Costs of license revenues were $3.2 million and $1.3 million for the
six months ended June 30, 1996 and 1997, respectively, representing 68.1% and
18.9% of license revenues, respectively. The decrease of $1.9 million is
attributable to a reduction in the amortization expense from $2.9 million to
$690,000 for the six months ended June 30, 1996 and 1997, respectively,
partially offset by amortization, beginning in 1997, of the intangible assets
acquired from the Company's former distributor in Austria, the Benelux
countries, Germany, and Switzerland. The decrease in amortization expense is due
to the completion of amortization on certain capitalized software costs recorded
by the Company in prior years.

Cost of service revenues. Cost of service revenues consists of personnel
and related costs for customer support, training and consulting services. Costs
of service revenues were $1.6 million and $1.6 million for the six months ended
June 30, 1996 and 1997, respectively, representing 12.4% and 12.3% of service
revenues.

Sales and marketing. Sales and marketing includes personnel and related
costs for the Company's direct sales organization, marketing staff and
promotional expenses. Sales and marketing expenses were $5.7 million and $6.7
million for the six months ended June 30, 1996 and 1997, respectively,
representing 32.8% and 33.8% of total revenues. The increase of $1.0 million is
attributable to the expansion of the North American and international direct
sales forces and the creation of the telesales organization within the North
American sales force, offset by a reduction in office and other support
expenses.

Product research and development. Product research and development
includes personnel and related costs for the Company's development staff.
Product research and development expenses were $7.5 million and $6.7 million for
the six months ended June 30, 1996 and 1997, respectively, representing 43.6%
and 33.5% of total revenues. The decrease of $800,000 is comprised of a
reduction in the Company's investment in client/ server product development and
a reduction in office and technical support expenses, offset by an increase in
the Company's investment in mainframe product development and a reduction in the
amount of development costs qualifying for capitalization.

General and administrative. General and administrative includes salaries
and related costs of administration, finance and management personnel, as well
as legal and accounting fees. General and administrative expenses were $2.3
million and $2.9 million for the six months ended June 30, 1996 and 1997,
respectively, representing 13.4% and 14.5% of total revenues. The increase of
$600,000 is a result of the 1996 settlement of a prior year lease obligation and
the 1997 recording of $530,000 in stock compensation expense, offset by the
impact of management's cost containment efforts.

Net interest and other income. Net interest and other income includes
interest recorded on installment receivables, interest income earned by the
Company on its excess cash balances, interest expense incurred on term and
revolving credit facilities, and exchange gains (losses) incurred by the Company
on foreign exchange

18
<PAGE> 20

transactions. The amount for the six months ended June 30, 1996 included
interest received on a federal tax refund.

Provision for income taxes. The Company records interim period tax
provisions utilizing management's estimate of the approximate effective tax rate
for the year. The Company recorded interim tax provisions of 37.1% and 40.0% for
the six months ended June 30, 1996 and 1997, respectively.

FISCAL 1994, 1995 AND 1996

Total revenues. Total revenues increased 5.5% from $32.7 million in 1994
to $34.5 million in 1995, and increased 6.1% to $36.6 million in 1996. Increases
in service revenues from 1994 to 1995 were partially offset by reductions in
license revenues during this period; from 1995 to 1996, both license revenues
and service revenues increased.

License revenues. License revenues decreased 7.8% from $11.3 million in
1994 to $10.4 million in 1995, and increased 8.4% to $11.3 million in 1996. The
decline in 1995 license revenues was a result of a temporary decline in sales of
the Company's mainframe products, impacted by reduced emphasis on these products
by the Company's direct sales force as the Company increased its focus on the
client/server market. The increase in 1996 license revenues reflects a focusing
of the Company's direct sales force on larger dollar amount transactions, and
greater success in selling additional products to existing customers.

Service revenues. Service revenues increased 12.4% from $21.4 million in
1994 to $24.1 million in 1995, and increased 5.1% to $25.3 million in 1996.
Service revenues were impacted by customer maintenance renewals, the volume of
prior year's license sales, and the effects of increases in the Company's
maintenance prices.

Cost of license revenues. Costs of license revenues were $4.5 million,
$4.3 million and $5.8 million in 1994, 1995 and 1996, respectively, representing
39.5%, 41.3% and 51.3% of license revenues. The decline of $200,000 from 1994 to
1995 is attributable to a 1994 royalty charge resulting from the re-negotiation
of a prior year obligation, offset by a 1995 write-off of previously capitalized
software costs after management concluded such amount was not recoverable. The
increase of $1.5 million from 1995 to 1996 is the result primarily of increased
amortization of capitalized software costs and, to a lesser extent, of product
royalties on client/server products which vary with revenues generated.

Amortization of capitalized software costs totaled $3.2 million, $3.1
million and $4.8 million in 1994, 1995 and 1996, respectively. The increase
between 1995 and 1996 principally is a result of the reduction, effective
January 1, 1996, of the estimated economic life of capitalized software
products. Amortization expense recorded in 1996 would have been $2.3 million
lower without this change.

Cost of service revenues. Costs of service revenues were $3.4 million,
$3.4 million and $3.1 million in 1994, 1995 and 1996, respectively, representing
15.8%, 14.0% and 12.4% of service revenues. In 1995, reductions in personnel
deployed in the Company's technical support center were offset by increased
costs associated with the Company's commencement of direct international
operations in Australia and Southeast Asia. The decline of $300,000 from 1995 to
1996 is a result of further reductions in personnel deployed in the Company's
technical support center and reduced office and other support costs, offset by
increased costs associated with the Company's commencement of direct
international operations in Spain.

Sales and marketing. Sales and marketing expenses were $11.7 million,
$13.1 million and $11.7 million in 1994, 1995 and 1996 respectively,
representing 35.9%, 38.0% and 31.9% of total revenues. The $1.4 million increase
in these expenses from 1994 to 1995 was primarily a result of the Company's
commencement of direct international operations in Australia and Southeast Asia.
The $1.4 million decrease from 1995 to 1996 resulted from elimination of several
sales and marketing programs, consolidation of functions previously spread over
several groups, and reduced office and other support costs.

Product research and development. Product research and development
expenses were $9.1 million, $12.5 million and $13.9 million in 1994, 1995 and
1996, respectively, representing 27.8%, 36.3% and 38.1% of total revenues. The
increase from 1994 to 1995 is a result of significant increases in resources
deployed for the

19
<PAGE> 21

development of the Company's client/server products and reductions in the amount
of software development costs qualifying for capitalization. The increase in
product research and development expenses from 1995 to 1996 reflects increased
investments in both mainframe and client/server products and reductions in the
amount of software development costs capitalized.

The Company capitalized software development costs of $1.5 million, $1.1
million and $730,000 in 1994, 1995 and 1996, respectively. The effect of
capitalization of software development costs is to reduce the current period
expenses by such amounts.

General and administrative. General and administrative expenses were $7.8
million, $6.9 million and $4.8 million in 1994, 1995 and 1996, respectively,
representing 23.9%, 19.9% and 13.1% of total revenues. The decline from 1994 to
1995 is a result of the impact of several charges recorded by the Company in
1994, including a $800,000 reserve for a lease obligation and $1.0 million in
termination compensation paid to a former international distributor. The 1995
expenses include $800,000 in stock compensation expense, offset by a credit for
the favorable resolution of certain previously accrued obligations. The decline
from 1995 to 1996 is a result of the Company's cost control efforts including
reductions in general management and legal expenses, reduced severance costs,
the 1996 settlement of a prior year lease obligation, and a reversal of accruals
relating to forfeitures of stock options.

Net interest and other income. During the three year period ending
December 31, 1996, these amounts were not material. The 1995 amount includes
foreign exchange losses of $100,000 recorded during the year. The 1996 amount
includes interest received on a federal tax refund.

Provision for (benefit from) income taxes. The Company's effective rates
were 37.6%, 18.4% and 40.3% for 1994, 1995 and 1996, respectively, and differ
from the federal and state statutory income tax rate primarily as a result of
the adjustments of valuation allowances to reflect management's judgment as to
whether certain tax credit carryforwards would expire before utilization by the
Company, and as to the likelihood that foreign subsidiary net operating losses
would not be recovered.

20
<PAGE> 22

QUARTERLY RESULTS

The following tables set forth consolidated statements of operations data
for each of the eight quarters ended June 30, 1997, both in dollar amounts and
as percentages of total revenues represented by each item of the respective
quarter. This information has been derived from unaudited consolidated financial
statements that, in the opinion of management, reflect all adjustments
(consisting only of normal recurring accruals) necessary to fairly present this
information when read in conjunction with the Consolidated Financial Statements
and Notes thereto appearing elsewhere in this Prospectus. The results of
operations for any quarter are not necessarily indicative of the results to be
expected for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------
SEP 30, DEC 31, MAR 31, JUN 30, SEP 30, DEC 31, MAR 31, JUN 30,
1995 1995 1996 1996 1996 1996 1997 1997
------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
License revenues............ $ 1,822 $4,112 $1,847 $2,909 $2,768 $3,744 $3,513 $3,319
Service revenues............ 6,093 5,972 6,201 6,324 6,151 6,612 6,482 6,641
------- ------- ------- ------ ------ ------- ------- -------
Total revenues.......... 7,915 10,084 8,048 9,233 8,919 10,356 9,995 9,960
------- ------- ------- ------ ------ ------- ------- -------
Cost of revenues
Cost of license revenues.... 1,382 944 1,643 1,594 1,451 1,087 640 652
Cost of service revenues.... 888 885 789 770 768 811 782 833
------- ------- ------- ------ ------ ------- ------- -------
Total cost of
revenues.............. 2,270 1,829 2,432 2,364 2,219 1,898 1,422 1,485
------- ------- ------- ------ ------ ------- ------- -------
Gross profit................ 5,645 8,255 5,616 6,869 6,700 8,458 8,573 8,475
------- ------- ------- ------ ------ ------- ------- -------
Operating expenses
Sales and marketing......... 3,152 3,931 2,680 2,995 2,847 3,149 3,366 3,373
Product research and
development............... 3,469 3,674 3,729 3,811 3,233 3,151 3,231 3,457
General and
administrative............ 1,724 1,615 1,492 816 1,193 1,275 1,398 1,500
------- ------- ------- ------ ------ ------- ------- -------
Total operating
expenses.............. 8,345 9,220 7,901 7,622 7,273 7,575 7,995 8,330
------- ------- ------- ------ ------ ------- ------- -------
Operating (loss) income......... (2,700) (965) (2,285) (753) (573) 883 578 145
Net interest and other income... 141 18 395 139 62 117 18 138
------- ------- ------- ------ ------ ------- ------- -------
(Loss) income before income
taxes......................... (2,559) (947) (1,890) (614) (511) 1,000 596 283
(Benefit from) provision for
income taxes.................. (816) 387 (701) (228) (189) 305 239 113
------- ------- ------- ------ ------ ------- ------- -------
Net (loss) income............... $(1,743) $(1,334) $(1,189) $ (386) $ (322) $ 695 $ 357 $ 170
======= ======= ======= ====== ====== ======= ======= =======
</TABLE>

21
<PAGE> 23

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------
SEP 30, DEC 31, MAR 31, JUN 30, SEP 30, DEC 31, MAR 31, JUN 30,
1995 1995 1996 1996 1996 1996 1997 1997
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
License revenues............ 23.0% 40.8% 22.9% 31.5% 31.0% 36.2% 35.1% 33.3%
Service revenues............ 77.0 59.2 77.1 68.5 69.0 63.8 64.9 66.7
------- ------- ------- ------ ------ ------- ------- -------
Total revenues.......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
------- ------- ------- ------ ------ ------- ------- -------
Cost of revenues
Cost of license revenues.... 17.5 9.4 20.4 17.3 16.3 10.5 6.4 6.5
Cost of service revenues.... 11.2 8.8 9.8 8.3 8.6 7.8 7.8 8.4
------- ------- ------- ------ ------ ------- ------- -------
Total cost of
revenues.............. 28.7 18.2 30.2 25.6 24.9 18.3 14.2 14.9
------- ------- ------- ------ ------ ------- ------- -------
Gross profit................ 71.3 81.8 69.8 74.4 75.1 81.7 85.8 85.1
------- ------- ------- ------ ------ ------- ------- -------
Operating expenses
Sales and marketing......... 39.8 39.0 33.3 32.4 31.9 30.4 33.7 33.9
Product research and
development............... 43.8 36.4 46.3 41.3 36.2 30.4 32.3 34.7
General and
administrative............ 21.8 16.0 18.5 8.8 13.4 12.3 14.0 15.1
------- ------- ------- ------ ------ ------- ------- -------
Total operating
expenses.............. 105.4 91.4 98.1 82.5 81.5 73.1 80.0 83.7
------- ------- ------- ------ ------ ------- ------- -------
Operating (loss) income......... (34.1) (9.6) (28.3) (8.1) (6.4) 8.6 5.8 1.4
Net interest and other income... 1.8 0.2 4.9 1.5 0.7 1.1 0.2 1.3
------- ------- ------- ------ ------ ------- ------- -------
(Loss) income before income
taxes......................... (32.3) (9.4) (23.4) (6.6) (5.7) 9.7 6.0 2.7
(Benefit from) provision for
income taxes.................. (10.3) 3.8 (8.7) (2.5) (2.1) 2.9 2.4 1.1
------- ------- ------- ------ ------ ------- ------- -------
Net (loss) income............... (22.0)% (13.2)% (14.7)% (4.1)% (3.6)% 6.8% 3.6% 1.6%
======= ======= ======= ====== ====== ======= ======= =======
</TABLE>

The Company has historically experienced a seasonal pattern in its license
revenues, and expects to see this pattern continue. Historically, the fourth
quarter has higher license revenues than the other three quarters, and the
second half of a year has higher license revenues than the first half. However,
these patterns will be affected by events both within and outside of the
Company's control, including economic conditions, the Company's new product
release schedules and those of its competitors, the timing of customer
expenditures, and the timing of delivery of new hardware platforms, operating
systems and databases by third party vendors.

Cost of license revenues historically has not fluctuated significantly with
revenue. The expense level is primarily impacted by amortization of capitalized
software costs. The amount of research and development costs being capitalized
has been, and likely will continue to be, reduced due to the increasingly rapid
pace of development and technological change. As a result, the relative
amortization expense will, over time, be reduced and therefore have a positive
impact on profits. From 1997 to 2000, cost of license revenues will be impacted
by the amortization of the intangible assets acquired from the Company's former
distributor in Austria, the Benelux countries, Germany and Switzerland. Cost of
service revenues has not historically varied with revenue.

Sales and marketing expenses vary both with revenue and as a result of
changes in the Company's distribution strategy and approach. The Company
believes further expansion of the Company's direct international operations will
increase sales and marketing expenses. Product research and development expenses
vary with the Company's level of investment in new products and the proportion
of such investment which is capitalized by the Company. Beginning in late 1995
and continuing through mid-1996, as a result of the increasingly rapid changes
in technology and anticipated demands of the Company's customers, the Company's
investment in client/server product research and development increased
significantly.

LIQUIDITY AND CAPITAL RESOURCES

Through December 31, 1996, the Company financed its activities through cash
flow generated by operations and through term and revolving credit facilities.
During the six months ended June 30, 1997, the Company obtained $2.5 million in
outside equity through the issuance of shares of Series B Preferred Stock.

22
<PAGE> 24

As of June 30, 1997, the Company had cash and cash equivalents totaling
$2.6 million. The Company's revolving credit facility consisted of a $2.0
million revolving line of credit and a $1.0 million restricted line of credit,
both of which expired on June 30, 1997. The Company has received a letter
offering a commitment for a new facility.

As a result of significant non-cash expenses, such as depreciation and
amortization, and the advanced billing and collection of annual maintenance
fees, the Company has generated operating cash flow significantly in excess of
its net income. During 1995, the Company's operating cash outflow totaled
$360,000 on net losses of $4.2 million. During 1996, operating cash flow totaled
$4.1 million on net losses of $1.2 million. During the six months ended June 30,
1997, operating cash flow totaled $1.9 million on net income of $530,000.

The Company's investing activities include primarily expenditures for fixed
assets in support of the Company's product development activities and
infrastructure, and for capitalized software costs. During 1995, the Company
invested $2.2 million in fixed assets, consisting of computer equipment to
expand and upgrade the Company's development environments and infrastructure.
Continuing this program, the Company invested $730,000 in fixed assets in 1996
and $800,000 in the six months ended June 30, 1997. The Company expects to
upgrade, on an ongoing basis, its development environments to meet changing
customer and market requirements.

The Company's investing activities also include amounts recorded as
capitalized software. Of the total research and development expenditures of
$10.6 million, $13.6 million, $14.7 million and $6.7 million for 1994, 1995,
1996 and the six months ended June 30, 1997, $1.5 million, $1.1 million and
$730,000 were capitalized for the years ended December 31, 1994, 1995 and 1996,
respectively.

The Company's financing activities have historically included borrowings
and repayments of indebtedness under term loans used to finance fixed assets
purchases and under the revolving credit facilities used for working capital
purposes.

During the first half of 1997, the Company issued 395,195 shares of Series
B Preferred Stock for $2.5 million. The proceeds of this infusion were used to
reduce the Company's outstanding balance on its revolving line of credit and to
supplement its cash balances. On May 1, 1997, the Company made a mandatory
redemption of Series A Preferred Stock in the amount of $375,000. The Company
will continue to make quarterly redemptions until the Series A Preferred Stock
is either fully redeemed or converted to Common Stock. The Company paid $153,000
in 1995 and in 1996 ($111,000 during the six months ended June 30, 1997) in
dividends to holders of its Series A Preferred Stock.

The Company believes that cash on hand at June 30, 1997, the net proceeds
from the sale of shares of Common Stock in the Offering, and cash flow generated
from operations will provide sufficient liquidity to meet its needs for at least
the next twelve months.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128) entitled "Earnings per
Share". This statement establishes standards for computing and presenting
earnings per share (EPS), simplifying previous standards for computing EPS and
making them comparable to international standards. SFAS 128 replaces the
presentation of primary EPS with a presentation of basic EPS, and requires dual
presentation of basic and diluted EPS on the face of the income statement for
all entities with complex capital structures. Basic EPS excludes dilution and is
computed by dividing income available for common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. SFAS 128 requires restatement of all prior period earnings per share
presented, and is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods. Early application of SFAS
128 is not permitted.

23
<PAGE> 25

The Company will adopt SFAS 128 for its December 31, 1997 financial
statements and will restate all prior period EPS data. To illustrate the effect
of adoption, the pro forma basic and diluted EPS for the year ended December 31,
1996, and for the six months ended June 30, 1996 and 1997, are set forth below:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED JUNE 30,
DEC 31, ------------------------
1996 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Pro forma basic (loss) earnings per share........ $ (0.13) $ (0.17) $ 0.06
Pro forma diluted (loss) earnings per share...... $ (0.13) $ (0.17) $ 0.05
</TABLE>

In June 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and No.
131, "Disclosures about Segments of an Enterprise and Related Information."
These statements become effective for the Company's 1998 financial statements.
The Company is evaluating these statements to determine the impact on its
reporting and disclosure requirements.

24
<PAGE> 26

BUSINESS

OVERVIEW

THE COMPANY

INDUSTRY BACKGROUND

Businesses and other organizations are increasingly relying upon computer
systems to run and manage their key business processes. These processes include
transactions such as credit card validation, electronic commerce, point-of-sale
processing, supply chain management and call center processing and fulfillment.
In doing so, these organizations are able to compete more effectively by
processing transactions more quickly and accurately, responding to customers
more rapidly and achieving lower cost structures. Because of this increased
reliance on computing resources to support business-critical applications, poor
system performance or system failure can have an immediate and substantial
impact on an organization's competitiveness and financial results.

As computer systems are being used increasingly to gain competitive
advantage, they are also becoming more complex. These systems may be comprised
of a variety of inter-operable, multi-vendor hardware platforms, operating
systems, databases, networks and applications deployed across widely dispersed
geographical locations. Moreover, computing environments are increasingly
dynamic -- users, hardware and software are often added, moved or changed, and
new, business-critical applications are developed and deployed on an ongoing
basis.

As businesses place greater reliance on complex computer systems, the cost
of suboptimal performance increases dramatically. For example, an operator at a
catalog clothing company processing incoming telephone orders uses the system to
enter customer information and the items ordered, check inventory and verify
credit information. The operator waits for a system response after each step in
this process. If the system experiences a degradation in response time, each
order takes longer to process, fewer orders can be processed in a given amount
of time, and potential customers have to wait longer before they can reach an
operator and have their transactions completed. As the effect of a slowdown in
system response time is compounded over tens or hundreds of operators, the
overall impact could adversely affect the business' competitive advantage and
market share.

Performance management software can provide early warning and facilitate
resolution of system problems by monitoring a system's key components, including
the CPU, memory and storage, I/O, disk space, workload, operating system and
network. Identifying and addressing system problems allows businesses to
increase system availability, improve user productivity, reduce computing costs
and limit the adverse business effects of system degradation. Performance
management tools also enable organizations to model or predict system and
application performance which improves the acquisition, development and
implementation of new or changed applications and hardware.

As a result of the increasing need to effectively manage complex computing
environments, revenues from the overall system management software market are
expected to rise to $17 billion by 2000, according to IDC. Performance
management is the largest sector of this market and is expected by IDC to grow
from $1.8 billion in 1996 to $3.1 billion by 2000. For the IBM mainframe
operating environment, IDC estimates that worldwide

25
<PAGE> 27

performance management software revenues will grow from $1.1 billion in 1996 to
$1.4 billion by 2000. For multi-user UNIX and Windows NT server operating
environments, IDC estimates that worldwide performance management software
revenues will grow from $400 million in 1996 to $1.2 billion by 2000.

Landmark believes that businesses are seeking comprehensive performance
management software products with the ability to support heterogeneous computing
environments consisting of numerous types of applications and platforms. These
products must be scalable to support the rapid growth of computing environments
and flexible to accommodate the dynamic nature of these systems. Additionally,
these products should automatically retrieve and manage performance data to
produce useful information for system planning and management decision-making.
This information should be accessible and relevant to real-time, recent past and
historical analyses. Finally, these products should be easy to use, consume
minimal computing resources and adhere to industry standards.

THE LANDMARK SOLUTION

Landmark's PerformanceWorks product family enables businesses to optimize
system performance and resource utilization while maintaining a high and
consistent level of user productivity. Landmark's products provide the ability
to transform raw data into useful information through an intelligent aggregation
and automatic summarization process, which collects data on a continuous basis
and generates summary information at prescribed intervals. This data can be
measured against a variety of performance thresholds and easily formatted into
understandable reports to facilitate the quick identification and resolution of
performance problems. In addition, Landmark's products self-manage the
collection, summarization and distribution of performance data, and consequently
require minimal computing and personnel resources. As a result of this efficient
gathering, storage and presentation of performance data, Landmark's products are
scalable to accommodate system growth.

Landmark's solutions are based on its "lifecycle" view of performance
management and are designed to allow customers to address each stage of the
application lifecycle: planning, development and production. Landmark views
performance management as a continuous process in which each stage of the
application lifecycle provides input and feedback for the next.

[This picture shows three arrows, each identifying a stage in the application
lifecycle, forming a circle. The activities performed at each stage of the
lifecycle are identified.]

Planning stage. Landmark's products are used to identify resource
requirements and to establish appropriate service levels through modeling,
trend analysis and load simulation.

Development stage. Landmark's products perform application tuning, assist
in stress testing and conduct resource impact analysis to assess
application performance prior to deployment.

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<PAGE> 28

Production stage. Landmark's products provide data collection, real-time
monitoring and troubleshooting to provide optimal system operation.

After the initial deployment is completed, the application lifecycle begins
again with planning for additional deployments or modifications to the computing
environment.

Landmark's products address performance management across leading hardware
platforms, operating systems from DEC, Hewlett-Packard, IBM, Microsoft and Sun
and databases consisting of DB2, Oracle, SQL Server and Sybase. Each of
Landmark's products has been developed to work with different configurations of
system components from multiple vendors while providing comparable functionality
across each platform.

Through its maintenance and support program, Landmark offers its customers
extensive technical support, including telephone consultation, product
maintenance and product upgrades. Landmark also provides its customers with
consulting and training services. Historically, over 90% of Landmark's customers
have renewed their support and maintenance arrangements with the Company.

STRATEGY

Landmark's objective is to strengthen its position as a worldwide leader in
providing performance management software solutions by addressing customers'
performance management needs throughout the application lifecycle. By
establishing relationships at the beginning of the application lifecycle, the
Company positions itself to continue providing products and services to the
customer in the future.

Landmark's strategy includes the following key elements:

Enhance, Extend and Expand Performance Management Products. Landmark
is leveraging its 14 years of experience providing performance management
solutions to enhance the functionality of and extend the hardware
platforms, operating systems and databases supported by existing mainframe
and client/server products. In addition, the Company plans to develop new
products providing performance management solutions in support of different
application vendors. As a result of its relationships with major vendors of
hardware platforms, operating systems and databases, Landmark is often
selected to participate in beta testing of new products and upgrades. The
Company believes that this early access to new technologies gives it a
strategically important opportunity to upgrade its existing products and to
develop new products. The Company plans to enhance, extend and expand its
product offerings through internal development and through acquisitions.
See "-- Grow Through Acquisitions and Partnering Arrangements."

Capitalize on Large Installed Customer Base. As of June 30, 1997,
Landmark had over 3,700 customers licensing performance management products
for the mainframe environment and 200 customers licensing its client/server
products. The Company expects to continue selling additional products to
its current customers as they upgrade their computing systems by adding new
hardware and software to address evolving business-critical needs. Landmark
also plans to sell client/server products to existing mainframe customers
who are expanding their computing environments to include distributed
systems.

Strengthen Worldwide Distribution Capability. Landmark provides
performance management products and services to customers worldwide. In the
United States and Canada, the Company employs a direct sales force
comprised of field sales representatives and systems engineers. In January
1997, the Company established a telesales force to support and complement
its North American field sales operations. The Company believes that the
telesales force permits the field sales force to focus on account
opportunities with major businesses involving larger dollar transactions,
and on establishing and maintaining relationships with these organizations,
thereby increasing the productivity of the direct sales effort. Although
the majority of the Company's international sales are currently conducted
through third party distributors, the Company has in place a direct sales
force in Australia, the Benelux countries, Germany, Hong Kong, Spain and
the U.K. Landmark intends to expand its world-wide distribution capability
by growing its direct sales force and by establishing additional
relationships and joint marketing programs with system integrators and
original equipment manufacturers ("OEMs").

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<PAGE> 29

Grow Through Acquisitions and Partnering Arrangements. Landmark
intends to accelerate its growth by acquiring or licensing products and
technologies that enhance or expand the Company's current product
offerings. In addition, Landmark intends to selectively acquire or partner
with companies offering complementary products and businesses. The Company
believes that this growth strategy will allow it to enhance the
functionality of its PerformanceWorks products, extend the number of
platforms which the Company's products support and expand the number of
products it offers. Although Landmark evaluates opportunities on an ongoing
basis, it is not engaged in any negotiations and has no current or pending
arrangements, agreements or understandings with respect to any acquisitions
or investments.

TECHNOLOGY AND PRODUCTS

The PerformanceWorks family of products is comprised of PerformanceWorks
for MVS, PerformanceWorks for VSE, PerformanceWorks for UNIX and
PerformanceWorks for Windows NT. PerformanceWorks enables a user to monitor and
analyze performance metrics in three different timeframes: real-time,
recent-past and historical.

- Real-time monitoring. Real-time monitoring allows users to view the
current status of the computing environment. To do this, performance
metrics are collected from throughout the system and displayed
graphically at a single workstation. The real-time monitoring feature can
be used as an early warning tool by establishing thresholds against which
critical performance metrics are measured. If a metric or combination of
metrics exceeds the established threshold, an alarm is generated to
notify the user of a potential system or application problem. The user is
then guided through increasingly detailed levels of performance data
until the cause of the problem is identified. The user can then either
solve the problem or an automated action can be triggered to correct the
problem.

- Recent-past monitoring. Recent-past monitoring displays the performance
metrics collected within the past few minutes or hours. If a system has
experienced a degradation in performance, recent-past monitoring can be
used to review the performance metrics leading up to the occurrence of
the problem to help identify its source and to facilitate a resolution.
Recent-past monitoring can also be used to identify trends in system
utilization and performance which may result in system errors. These
trends can be used to predict and prevent future system problems.

- Historical data analysis. Historical data analysis is used to review
performance metrics collected over days, weeks and months to understand
how system resources have been used and whether trends have developed
which could lead to future performance problems. Landmark's products
automatically store and aggregate performance data so users can quickly
retrieve and view information over the desired period of time from
multiple systems on one report.

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<PAGE> 30

TECHNOLOGY. The technology underlying the PerformanceWorks family of
products is based on a multi-tiered architecture which can be represented by a
data collection layer, a core services layer and a user interface and external
tools layer.

[This picture provides a conceptual representation of PerformanceWorks
architecture, showing user interface and external tools layer, core services
layer and data collection layer.]

Data Collection Layer. The data collection layer consists of
PerformanceWorks agents, referred to as "SmartAgents," designed to collect
performance data automatically for on-line analysis and historical data storage
and to translate the data into useable information. SmartAgents are installed on
each element in the computing environment for which performance metrics will be
monitored and automatically collect performance data at set intervals. After
collection, SmartAgents compare the collected information against defined
thresholds. If any threshold is exceeded, the SmartAgent will generate a warning
or error message.

Core Services Layer. The core services layer is comprised of three key
components: data management, data brokering and network services.

Data Management. The data management component manages the storage
and retention of performance data throughout the system and includes the
following functionalities:

- Data normalization gathers disparate performance data and normalizes it
into common categories, such as CPU, memory, disk I/O, workload, disk
space and network. Users can view similar performance data from different
hardware platforms, operating systems and databases and easily make
comparisons and draw conclusions.

- Data summarization averages performance data into logical intervals of
minutes, hours, days, weeks, months and years. Without time-consuming
preparation, users can view data in various formats in order to identify
trends quickly.

- Data administration records all information in a data store, allowing
users to manage and protect performance data. Data administration also
provides efficient storage of collected performance data.

Data Brokering. The data brokering component receives all incoming
requests and routes them either to the appropriate SmartAgent for real-time
data or to a data store for historical data without requiring that the
end-user have knowledge of where these components are located.

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<PAGE> 31

Network Services. The network services component provides a registry
and look-up service that allows transmission of real-time, recent past and
historical performance data from where it is collected to where it is used.
Since the architecture of a distributed computing environment frequently
changes with the addition or deletion of servers, applications and users,
the registry is designed to communicate changes in system configuration
automatically.

Landmark supports third party applications and access to performance data
by publishing detailed record formats and by providing application programming
interfaces ("APIs") for standard Open Data Base Connectivity ("ODBC")
applications and Simple Network Management Protocol ("SNMP") interface modules
for industry leading systems and network management frameworks.

User Interface and External Tools Layer. The user interface for
PerformanceWorks allows users to view and analyze the status of their critical
applications. Performance management data for each application can be viewed
statistically and graphically to show consumption of system resources, proximity
to critical threshold values and alarm situations requiring immediate attention.
In addition, users can generate customized reports incorporating any combination
of real-time, recent-past and historical performance data analyses. The
available user interfaces operate using Motif (UNIX), Windows 95/NT (NT), OS/2
(MVS-NaviPlex) and 3270 (MVS and VSE).

In addition to the user interfaces provided directly by Landmark's
products, customers can also gain access to PerformanceWorks data through the
use of external tools provided by third party vendors. Published record formats
are utilized by third party vendor products such as Computer Associates MICS,
Merrill Consultants MXG, IBM SNAPSHOT, SAS and BGS Systems Best/1. ODBC
connectivity permits a multitude of applications, including Microsoft Excel and
Lotus 1-2-3, to be used to process, analyze, and report on Landmark's
performance data. In addition, SNMP integration modules allow PerformanceWorks
products to operate within leading systems management frameworks including IBM
Netview, Tivoli TME, Hewlett-Packard OpenView, Computer Associates Unicenter,
Cabletron Spectrum and Sun Solstice.

PRODUCTS. The ability to monitor performance metrics from each system
component in a complex, heterogeneous computing environment is a key feature of
Landmark's software, particularly because performance problems in these
environments can originate from any one or a combination of components.

[Illustration of components in a complex, heterogenous computing environment
consisting of an application client, middleware, application server and
relational database management system.]

If applications running in a distributed environment are experiencing slow
response time, the cause of the problem could be a memory problem on the
distributed application server, a disk contention problem on the mainframe
database server, an overloaded network, a poorly written application or any
combination of these conditions. By monitoring performance data from each of the
system components, Landmark's products are

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<PAGE> 32

able to efficiently identify the source of the problem so a solution can be
implemented quickly or the potential problem can be anticipated and avoided
altogether by taking immediate corrective actions. The Company believes its
users benefit from the ease of use, depth of metrics and diagnostic tools it
provides, as well as the level of intelligent integration which allows enhanced
manageability in production environments.

Landmark's products are easily installed and implemented and generally do
not require additional customization before the products can be used by the
customer. The Company's products are also easily tailored so that the
performance metrics, data retention standards and data storage locations are
appropriate for each customer.

LANDMARK'S FAMILY OF PERFORMANCEWORKS PRODUCTS

<TABLE>
<CAPTION>
MVS VSE UNIX WINDOWS NT
<S> <C> <C> <C> <C>
Core Performance Monitor MVS VSE HP-UX Windows NT
CICS/MVS CICS/VSE DEC SQL Server
CICS/ESA VM Contention IBM/AIX
VTAM Monitor SUN/OS
DB2 Sun Solaris
SQL/Capture Oracle
Sybase
Capacity Planning Interface to third Interface to third Predictor
party software party software
User Interface NaviGraph NaviGraph SmartStation SmartStation
NaviPlex
Integrated Interfaces SNMP SNMP SNMP
Vendor API's ODBC ODBC
Number of licenses (as of June
30, 1997) 6,200 1,900 5,600 1,000
Average transaction size (during
the six months ended June 30,
1997) $79,600 $5,200 $39,200 $11,800
</TABLE>

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<PAGE> 33

The Company derived 93.0%, 90.3%, 89.2% and 87.0% of its revenues from
mainframe products and services in fiscal years 1994, 1995, and 1996 and the six
months ended June 30, 1997, respectively. See "Risk Factors -- Dependence on
Certain Products."

PerformanceWorks for MVS. PerformanceWorks for MVS is Landmark's
integrated set of performance management tools for use in the MVS environment
and consists of The Monitor for CICS, The Monitor for DB2, The Monitor for MVS,
The Monitor for VTAM, NaviGraph and NaviPlex. Landmark's family of MVS products
provide a complete solution for optimizing and monitoring environments running
the MVS operating system.

The Monitor products support data collection in the host-based
environment for real-time, recent-past and historical performance
management monitoring. Each of these products incorporates Landmark's
Navigate technology which provides intelligent transfer of control from one
monitor to another, facilitating intuitive problem solving.

NaviGraph provides users with a graphical display of the performance
of key applications and system resources. NaviGraph is an easy-to-use,
Windows-based display providing a single point of access and control for
monitoring and analysis of the data collected by The Monitor products.

NaviPlex is designed for IBM's Parallel Sysplex technology which
introduces to mainframe environments performance complexities similar to
those of a distributed processing environment. NaviPlex consolidates
performance information from all MVS system environments into a single
workstation for managing performance issues, handling exception conditions
and trending information.

PerformanceWorks for VSE. PerformanceWorks for VSE is similar to
PerformanceWorks for MVS in terms of the performance management functionality.
PerformanceWorks for VSE includes The Monitor for VSE, The Monitor for CICS,
NaviGraph and VM Contention Monitor.

PerformanceWorks for UNIX. PerformanceWorks for UNIX is Landmark's
integrated set of performance management tools for use in the UNIX environment
and consists of SmartAgent for UNIX, SmartAgent for Oracle, SmartAgent for
Sybase, SmartStation and Predictor.

SmartAgent for UNIX, SmartAgent for Oracle and SmartAgent for Sybase
provide collection of performance metrics for each UNIX operating system
and database supported. Specific metrics collected vary with the individual
platforms. SmartAgents employ the Core Services features of the
PerformanceWorks architecture to manage, analyze and present performance
data across tens or hundreds of locations operating with hundreds or
thousands of servers.

SmartStation provides a central control point to access performance
information collected by SmartAgents. Information is presented in
easy-to-understand charts, graphs, reports and gauges. Alarms warn of
potential system problems before they become serious. SmartStation provides
a complete set of pre-configured reports and graphics which can be tailored
to users' specific needs. Users can also define exception conditions, and
SmartStation will provide an alarm when performance thresholds are
exceeded. The alarms provide the user with an explanation of the error,
sending notifications through email systems, alphanumeric pagers and
management platforms. In addition, the alarms can be configured to take
corrective actions automatically.

Predictor is a capacity planning tool designed to help planners in
determining the types and quantities of new equipment and software required
to handle increased system utilization and performance requirements. Based
on the performance metrics stored for historical data analysis, Predictor
can predict the impact of adding new applications, modifying an existing
application, removing an application, adding users, changing the server
hardware configuration or changing the server entirely.

PerformanceWorks for Windows NT. PerformanceWorks for Windows NT is
similar to PerformanceWorks for UNIX in terms of the performance management
functionality of products currently available in the Windows NT environment.
PerformanceWorks for Windows NT includes SmartAgent for NT, SmartAgent for SQL
Server and SmartStation.

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<PAGE> 34

SERVICES

Landmark offers its customers a maintenance and support program which
provides telephone consultation, product maintenance and product upgrades.
Customers can communicate with Landmark technical support representatives 24
hours-per-day, 7 days-per-week. In addition, Landmark provides its customers and
distributors access to on-line maintenance information through an Internet-based
application. Landmark's maintenance and support program entitles participants to
product enhancements and upgrades as well as maintenance information. The first
year of maintenance and support is typically included in the license fee and
thereafter may be renewed for an annual fee. Historically, over 90% of
Landmark's customers have renewed their maintenance and support arrangements.

In January 1997, Landmark established a Professional Services organization
to offer consulting services to users of its products. These consulting services
are designed to support the effective deployment and implementation of
Landmark's products by assisting in the location of appropriate components on
which to run Landmark's software, identifying which performance metrics to
monitor, establishing rules concerning how to aggregate, retain and store data,
and customizing the presentation of reports generated from the collected
information. The demand for these consulting services has grown as
business-critical applications are increasingly deployed in complex,
heterogeneous computing environments. Moreover, many businesses lack sufficient
technical staff to fully implement Landmark's performance management solution
and require external assistance. The Professional Services organization offers a
variety of training programs to assist customers in implementing Landmark's
performance management tools, including a number of standard programs and custom
presentations to fulfill specific requests. Training courses are held at
Landmark's Vienna, Virginia training center as well as on-site at customers'
facilities.

CUSTOMERS

The Company's target customers consist of organizations across a wide
variety of industries that are developing or have deployed business-critical
applications in complex, multi-user environments. The following table lists
certain customers of the Company that have purchased at least $50,000 of the
Company's products and services during the twelve months ended June 30, 1997:

ABN-AMRO
Alpine Computer Services
American Electric Power Service Co.
Amoco
Beiersdorf AG
Blue Cross Blue Shield of Georgia
BMW AG
J.I. Case Corporation
Centraal Beheer Holding BV
ChoicePoint
CSC Australia
Deutsche Bahn AG
DynaMark
First American National Bank
First of America Computer Services
Foundation Health Corporation
Frontier Information Technologies
Great West Life Assurance
HBO and Company
IBM and ISSC
Ikon Capital
ING US Insurance Holding
Kodak
Lockheed Martin
Mercantile Bank
MicroAge Computer Centers
Old Mutual
Physicians Mutual Insurance
Proffitt's
Provident Companies
Sony Nederland BV
Spartan Stores
Thrift Drug
Union Electric
Wachovia Bank
Wells Fargo Bank
Whirlpool Corporation

SALES AND MARKETING

Landmark markets its products and services through its North American and
international sales organizations. The North American direct sales force, which
covers the United States and Canada, consists of field sales representatives,
mainframe and client/server system engineers and telesales personnel. The
telesales force was established in January 1997 to increase the productivity of
the field sales representatives by undertaking a variety of support activities.
These include generating and following up on leads, handling and closing smaller
transactions, maintaining a current database of existing and potential customers
and providing general assistance and account management. Each telesales
representative supports the efforts of two direct sales representatives. The
Company believes that the telesales force permits the field sales force to focus
on account opportunities with major businesses involving larger dollar
transactions, and on establishing and

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<PAGE> 35

maintaining relationships with these organizations. Landmark intends to
establish additional relationships with system integrators and OEMs to expand
the breath of its sales channel. See "Business -- Strategy."

Landmark has historically relied primarily on third-party distributors to
market and sell the Company's products internationally. Revenues from
international sales accounted for 27.6%, 32.4%, 32.4% and 33.6% of total
revenues in 1994, 1995, 1996 and the six months ended June 30, 1997,
respectively. Of those amounts, 27.6%, 28.9%, 27.4% and 20.2%, respectively,
were attributable to third party distributors. Landmark has recently established
a direct sales force in certain strategic international markets to increase
sales levels and gross margins on products sold in such markets. To date,
Landmark's international direct sales efforts consist of six sales offices
located in London, Dusseldorf, Utrecht (Netherlands), Madrid, Melbourne and Hong
Kong.

The Company also maintains relationships with leading vendors including
DEC, Hewlett-Packard, IBM, Microsoft, Oracle, Sun, Sybase and Tivoli. These
relationships afford the Company opportunities to participate in joint marketing
programs with the vendors such as sales seminars, trade shows and other
promotional activities.

Revenues received from individual customers of the Company vary
significantly based on the size of the product installation. The sales cycle for
Landmark's products is lengthy and unpredictable, and may range from a few
months to over a year, depending upon the interest of the prospective customer
in the Company's products, the size of the order (which may involve a
significant commitment of capital by the customer), the decision-making and
acceptance procedures within the customer's organization and other factors.

PRODUCT DEVELOPMENT

Since its inception in 1983, Landmark has made substantial investments in
performance management software development. In 1994, 1995, 1996 and the six
months ended June 30, 1997, Landmark's product development expenditures,
including amounts capitalized, totaled $10.6 million, $13.6 million, $14.7
million and $6.7 million, respectively. The Company anticipates that, in the
future, it will continue to commit substantial resources to research and
development. Landmark maintains mainframe, UNIX and Windows NT development labs
which it uses to develop, enhance and test its products. Landmark believes that
its future success will depend in large part on its ability to continue to
enhance the functionality of its existing products, extend its product line to
support additional hardware and software platforms, respond to changing customer
requirements and develop and introduce in a timely manner new products that keep
pace with technological developments and emerging industry standards. See "Risk
Factors -- Rapid Technological Change; Product Development."

As of June 30, 1997, the Company had 98 employees engaged in product
development. As it continues to implement its growth strategies, Landmark
intends to increase the size and depth of its product development operation.
However, competition for highly qualified technical employees is intense and
there can be no assurance that the Company will be successful in recruiting or
retaining product development employees. See "Risk Factors -- Need to Attract
and Retain Qualified Technical Personnel."

INTELLECTUAL PROPERTY

Landmark relies on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and licensing arrangements to establish and
protect its proprietary rights. As part of its confidentiality procedures, the
Company generally enters into non-disclosure agreements with its employees,
distributors and corporate partners, and license agreements with its customers,
distributors and corporate partners with respect to its software, product
documentation and other proprietary information. Despite these precautions, it
may be possible for a third party to copy or otherwise obtain and use the
Company's products or technology without authorization, or to develop similar
technology independently. Policing unauthorized use of the Company's products is
difficult, and Landmark is unable to determine the extent to which piracy of its
software products and misappropriation of its technology occur. Software piracy
and misappropriation may adversely affect the Company's results of operations.
Landmark currently relies on signed license agreements, but may in the future
rely on "shrink wrap" licenses that are not signed by licensees and, therefore,
may be

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<PAGE> 36

unenforceable under the laws of certain jurisdictions. In addition, effective
protection of intellectual property rights is unavailable or limited in certain
foreign countries. There can be no assurance that the Company's protection of
its proprietary rights, including any patent that may be issued, will be
adequate or that the Company's competitors will not independently develop
similar technology, duplicate the Company's products or design around any
patents issued to the Company or other intellectual property rights.

Landmark is not aware that any of its products infringes the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim such infringement by the Company with respect to current or
future products. The Company expects that software product developers will
increasingly be subject to such claims as the number of products and competitors
in the Company's industry segment grows and the functionality of products in the
industry segment overlaps. Any such claims, with or without merit, could result
in costly litigation that could absorb significant management time, which could
have a material adverse effect on Landmark's business, financial condition and
results of operations. Such claims might require the Company to enter into
royalty or license agreements. Such royalty or license agreements, if required,
may not be available on terms acceptable to Landmark or at all, which could have
a material adverse effect upon the Company's business, financial condition and
results of operations. See "Risk Factors -- Trademarks and Proprietary Rights;
Risks of Infringement."

COMPETITION

The market for performance management software is intensely competitive,
fragmented and characterized by increasingly rapid technological developments,
evolving standards and rapid changes in customer requirements. To maintain and
improve its position in this market, Landmark is enhancing current products and
the inter-operability of its products with one another and developing new
products. Landmark competes primarily with vendors that provide mainframe
performance management software and vendors that provide client/server
performance management software. The Company believes that principal competitors
with respect to mainframe performance management software products include
Candle Corporation and Boole and Babbage, Inc. In the client/server market,
Landmark believes that its principal competitors include BMC Software, Inc.,
Compuware Corporation, BGS Systems Inc. and Platinum technologies, inc. The
Company believes that no single principal competitor currently offers products
in each of the mainframe, UNIX and Windows NT operating environments.

Some of the Company's competitors have longer operating histories and
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger customer base, than
those of the Company. The Company's current and future competitors could
introduce products with more features, greater scalability, increased
functionality and lower prices than the Company's products. These competitors
could also bundle existing or new products with other, more established products
in order to compete with the Company. The Company's focus on performance
management software may be a disadvantage competing with vendors that offer a
broader range of products. Moreover, as the client/server performance management
software market develops, a number of companies with significantly greater
resources than those of the Company could increase their presence in this market
by acquiring or forming strategic alliances with competitors or business
partners of the Company. In addition, due to potentially lower barriers to entry
for platform-specific niche products in the performance management software
market, the Company believes that emerging companies may enter this market,
particularly in the client/server environment. Increased competition is likely
to result in price reductions, reduced gross margins and loss of market share,
any of which could materially and adversely affect the Company's business,
financial condition and results of operations. Any material reduction in the
price of the Company's products would negatively affect gross margins and would
require the Company to increase software unit sales in order to maintain gross
profits. There can be no assurance that the Company will be able to compete
successfully against current and future competitors, and the failure to do so
would have a material adverse effect upon the Company's business, financial
condition and results of operation.

The principal competitive factors affecting the market for Landmark's
products are functionality and features (including breadth of data collection,
data management, integration and modeling), product quality, platform coverage,
product architecture, price, customer support and name recognition. Based on
these

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<PAGE> 37

factors, the Company believes that it has competed effectively to date. In the
future, Landmark will be required to respond promptly and effectively to the
challenges of technological change, its competitors' innovations and customer
requirements. There can be no assurance that Landmark will be able to provide
products that compare favorably with the products of the Company's competitors
or that competitive pressures will not require the Company to reduce its prices.
See "Risk Factors -- Intense Competition."

EMPLOYEES

As of June 30, 1997, the Company employed 247 full time personnel,
including 98 in product development, 28 in technical support, 84 in sales and
marketing, and 37 in finance and administration. The Company's employees are not
represented by any collective bargaining organization, and the Company has never
experienced a work stoppage. The Company believes its success will depend in
part on its continued ability to attract and retain highly qualified personnel
in an intensely competitive market for experienced and talented software
engineers and sales and marketing personnel. The Company believes that its
relationship with its employees is satisfactory. See "Risk Factors -- Dependence
on Key Personnel" and "-- Need to Attract and Retain Qualified Technical
Personnel."

FACILITIES

Landmark's headquarters are located in 88,000 square feet of office space
in Vienna, Virginia, under a lease expiring in June 2003, with a renewal option
for an additional five years. The Company also leases approximately 4,000 square
feet of office space in Oak Brook, Illinois under a lease expiring in April
1999. In addition, Landmark leases office space in London, Dusseldorf, Utrecht
(Netherlands), Madrid, Melbourne and Hong Kong. Landmark believes that its
existing facilities and offices are adequate to meet its requirements for the
foreseeable future.

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation and proceedings
arising out of the ordinary course of its business. There are no pending legal
proceedings to which the Company is a party or to which the property of the
Company is subject.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
September 1, 1997 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- --------------------------------------------------
<S> <C> <C>
Patrick H. McGettigan.............. 56 Chairman of the Board of Directors
Katherine K. Clark................. 40 Chief Executive Officer and Director
Ralph E. Alexander................. 51 President, Chief Operating Officer, Chief
Financial Officer, Treasurer, Secretary and
Director
Leslie J. Collins.................. 41 Vice President, Finance and Controller
Theodore L. Cruse.................. 38 Vice President, North American Sales
John D. Hunter..................... 50 Vice President, Mainframe Products
Mark E. Knecht..................... 47 Vice President, Marketing and Business Development
Andrew L. McCasker................. 34 Vice President, Distributed Products
Roger A. Philips................... 51 Vice President, International Sales
Henry D. Barratt, Jr.(2)........... 45 Director
Jeffrey H. Bergman(1).............. 53 Director
T. Eugene Blanchard(1)(2).......... 66 Director
Patrick W. Gross(2)................ 53 Director
</TABLE>

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

(2) Member of the Compensation Committee.

PATRICK H. MCGETTIGAN has served as Chairman of Landmark's Board of
Directors since 1982. One of Landmark's founders, Mr. McGettigan founded the
Company to market The Monitor for CICS, a performance management tool for IBM's
on-line transaction processing system, CICS.

KATHERINE K. CLARK, a co-founder of Landmark, has headed product
development, technical support, finance and human resources at various times
over Landmark's history, has been a director of Landmark since 1983 and from
November 1993 to September 1997 was President of the Company. In 1994, Ms. Clark
assumed her current role as Chief Executive Officer of the Company and is
responsible for the long-term strategic direction of the Company.

RALPH E. ALEXANDER joined Landmark in November 1995 as Chief Financial
Officer, became Chief Operating Officer in March 1996, a director in March 1997
and President in September 1997. Prior to his employment with Landmark, Mr.
Alexander served as Executive Vice President and Chief Financial Officer of
Rational Software Corporation, a software development company, from 1994 to
1995. From 1991 to 1994, Mr. Alexander served as President and Chief Executive
Officer of Verdix Corporation, a software development company, which merged with
Rational in 1994.

LESLIE J. COLLINS has served as Vice President, Finance and Controller
since September 1993, with responsibility for financial planning, operations and
reporting, contracting and purchasing activities, and information systems. From
March 1990 to September 1993, Ms. Collins was Landmark's Director of Finance.

THEODORE L. CRUSE has served as Landmark's Vice President, North American
Sales since May 1996, with responsibility for sales and sales support within the
United States and Canada. Mr. Cruse served as Landmark's Director, North
American Sales from June 1995 to May 1996 and as a Regional Sales Manager from
February 1993 to June 1995. Prior to joining Landmark, Mr. Cruse served as
Director, North American Sales, at Platinum technology, inc. from November 1991
to February 1993.

JOHN D. HUNTER has served as Landmark's Vice President, Mainframe Products
since June 1994. Mr. Hunter is responsible for strategy, development,
maintenance and planning for Landmark's mainframe

37
<PAGE> 39

product lines. Mr. Hunter joined Landmark in August 1992 as Vice President,
Development and Technology after 24 years with IBM, during which time he held
management roles in various IBM development labs and was responsible for IBM's
worldwide standards participation as director of architecture and
telecommunications.

MARK E. KNECHT has served as Vice President, Marketing and Business
Development since March 1997, and is responsible for Landmark's marketing and
business development efforts. Prior to joining Landmark, Mr. Knecht served as
Vice President/General Manager, Software Division, of DataFocus, a software
development company, from October 1995 to February 1997. Mr. Knecht worked at
NCR Corporation, and its successors, from 1975 to 1995 where he held various
positions in marketing, management and engineering.

ANDREW L. MCCASKER has served as Vice President, Distributed Products since
April 1996, and is responsible for product strategy, development, maintenance
and planning for Landmark's client/server product lines. From January 1995 to
April 1996, Mr. McCasker served as Landmark's Director of Strategic Marketing.
Prior to joining Landmark in 1995, Mr. McCasker served as Director, Technology
and Planning for the Enterprise Network Applications Division of Legent
Corporation, a software development company, from October 1993 to January 1995
and also served on Legent's Architecture Board from June 1994 to January 1995.
Mr. McCasker served as Manager of Product Development at Systems Center, Inc., a
software development company, from September 1989 to October 1993.

ROGER A. PHILIPS has served as Landmark's Vice President, International
Sales since September 1994, with responsibility for sales and operations outside
of the United States and Canada. Prior to joining Landmark, Mr. Philips was
General Manager, International for Viasoft, Inc., a software development
company, from 1988 to 1994.

HENRY D. BARRATT, JR. has served as a director of Landmark since March
1997. Since January 1996, Mr. Barratt has been Managing Director of Blue Water
Capital, LLC, a venture capital management company. From September 1994 to
January 1996, Mr. Barratt was President of The Drayton Company, an investment
banking firm, and from March 1990 to August 1994 was a partner with CEO Venture
Fund, a venture capital company. In addition, Mr. Barratt is a director of
Powerway, Inc., a work flow management software company, and Sirius Corporation,
a developer of medical imaging solutions.

JEFFREY H. BERGMAN, a director of Landmark since 1983, has served as a
principal of Interboard, a division of the Interface Group Ltd./Boyden, an
executive placement company, since 1996. From 1991 to 1996, Mr. Bergman was
President of Celedon Technologies, a technology consulting firm. From 1989 to
1991, Mr. Bergman held various positions within Landmark, including that of
President.

T. EUGENE BLANCHARD has been associated with Landmark as a member of the
Advisory Board (the "Advisory Board") since 1993 and was elected to the Board of
Directors in March 1997. From 1979 to February 1997, Mr. Blanchard served as
Senior Vice President, Chief Financial Officer and a director of DynCorp, a
provider of technical and professional services to government agencies and the
airline industry. Mr. Blanchard continues to serve as a director of DynCorp.

PATRICK W. GROSS has been associated with Landmark as a member of the
Advisory Board since 1993 and was elected to the Board of Directors in March
1997. Mr. Gross is a founder of American Management Systems, Inc. ("AMS"), an
international business and information technology consulting firm, and has
served as a Director of AMS since 1974 and as Vice Chairman of the board of
directors of AMS since 1989. Mr. Gross is also a director of Capital One
Financial Corporation.

BOARD OF DIRECTORS

Each director, other than those directors employed by Landmark, Henry D.
Barratt, Jr. and Jeffrey H. Bergman receives a fee of $1,250 for each Board
meeting attended, $500 for each committee meeting attended and reimbursement of
expenses incurred in attending meetings. Pursuant to an agreement between Mr.
Bergman and the Company in connection with the discontinuation of his employment
as an officer of Landmark, from 1993 to 1997 Mr. Bergman received an annual fee
of $15,000 for his services as a director of the Company. As of May 1, 1997, Mr.
Bergman no longer received payments from the Company for services

38
<PAGE> 40

as a director. See "Certain Transactions -- Transactions With Mr. Bergman."
Directors who are employees of the Company are eligible to participate in each
of the Company's stock incentive and stock purchase plans, other than the 1996
Advisory Board and Directors Stock Incentive Plan (the "Board Plan"). See
"-- Stock Incentive Plans." Directors who are not employees of the Company are
not eligible to participate in any of the Company's stock incentive or stock
purchase plans other than the Board Plan.

In 1993, the Board established an Advisory Board to make recommendations to
the Board concerning the business and policies of the Company. Advisory Board
members are not employees of the Company, and have no authority to make final
decisions in matters concerning the business of the Company. The number and
composition of the Advisory Board, and the term of Advisory Board members, are
determined by the Board of Directors. Effective upon the closing of the
Offering, the Advisory Board will terminate. As a member of the Advisory Board,
in 1996 Messrs. Blanchard and Gross received a total of $7,250 and $6,500,
respectively, in fees for attending meetings of the Board. Prior to becoming
members of the Board, in December 1996 T. Eugene Blanchard and Patrick W. Gross
were each granted nonqualified stock options to acquire 24,000 shares of Common
Stock as members of the Advisory Board under the Board Plan. See "Benefit
Plans -- Board Plan."

The Board has standing Audit and Compensation Committees. The Audit
Committee consists of Messrs. Bergman and Blanchard, and the Compensation
Committee consists of Messrs. Barratt, Blanchard and Gross. The Audit Committee
makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagement, reviews the independence of the independent
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal controls. The Compensation Committee is
responsible for establishing salaries, bonuses and other compensation for the
Company's officers and administering the Company's stock option and stock
purchase plans.

VOTING ARRANGEMENTS

In May 1990, Messrs. McGettigan and Bergman and Ms. Clark (the "Original
Shareholders") entered into an agreement (the "Shareholders' Agreement") whereby
each agreed to vote his or her Common Stock and Series A Preferred Stock
(collectively, the "Shares"), and to cause their respective family members to
vote their Shares, to elect each of Messrs. McGettigan and Bergman and Ms. Clark
(or a designee acceptable to all of the Original Shareholders) and the then
current President of the Company as directors of the Company. Pursuant to the
Shareholders' Agreement, the Original Shareholders also agreed not to vote their
Shares, and to ensure that their family members not vote their Shares, for the
election of any person other than as specified in the agreement unless holders
of at least two-thirds of all Shares held by the Original Shareholders and their
family members consent in writing to the election of such person as a director.
In addition, the Original Shareholders agreed not to vote any of their Shares,
and to ensure that their family members do not vote any of their Shares, to
amend the Company's Articles of Incorporation or Bylaws to change the number of
directors of the Company or the power of the Board to determine the number of
directors of the Company, unless holders of at least two-thirds of all Shares
held by the Original Shareholders and their family members consent in writing to
such an amendment. The Shareholders' Agreement will terminate on the closing of
the Offering.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth summary information
concerning the compensation paid or earned for services rendered to Landmark in
all capacities during fiscal year 1996 by the Company's Chief Executive Officer
and each of the four other most highly compensated officers (the "Named
Executive Officers").

39
<PAGE> 41

1996 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION
- ------------------------------------------ -------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Katherine K. Clark(1)..................... $210,000 $12,500 -- --
Chief Executive Officer
Patrick H. McGettigan..................... $300,000(2) $12,500 -- $ 493(3)
Chairman of the Board
John D. Hunter............................ $200,000 $12,500 -- --
Vice President, Mainframe Products
Ralph E. Alexander(1)..................... $171,250 $12,500 174,375 --
President, Chief Operating Officer and
Chief Financial Officer
Theodore L. Cruse......................... $ 95,040 $66,166 38,250 $ 4,085(4)
Vice President, North American Sales
</TABLE>

- ---------------
(1) Ms. Clark was President from November 1993 to September 1997. Mr. Alexander
became President in September 1997.

(2) To be reduced to $100,000 per year upon the closing of the Offering.

(3) Represents insurance premiums paid on behalf of executive.

(4) Represents the cost of a sales incentive award.

The following table sets forth certain information concerning grants of
options to acquire Common Stock to each of the Company's Named Executive
Officers during the fiscal year ended December 31, 1996. In addition, in
accordance with the rules and regulations of the Securities and Exchange
Commission, the following table sets forth the hypothetical gains or "option
spreads" that would exist for the options. Such gains are based on assumed rates
of annual compound stock appreciation of 5% and 10% from the date on which the
options were granted over the full term of the options. The rates do not
represent the Company's estimate or projection of future Common Stock prices and
no assurance can be given that the rates of annual compound stock appreciation
assumed for the purposes of the following table will be achieved.

OPTION GRANTS IN FISCAL 1996

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATE OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) 1996(2) PRICE($/SH) DATE 5%($) 10%($)
- ----------------------- ---------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Katherine K.
Clark(4)............. -- -- -- -- -- --
Chief Executive
Officer
Patrick H.
McGettigan........... -- -- -- -- -- --
Chairman of the Board
John D. Hunter......... -- -- -- -- -- --
Vice President,
Mainframe Products
Ralph E.
Alexander(4)......... 174,375 14.95% $ 4.00 4/23/01 $1,161,998 $1,488,435
President, Chief
Operating Officer and
Chief Financial
Officer
Theodore L. Cruse...... 7,500 0.64% $ 4.00 4/23/01 $ 49,978 $ 64,019
Vice President, North 30,750 2.64% $ 4.00 8/27/06 $ 302,673 $ 518,747
American Sales
</TABLE>

40
<PAGE> 42

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

(1) All options were granted at an exercise price equal to the fair market value
of the Common Stock as determined by the Board of Directors. The Common
Stock was not publicly traded at the time the options were granted. All
options vest ratably over four years beginning on the first anniversary of
the date of grant and are fully vested on the fourth anniversary of the date
of grant.

(2) Based on an aggregate of 1,166,010 options granted in 1996.

(3) Potential realizable values are net of exercise price, but before taxes
associated with exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock, overall market conditions and the
option holders' continued employment through the vesting period.

(4) Ms. Clark was President from November 1993 to September 1997. Mr. Alexander
became President in September 1997.

The following table sets forth certain information with respect to stock
options held by the Named Executive Officers as of December 31, 1996. None of
the Named Executive Officers exercised options during fiscal 1996.

AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END(#) YEAR-END($)(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Katherine K. Clark(2)...................... 213,915 8,805 $ 198,418 $ 3,639
Chief Executive Officer
Patrick H. McGettigan...................... -- -- -- --
Chairman of the Board
John D. Hunter............................. 235,010 1,773 $ 231,887 $ 733
Vice President, Mainframe Products
Ralph E. Alexander(2)...................... 39,845 262,031 $0 $0
President, Chief Operating Officer and
Chief Financial Officer
Theodore L. Cruse.......................... 13,266 46,734 $ 2,383 $ 407
Vice President, North American Sales
</TABLE>

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

(1) Based on the deemed fair market value of the Common Stock at December 31,
1996 of $4.00 per share, as determined by the Company's Board of Directors,
less the exercise price payable for such shares.

(2) Ms. Clark was President from November 1993 to September 1997. Mr. Alexander
became President in September 1997.

EMPLOYMENT AGREEMENTS

In April 1997, the Company entered into an employment agreement with Ralph
E. Alexander, President, Chief Operating Officer and Chief Financial Officer of
the Company. The agreement has an initial term of three years and renews
automatically thereafter for consecutive terms of one year unless either party
elects not to renew the agreement by providing the other with 90 days prior
written notice. The Company has the right at any time to terminate Mr.
Alexander's employment agreement for convenience, provided the Company pays a
severance amount equal to three-fourths of the salary in effect at the time of
termination during the nine-month period following such termination.

41
<PAGE> 43

STOCK INCENTIVE PLANS

Stock Incentive Plans. Landmark maintains the First Amended and Restated
1989 Stock Incentive Plan, the 1992 Executive Stock Incentive Plan and the 1994
Stock Incentive Plan (collectively, the "Stock Incentive Plans"). Under the
Stock Incentive Plans, incentive stock options, nonqualified stock options,
restricted stock and bonus stock may be granted to employees of the Company. The
purpose of the Stock Incentive Plans is to offer employees additional incentive
and encouragement to remain in the service of the Company by increasing their
personal participation in Landmark through stock ownership.

As of June 30, 1997, a total of 185,693 shares of Common Stock were
reserved for issuance under the First Amended and Restated 1989 Stock Incentive
Plan and options to acquire 185,693 shares of Common Stock were outstanding
under this plan. As of June 30, 1997, a total of 304,687 shares of Common Stock
were reserved for issuance under the 1992 Executive Stock Incentive Plan and a
total of 304,687 shares of common stock were outstanding under this plan. As of
June 30, 1997, a total of 2,250,000 shares of Common Stock were reserved for
issuance under the 1994 Stock Incentive Plan and options to acquire 1,963,830
shares of Common Stock were outstanding under this plan. The number of shares of
Common Stock reserved for issuance under the 1994 Stock Incentive Plan was
increased to 3,000,000 in August 1997. Unless the plans are sooner terminated by
action of the Board, these plans terminate in February 1999, March 1999 and
September 2004, respectively. The number of shares subject to each Stock
Incentive Plan may be adjusted by the Board in the event of a merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, reclassification, stock divided, stock split, reverse stock
split, or similar distribution with respect to the outstanding shares of Common
Stock.

The Stock Incentive Plans are administered by the Board, although the Board
is authorized to delegate the administration of the Stock Incentive Plans to a
committee. The Board may amend the Stock Incentive Plans at any time. The Board
(or the committee) is authorized to determine, consistent with the provisions of
the Stock Incentive Plans, the employees to be granted stock options, restricted
stock, and stock bonuses, and to determine the terms of each stock option and
restricted stock award. These terms include the number of shares subject to each
option, the exercise date of the option, the duration of the option and any
other terms of the option grant. The Board also may accelerate the time at which
any option may be exercised. Each Stock Incentive Plan provides that in the
event of a merger in which Landmark is not the surviving corporation, the sale
of 50% or more of the Company's outstanding stock to persons who are not
shareholders on the date of grant, or the liquidation or dissolution of the
Company, each outstanding option and restricted stock award will automatically
become vested immediately prior to the effective date of such event.

Each Stock Incentive Plan requires that the exercise price of each
incentive stock option be set at the fair market value of the Common Stock on
the date of grant. The First Amended and Restated 1989 Stock Incentive Plan and
the 1994 Stock Incentive Plan require that the exercise price of each
nonqualified stock option be set at no less than 85% of the fair market value of
the Common Stock on the date of grant. The 1992 Executive Stock Incentive Plan
provides that the exercise price of each nonqualified stock option be set at no
less than the par value of the Common Stock.

As of June 30, 1997, the Named Executive Officers of the Company have
options in the aggregate to purchase shares of Common Stock under the Stock
Incentive Plans as follows: Katherine K. Clark, 245,220 shares; John D. Hunter,
259,282 shares; Ralph E. Alexander, 324,375 shares; Theodore L. Cruse, 75,000
shares. In general, these options vest over a four year period from their grant
date, expire after a specified period not to exceed ten years, and have exercise
prices ranging from $3.00 to $4.99 per share.

Board Plan. Landmark adopted the Board Plan pursuant to which nonqualified
stock options are granted to members of the Advisory Board and to designated
members of the Board who are not employees of the Company (each, a "designee").
A total of 300,000 shares have been reserved for issuance under the Board Plan,
which terminates in December 2006.

Under the Board Plan, a designee receives a nonqualified stock option to
purchase the greater of 6,000 shares of Common Stock or the difference between
24,000 shares of Common Stock and the number of shares of Common Stock subject
to any option previously granted to such designee by the Company. As of the date

42
<PAGE> 44

of each annual stockholders meeting, each designee who has not previously
received a grant during the calendar year will receive a nonqualified stock
option to purchase 6,000 shares of the Company's Common Stock. The exercise
price of each option is set at the fair market value of the Company's Common
Stock on the date of grant. The options vest over a four-year period.

As of June 30, 1997, options to purchase 120,000 shares of Common Stock
were outstanding pursuant to the Board Plan. On December 22, 1996, T. Eugene
Blanchard, Patrick W. Gross, Arthur E. Johnson, Steven L. Meltzer, and Cornelis
deKluyver each received grants to purchase 24,000 shares of Common Stock at an
exercise price of $4.00 per share, which vest at a rate of 25% per year,
beginning on December 31, 1996.

EMPLOYEE STOCK PURCHASE PLAN

In 1991, Landmark adopted the 1991 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), pursuant to which full-time employees of the Company who have
been employed by the Company on a full-time basis for a period of six continuous
months may purchase Common Stock through payroll deductions or by direct
payment. The purchase price is the fair market value of the Common Stock at the
time of purchase. In general, eligible employees may not purchase more than the
number of shares of Common Stock determined by dividing 10% of the employee's
cash compensation by the fair market value of the Company's Common Stock on the
date of purchase.

The Stock Purchase Plan is administered by the Board or by a committee
appointed by the Board. The Board determines the number of shares that will be
made available for purchase under the Plan on an annual basis. Effective April
1, 1997, the Board suspended purchases under the Stock Purchase Plan. As of June
30, 1997, the Company's employees own an aggregate of 112,154 shares of Common
Stock issued under the Stock Purchase Plan.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Landmark's Articles of Incorporation provide that Landmark shall, to the
fullest extent permissible under Virginia law, indemnify its directors, officers
and Advisory Board members against any damages arising out of their actions as
directors, advisors or officers of the Company. Landmark also intends to obtain
officer and director liability insurance with respect to liabilities arising out
of certain matters, including matters arising under the federal securities laws.

There is no pending litigation or proceeding involving any Landmark
director, officer, employee or agent with respect to which indemnification would
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Since March 1997, Henry D. Barratt, Jr., T. Eugene Blanchard and Patrick W.
Gross, none of whom is an employee of the Company, have served on the
Compensation Committee of the Board. On March 7 and April 1, 1997, the Company
issued to Blue Water Strategic Fund I, LLC ("Blue Water"), in a private
placement transaction, an aggregate of 395,195 shares of Series B Preferred
Stock at a purchase price of $6.326 per share. In connection with this
transaction and pursuant to the terms of the Series B Preferred Stock, Mr.
Barratt, an affiliate of Blue Water, became a member of the Board. Upon
consummation of the Offering, the outstanding shares of Series B Preferred Stock
will automatically be converted into 592,793 shares of Common Stock. See
"Description of Capital Stock -- Preferred Stock." No member of the Compensation
Committee serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of
Landmark's Board or the Compensation Committee.

43
<PAGE> 45

CERTAIN TRANSACTIONS

TRANSACTIONS WITH MR. BERGMAN

In connection with the discontinuation of Mr. Bergman's employment as an
officer of Landmark in June 1992, Mr. Bergman and Landmark entered into a
Separation Agreement and a Noncompetition Agreement, each of which expired in
April 1997. Pursuant to the Separation Agreement, Mr. Bergman received 1,300,000
shares of Series A Preferred Stock plus $500,000 in cash in exchange for
1,400,000 shares of his Common Stock. For a description of the Series A
Preferred Stock, see "Description of Capital Stock -- Preferred Stock." Also
pursuant to the Separation Agreement, from February 1993 to April 1997, the
Company paid Mr. Bergman a fee of $15,000 per year for his services to the
Company as a director. In addition, the Separation Agreement provided that Mr.
Bergman had the right to engage Landmark employees in a limited capacity as
consultants, and had access to Landmark's mainframe computer facility, subject
to certain restrictions. Pursuant to the Noncompetition Agreement, Mr. Bergman
agreed not to directly or indirectly market or distribute in any area in which
Landmark markets or distributes its products any software which competes with
any existing products of Landmark. From February 1993 to April 1997, the Company
paid Mr. Bergman $20,000 per month pursuant to the Noncompetition Agreement.

From May 1, 1992 through June 30, 1997, the Company paid an aggregate of
$819,651 in dividends to Mr. Bergman with respect to Series A Preferred Stock
registered in his name. In August 1997, pursuant to the mandatory redemption
provisions of the Series A Preferred Stock, the Company redeemed 49,558 shares
of Series A Preferred Stock from Mr. Bergman for $338,233.

REGISTRATION RIGHTS

Landmark has granted to Messrs. McGettigan and Bergman, Ms. Clark, the
Bergman Family Trust and Blue Water, of which Mr. Barratt is an affiliate
(collectively, the "Stockholders"), certain registration rights in connection
with the Common Stock (including any Common Stock to be held upon the conversion
of any preferred stock of the Company). Blue Water has the right to demand
registration of its shares, subject to certain conditions and limitations
including that the Company is not obligated to file any registration statement
initiated by Blue Water within six months of the effective date of certain other
registration statements filed by the Company or with respect to registerable
shares having less than a $5.0 million aggregate offering price. Messrs.
McGettigan and Bergman and Ms. Clark have "piggyback" registration rights in
connection with any such registration statement, and all of the Stockholders
have piggyback registration rights in connection with shares proposed to be
registered by Landmark. The registration rights generally are transferable in
connection with any private sale of registerable shares, including to any
partner or member of a Stockholder. The Company will bear all expenses incident
to its registration obligations upon exercise of these demand and piggyback
registration rights, except that it will not bear any underwriting discounts or
commissions, federal or state securities registration fees or transfer taxes
relating to the exercise of those rights. All piggyback registration rights have
been waived in connection with the Offering.

44
<PAGE> 46

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership as of September 1, 1997 (i) by each person (or group of affiliated
persons) known by the Company to be the beneficial owner of more than five
percent of Landmark's capital stock, (ii) Patrick H. McGettigan, Katherine K.
Clark and Jeffrey H. Bergman (the "Selling Stockholders"), (iii) each of
Landmark's directors, (iv) each of the Named Executive Officers and (v) all
executive officers and directors of the Company, as a group. Unless otherwise
indicated, all such shares are owned directly by the person indicated. The table
also reflects a 3-for-2 split of the Common Stock and the conversion of 910,109
shares of Series A Preferred Stock into 690,166 shares of Common Stock and of
395,195 shares of Series B Preferred Stock into 592,793 shares of Common Stock.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE AFTER THE
OFFERING(1) OFFERING(1)(2)
-------------------- SHARES ---------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT BEING OFFERED SHARES PERCENT
- ------------------------------------------ --------- ------- ------------- --------- --------
<S> <C> <C> <C> <C> <C>
Patrick H. McGettigan..................... 4,687,500 52.7% 650,000 4,037,500 37.1%
Katherine K. Clark(3)..................... 2,501,415 27.5 50,000 2,451,415 22.1
Ralph E. Alexander(3)..................... 124,401 1.4 -- 124,401 1.1
Theodore L. Cruse(3)...................... 23,139 * -- 23,139 *
John D. Hunter(2)......................... 240,492 2.7 -- 240,492 2.2
Henry D. Barratt, Jr.(4).................. 592,793 6.7 -- 592,793 5.4
Jeffrey H. Bergman(5)..................... 817,504 9.2 500,000 317,504 2.9
T. Eugene Blanchard(3).................... 6,000 * -- 6,000 *
Patrick W. Gross(3)....................... 7,650 * -- 7,650 *
All directors and executive officers as a
group (13 persons)(3)................... 9,099,997 96.0 1,200,000 7,899,997 68.8
Blue Water Strategic Fund I, LLC(4)....... 592,793 6.7 -- 592,793 5.4
</TABLE>

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

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In comparing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
exercisable at or within 60 days of September 1, 1997 are deemed
outstanding. Such shares, however, are not deemed outstanding for purposes
of computing the percentage ownership of each other person. Unless otherwise
specified in the footnotes to this table, the address of each person set
forth in the above table is 8000 Towers Crescent Drive, Vienna, Virginia
22182.

(2) Assumes the Underwriters' do not exercise their over-allotment option.

(3) Includes shares which may be acquired within 60 days of September 1, 1997
pursuant to outstanding options by the person or persons listed, as follows:
Ms. Clark, 213,915; Mr. Alexander, 123,039; Mr. Cruse, 23,063; Mr. Hunter,
122,510; Mr. Blanchard, 6,000; Mr. Gross, 7,500; all directors and executive
officers as a group, 588,179.

(4) Mr. Barratt is an affiliate of Blue Water which holds all of the outstanding
395,195 shares of Series B Preferred Stock. On the closing of the Offering,
such shares will be converted into 592,793 shares of Common Stock. Mr.
Barratt shares voting power with respect to such shares with the three other
principals of Blue Water. The address of Blue Water is 8300 Greensboro
Drive, Suite 1020, McLean, Virginia 22012.

(5) Of the 910,109 shares of Series A Preferred Stock outstanding, 820,884
shares were held by Mr. Bergman and 89,225 were held by the Bergman Family
Trust. On the closing of the Offering, these shares of Series A Preferred
Stock held by Mr. Bergman and the Bergman Family Trust will convert into
622,504 and 67,662 shares of Common Stock, respectively. Prior to the
closing of the Offering, Mr. Bergman also held 195,000 shares of Common
Stock and the Bergman Family Trust held 105,000 shares of Common Stock. The
shares reflected in the table exclude all shares held by the Bergman Family
Trust, as to which Mr. Bergman disclaims beneficial ownership. Prior to the
conversion, holders of Series A Preferred Stock are entitled to one vote for
each share of such stock. Because the Series A Preferred Stock converts at a
ratio of approximately .76 shares of Common Stock for each share of Series A
Preferred Stock, the voting power represented by the Series A Preferred
Stock is accordingly reduced upon the conversion to Common Stock.

45
<PAGE> 47

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, par value $0.01 per share, and 8,000,000 shares of Preferred
Stock, par value $0.01 per share.

COMMON STOCK

As of September 1, 1997, there were 7,604,888 shares of Common Stock
outstanding that were held of record by 156 stockholders. Based on the shares of
Common Stock outstanding on September 1, 1997 and giving effect to the issuance
of the 2,000,000 shares of Common Stock offered by the Company, following the
Offering there will be 10,887,847 shares of Common Stock outstanding (assuming
conversion of 910,109 shares of Series A Preferred Stock into 690,166 shares of
Common Stock, conversion of 395,195 shares of Series B Preferred Stock into
592,793 shares of Common Stock, the lapse of the rights of the holders of the
Redeemable Common Stock Instruments, no exercise of the Underwriters'
over-allotment option and no exercise of options and warrants outstanding as of
September 1, 1997).

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Holders of Common
Stock do not have cumulative voting rights in the election of directors and do
not have preemptive rights. Holders of the Common Stock are entitled to receive
dividends, when and if declared by the Board, out of funds legally available
thereunder. Subject to any preferential liquidation rights of holders of
Preferred Stock, upon any liquidation, dissolution or winding-up of the Company,
the holders of Common Stock are entitled to share ratably in all assets of the
Company remaining after payments in full of all liabilities of the Company.

All of the Common Stock offered hereby, when issued, will be fully paid and
nonassessable.

PREFERRED STOCK

As of September 1, 1997, there were 910,109 shares of Series A Preferred
Stock authorized, issued and outstanding and 1,580,779 of Series B Preferred
Stock authorized of which 395,195 shares were issued and outstanding. Upon the
closing of the Offering, there will be no shares of Series A or Series B
Preferred Stock outstanding. The Company has no present intention to issue
shares of Preferred Stock.

The Articles of Incorporation authorize the Board to issue up to an
aggregate of 8,000,000 shares of Preferred Stock and to determine the
preferences, rights and other terms of such stock. Although it has no present
intention to do so, the Board could, in the future, issue one or more series of
Preferred Stock which, due to their terms, could impede a merger, tender offer
or other transaction that some, or a majority, of Landmark's stockholders might
believe to be in their best interests. See "Risk Factors -- Anti-Takeover
Effects of Certain Charter Provisions."

Series A Preferred Stock

The holders of Series A Preferred Stock are entitled to receive cash
dividends, in any fiscal year, when and as declared by the Board and to the
extent permitted by the Virginia Stock Corporation Act, as amended ("VSCA"). As
of May 1, 1997, the annual rate of dividends on the Series A Preferred Stock was
$0.375. Such dividends are declared and paid in arrears on the first business
day of each succeeding calendar quarter. With certain exceptions, the
declaration and payment of dividends are mandatory. With respect to dividends or
distributions upon the voluntary or involuntary liquidation, dissolution or
winding up of the Company, the Series A Preferred Stock ranks senior to the
Common Stock and junior to the Series B Preferred Stock. The holders of Series A
Preferred Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders. Except as otherwise provided by
the VSCA, holders of Series A Preferred Stock vote together with holders of
Common Stock.

Since May 1, 1997, the Company has been obligated to periodically redeem a
portion of the Series A Preferred Stock. On August 1, 1997, the Company redeemed
a total of 54,946 shares of Series A Preferred Stock. The holders of Series A
Preferred Stock also have the right to convert all, but not less than all, of
their Series A Preferred Stock into Common Stock at any time on or after the
closing of the Offering. The holders of Series A Preferred Stock have informed
the Company that they intend to convert all of the currently

46
<PAGE> 48

outstanding 910,109 shares of Series A Preferred Stock into 690,166 shares of
Common Stock on the closing of the Offering. See Note 9 of Notes to Consolidated
Financial Statements for a description of the conversion formula. After the
closing of the Offering, the Board intends to amend the Company's Articles of
Incorporation to eliminate the designation of the Series A Preferred Stock from
the authorized preferred stock of the Company.

Series B Preferred Stock

The holders of Series B Preferred Stock are entitled to receive dividends
when, as and if declared by the Board in its discretion. So long as any Series B
Preferred Stock remains outstanding, no class or series of stock other than
Series B Preferred Stock is entitled to dividends, other than to holders of
Series A Preferred Stock and any series or class of stock issued subsequent to
the issuance of the Series B Preferred Stock. Holders of shares of Series B
Preferred Stock have preferential rights to holders of Series A Preferred Stock
and Common Stock with respect to the assets of the Company in the event of any
liquidation, dissolution or winding up of the Company. Each share of Series B
Preferred Stock entitles the holder thereof to such number of votes per share
equal to the number of shares of Common Stock into which such share of Series B
Preferred Stock is convertible. So long as at least one share of Series B
Preferred Stock remains outstanding, holders of Series B Preferred Stock have
the right to select one of the Company's seven directors.

The 395,195 shares of Series B Preferred Stock outstanding prior to the
Offering will convert into 592,793 shares of Common Stock on the closing of the
Offering, and, after the sale of the shares of Common Stock pursuant to the
Offering, the Company will have no outstanding shares of Series B Preferred
Stock. See Note 9 of Notes to Consolidated Financial Statements. After the
closing of the Offering, the Board intends to amend the Company's Articles of
Incorporation to eliminate the designation of the Series B Preferred Stock from
the authorized preferred stock of the Company.

WARRANTS

In connection with early termination of the distributor relationship
between the Company and Infarmedica Holding AG ("Infarmedica"), on January 1,
1997, Landmark issued a warrant to Infarmedica to purchase 225,000 shares of
Common Stock at a price equal to $4.00 per share as partial consideration for
certain rights and related assets (including access to Landmark's customer base
in Austria, the Benelux countries, Germany, and Switzerland and assignment of
license and maintenance and support agreements) and covenants not to compete
from certain principals of the distributor. The warrant was fully vested upon
issuance, expires on January 1, 2007 and is transferable only with the Company's
consent.

VIRGINIA LAW AND CERTAIN CHARTER PROVISIONS

Landmark is a Virginia corporation subject to the VSCA which contains
certain anti-takeover provisions regulating affiliated transactions, control
share acquisitions and the adoption of shareholder rights plans. In general, the
affiliated transactions provisions prevent a Virginia corporation from engaging
in an "affiliated transaction" (as defined) with an "interested shareholder"
(generally defined as a person owning more than 10% of any voting securities of
the corporation) unless approved by a majority of the "disinterested directors"
(as defined) and the holders of at least two-thirds of the outstanding voting
stock not owned by the interested shareholder, subject to certain exceptions.
Under the control share acquisitions provisions of the VSCA, shares acquired in
a "control share acquisition" (defined generally as transactions that increase
the voting strength of the person acquiring such shares above certain thresholds
in director elections) generally have no voting rights unless granted by a
majority of the outstanding voting stock not owned by such acquiring person. If
such voting rights are granted and the acquiring person controls 50% or more of
the voting power, all shareholders, other than the acquiring person, are
entitled to receive "fair value" (as defined) for their shares. If such voting
rights are not granted, the corporation may, if authorized by its articles of
incorporation or bylaws, purchase the acquiring person's shares at their cost to
the acquiring person. Finally, the shareholder rights plan provisions of the
VSCA permit the Board to adopt a shareholder rights plan that could render a
hostile takeover prohibitively expensive if the Board determines that such a
takeover is not in the best interests of the corporation. The Board has no
present intention to adopt a shareholder rights plan and will not adopt any such
plan in the future except on terms that the Board deems to be in the best
interests of Landmark's

47
<PAGE> 49

shareholders. The existence of the shareholder rights plan provisions of the
VSCA, as well as the affiliated transactions and control share acquisition
provisions could delay or prevent a change in control of the Company, impede a
merger, consolidation or other business combination involving the Company or
discourage a potential acquirer from making a tender offer to otherwise
attempting to obtain control of the Company.

Charter provisions. Landmark's Articles of Incorporation and Bylaws
contain certain provisions that could inhibit or impede acquisition of control
of the Company by means of a tender offer, a proxy contest or otherwise and
inhibit attempts at such transactions. These provisions are expected to
discourage certain types of coercive takeover practices and inadequate takeover
bids and to encourage persons seeking to acquire control of the Company to
negotiate first with the Board. The Company believes that these provisions
increase the likelihood that proposals initially will be on more attractive
terms than would be the case in their absence and increase the likelihood of
negotiations, which might outweigh the potential disadvantages of discouraging
such proposals because, among other things, negotiation of such proposals might
result in improvement of terms. The description set forth below is a summary
only, and is qualified in its entirety by reference to the Articles of
Incorporation and Bylaws which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part. See "Risk Factors -- Anti-Takeover
Effects of Certain Charter Provisions."

Number of Directors; Removal; Filling Vacancies. The Articles of
Incorporation provide that, subject to any rights of holders of Preferred Stock
to elect additional directors under specified circumstances, the number of
directors will be fixed by the Bylaws. The Bylaws provide that, subject to the
rights of any holders of Preferred Stock, the number of directors will be fixed
by the Board, but must be at least seven. In addition, the Bylaws provide that,
subject to the rights of the holders of any Preferred Stock, and unless the
Board otherwise determines, any vacancies (other than vacancies created by an
increase in the total number of directors) will be filled by the affirmative
vote of a majority of the remaining directors, though less than a quorum and any
vacancies created by an increase in the total number of directors may be filled
by a majority of the entire Board. Accordingly, the Board could temporarily
prevent any stockholder from enlarging the Board and then filling the new
directorship with such stockholder's own nominees.

The Bylaws provide that, subject to the rights of the holders of Preferred
Stock, if any, directors may only be removed upon the affirmative vote of at
least a majority of the entire voting power of all the then-outstanding shares
of Common Stock entitled to vote generally in the election of directors.

Preferred Stock. The Articles of Incorporation authorize the Board to
establish one or more series of Preferred Stock and to determine, with respect
to any series of Preferred Stock, the preferences, rights and other terms of
such series. See "Description of Capital Stock -- Preferred Stock." The Company
believes that the ability of the Board to issue one or more series of Preferred
Stock will provide the Company with increased flexibility in structuring
possible future financings and acquisitions, and in meeting other corporate
needs. The authorized shares of Preferred Stock, as well as shares of Common
Stock, will be available for issuance without further action by the Company's
stockholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. Although the Board has no present intention
to do so, it could, in the future, issue a series of Preferred Stock (other than
the Series A Preferred Stock or Series B Preferred Stock) which, due to its
terms, could impede a merger, tender offer or other transaction that some, or a
majority, of the Company's stockholders might believe to be in their best
interests, or in which stockholders might receive a premium over then-prevailing
market prices for their shares of Common Stock.

LISTING

Application has been made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "LDMK."

TRANSFER AGENT

The transfer agent and registrar for the Company's Common Stock is
.

48
<PAGE> 50

SHARES ELIGIBLE FOR FUTURE SALE

SALES OF RESTRICTED SHARES

Based on shares of Common Stock outstanding as of September 1, 1997 and
assuming the date of this Prospectus is November 1, 1997, upon completion of the
Offering, the Company will have 10,887,847 shares of Common Stock outstanding.
See "Description of Capital Stock." Of these shares, the 3,200,000 shares sold
in the Offering will be freely tradeable without restriction or further
registration under the Securities Act, except that any shares purchased by
"affiliates" of the Company, as that term is defined under the Securities Act
("Affiliates"), may generally only be sold in compliance with the limitations of
Rule 144 as described below.

The remaining 7,687,847 shares of Common Stock are deemed "restricted
securities" under Rule 144. Of these shares, shares are subject to
Lock-Up Agreements for a period of 180 days beginning after the date of this
Prospectus (the "Lock-Up Period). Of the shares not subject to Lock-Up
Agreements, shares will be eligible for sale in the public market on
the date of this Prospectus in reliance on Rule 144(k) and shares will
be eligible for sale in the public market beginning 90 days after the date of
this Prospectus in reliance on Rule 701. Of the shares subject to Lock-Up
Agreements, shares will be eligible for sale in reliance upon Rule 144
and Rule 701 upon the expiration of the Lock-Up Period, of which are
currently held by Affiliates. Such shares held by Affiliates will be subject to
the volume and other resale limitations of Rule 144, other than the one-year
holding period; the shares not held by Affiliates will be freely tradeable
after expiration of the Lock-Up Period.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned "restricted" shares for at least one year, including
a person who may be deemed an Affiliate of the Company, is entitled to sell
within any three month period a number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of the Company's Common Stock
or (ii) the average weekly trading volume of the Company's Common Stock during
the four calendar weeks preceding the date on which notice of the sale is filed
with the Securities Exchange Commission. Sales under Rule 144 are also subject
to certain manner of sales provisions, notice requirements and the availability
of current public information about the Company. Any person (or persons whose
shares are aggregated) who is not deemed to have been an Affiliate of the
Company at any time during the 90 days preceding a sale, and who owns shares
within the definition of "restricted securities" under Rule 144 that were
purchased from the Company (or any Affiliate) at least two years previously,
will be entitled to sell such shares under Rule 144(k) without regard to the
volume limitations, manner of sale provision, public information requirements or
notice requirements. However, the transfer agent may require an opinion of
counsel that a proposed sale of shares comes within the terms of Rule 144 prior
to effecting a transfer of such shares. Rule 701 provides that shares of Common
Stock acquired on the exercise of outstanding options issued before the date of
this Prospectus may be resold by persons other than Affiliates, beginning 90
days after the date of this Prospectus, subject only to the manner of sale
provisions of Rule 144, and by Affiliates, beginning 90 days after the date of
this Prospectus, subject to all provisions of Rule 144 except its one-year
minimum holding period.

Prior to the Offering, there has been no public market for the Common Stock
of the Company and no predictions can be made of the effect, if any, that the
sale or availability for sale of shares of additional Common Stock will have on
the market price of the Common Stock. Nevertheless, sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could adversely affect the market price of the Common Stock and could
impair the Company's future ability to raise capital through an offering of its
equity securities.

OPTIONS AND WARRANTS

On September 1, 1997, options to acquire a total of shares of
Common Stock were outstanding. Of this amount, options to acquire
shares are subject to Lock-Up Agreements, and options to acquire the remaining
shares are not subject to the Lock-Up Agreements and will be eligible for
sale in

49
<PAGE> 51

the public market beginning 90 days after the date of this Prospectus, subject
to applicable vesting requirements and compliance with the Securities Act and
applicable state securities laws. See "Shares Eligible for Future
Sale -- Lock-up Agreements." On September 1, 1997, options to purchase
shares of Common Stock were available for future grants under the Company's
Stock Incentive Plans. See "Management -- Stock Incentive Plans."

On September 1, 1997, warrants to purchase 225,000 shares of Common Stock
were outstanding. Such warrants were fully vested upon issuance and expire on
January 1, 2007. Shares of Common Stock received upon the exercise of such
warrants will be "restricted securities" within the meaning of Rule 144 and, as
a result, may only be resold subject to the volume, manner of sale and other
limitations contained in Rule 144 beginning at least one year after the date of
such exercise. See "Description of Capital Stock -- Warrants."

REGISTRATION STATEMENT ON FORM S-8

The Company intends to file a registration statement on Form S-8 covering
approximately shares of Common Stock issued or issuable under the
Stock Incentive Plans and the Stock Purchase Plan. Of the shares covered by the
Form S-8, shares are subject to vested options as of September 1, 1997.
Of these options, options to acquire shares are subject to Lock-Up
Agreements and options to acquire shares are not subject to Lock-Up
Agreements. The Form S-8 is expected to be filed approximately 90 days after the
date of this Prospectus and will become effective automatically upon filing.
Accordingly, the shares of Common Stock covered by the Form S-8 will become
eligible for sale in the public markets, subject to the Lock-up Agreements.

LOCK-UP AGREEMENTS

All officers and directors and certain holders of Common Stock and options
to purchase Common Stock have agreed pursuant to the Lock-Up Agreements that
they will not 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 to purchase, or otherwise dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible or exercisable or exchangeable for
Common Stock, or enter into any swap or similar agreement that transfers, in
whole or in part, the economic risk of ownership of the Common Stock during the
Lock-Up Period without the prior written consent of Unterberg Harris. Unterberg
Harris may, however, in its sole discretion and at any time without notice,
release all or any portion of the securities subject to the Lock-Up Agreements.
Any such release could have a material adverse effect upon the market price of
the Company's Common Stock.

50
<PAGE> 52

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Company and the Selling Stockholders have
agreed to sell to each of the Underwriters named below, and each of the
Underwriters, for whom Unterberg Harris and Wheat, First Securities, Inc. are
acting as Representatives, has agreed to purchase the number of shares of Common
Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ----------
<S> <C>
Unterberg Harris..................................................
Wheat, First Securities, Inc. ....................................

---------
Total................................................... 3,200,000
=========
</TABLE>

In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock offered hereby, if any such shares are purchased. In the
event of a default by an Underwriter, the Underwriting Agreement provides that,
in certain circumstances, such commitments of the non-defaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.

Unterberg Harris has advised the Company that the Underwriters propose
initially to offer the shares of Common Stock offered hereby to the public at
the public offering price per share set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may reallow,
a discount not in excess of $ per share on sales to certain other dealers.
After the public offering, the offering price, discount and reallowance may be
changed.

The Selling Stockholders have granted the Underwriters an option, which may
be exercised within 30 days after the date of this Prospectus, to purchase up to
an additional 480,000 shares of Common Stock to cover over-allotments, if any,
at the initial public offering price, less the underwriting discount. To the
extent that the Underwriters exercise the option, each of the Underwriters will
have a firm commitment, subject to certain conditions, to purchase approximately
the same percentage of shares that the number of shares of Common Stock to be
purchased by it shown on the foregoing table bears to the total number of shares
initially offered hereby.

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

The Selling Stockholders, the Company, its officers and directors and
certain other stockholders have entered into Lock-Up Agreements under which they
have agreed not to offer, sell or otherwise dispose of any of their shares of
Common Stock or other securities of the Company for a period of 180 days after
the date of this Prospectus without the prior written consent of Unterberg
Harris. In the case of the Selling Stockholders, this agreement is subject to an
exception for sales pursuant to the Underwriters' over-allotment option. In the
case of the Company, this agreement is subject to exceptions for the grant of
options and the issuance of shares pursuant to the Company's stock option plans
and in connection with acquisitions. Any Common Stock issued in connection with
such acquisitions would be subject to a lock-up agreement with the
Representatives for 180 days from the date of issuance.

In connection with the Offering, Unterberg Harris, on behalf of the
Underwriters, may purchase and sell the Common Stock in the open market. Such
transactions may include (i) over-allotment transactions, (ii) stabilizing
transactions, consisting of certain bids for the purpose of preventing or
restraining a decline in the market price of the Common Stock, and (iii)
purchases to cover syndicate short positions created in

51
<PAGE> 53

connection with the Offering. The Underwriters, also may impose a "penalty bid,"
whereby selling conversions allowed to syndicate members or other broker-dealers
in respect of the Common Stock sold in the Offering for their account may be
reclaimed by the syndicate if such shares of Common Stock are re-purchased by
the syndicate in stabilizing or covering transactions. These transactions may be
effected on The Nasdaq National Market or otherwise, and these activities, if
commenced, may be discontinued at any time.

The Underwriters have informed the Company that they do not intend to
confirm sales to any 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 of the Common Stock offered hereby has
been arbitrarily determined by negotiation between the Company and the
Representatives and is not necessarily related to the Company's asset value, net
worth or other established criteria of value. In determining the initial public
offering price, the Representatives and the Company considered, among other
things, market prices of similar securities of comparable publicly traded
companies, the financial conditions and operating information of companies
engaged in activities similar to those of the Company, the financial condition
and prospects of the Company and the general condition of the securities market.

LEGAL MATTERS

The legality of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholders by Shaw Pittman Potts &
Trowbridge, Washington, D.C., a partnership including professional corporations.
Certain legal matters will be passed upon for the Underwriters by Akin, Gump,
Strauss, Hauer & Feld, L.L.P.

EXPERTS

The Consolidated Financial Statements as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996 included in
this Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.

ADDITIONAL INFORMATION

A Registration Statement on Form S-1 including amendments thereto, relating
to the Common Stock offered by the Company and the Selling Stockholders has been
filed with the Securities and Exchange Commission (the "Commission"),
Washington, D.C. 20549. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules thereto. A copy of the
Registration Statement may be inspected by anyone without charge at the
Commission's principal offices in Washington, D.C. and copies of all or any part
thereof may be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's World Wide Web site is http://www.sec.gov.

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

52
<PAGE> 54

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Operations................................................. F-4
Consolidated Statements of Changes in Stockholders' Equity (Deficit).................. F-5
Consolidated Statements of Cash Flows................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 55

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Landmark Systems Corporation

The recapitalization described in Note 13 of the consolidated financial
statements has not been consummated at September 15, 1997. When it has been
consummated, we will be in a position to furnish the following report:

"In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in stockholders'
equity (deficit) and of cash flows present fairly, in all material
respects, the financial position of Landmark Systems Corporation and its
subsidiaries at December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above."

PRICE WATERHOUSE LLP

Falls Church, Virginia
April 30, 1997

F-2
<PAGE> 56

LANDMARK SYSTEMS CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
------------------------- JUNE 30, JUNE 30,
1995 1996 1997 1997
----------- ----------- ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 316,333 $ 339,073 $ 2,574,787
Accounts receivable, net of allowance for doubtful
accounts of $656,000, $382,000 and $453,000
(unaudited)....................................... 9,632,617 10,139,856 9,118,381
Unbilled accounts receivable........................ 3,489,725 4,265,547 3,641,162
Deferred income taxes, net.......................... 1,354,059 2,065,460 1,507,159
Income taxes receivable............................. 3,174,432 16,061 13,502
Other current assets................................ 226,556 159,012 519,435
----------- ----------- -----------
Total current assets......................... 18,193,722 16,985,009 17,374,426
Unbilled accounts receivable.......................... 4,335,708 2,995,868 3,880,311
Fixed assets, net..................................... 3,191,852 2,896,225 3,142,705
Capitalized software costs, net....................... 5,757,252 1,650,339 963,527
Deferred income taxes................................. -- 414,928 928,600
Intangible assets, net................................ -- -- 1,540,000
Other assets.......................................... 674 133,613 116,510
----------- ----------- -----------
$31,479,208 $25,075,982 $27,946,079
============ ============ ============

LIABILITIES, MANDATORILY REDEEMABLE SECURITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable.................................... $ 1,682,645 $ 1,200,553 $ 668,996
Accrued expenses.................................... 3,387,440 1,951,471 2,511,089
Deferred revenue.................................... 15,869,704 16,206,265 16,171,166
Income taxes payable................................ -- 271,288 261,835
Debt due within one year............................ 3,238,442 1,493,763 516,538
----------- ----------- -----------
Total current liabilities.................... 24,178,231 21,123,340 20,129,624
Long-term debt........................................ 1,083,676 591,750 327,259
Deferred revenue -- noncurrent........................ 2,677,856 2,498,482 2,404,731
Deferred income taxes................................. 472,210 -- --
Other liabilities..................................... 1,067,717 583,250 1,363,029
----------- ----------- -----------
Total liabilities............................ 29,479,690 24,796,822 24,224,643
----------- ----------- -----------
Commitments
Redeemable common stock
instruments, at redemption value.................... 1,049,043 703,930 1,179,234 --
Mandatorily redeemable Series A Cumulative Preferred
Stock, $.01 par value, 1,300,000 shares authorized,
1,020,000, 1,020,000 and 965,055 shares issued and
outstanding, actual; no shares issued and
outstanding, pro forma.............................. 5,865,000 5,865,000 6,586,500 --
Mandatorily redeemable Series B Cumulative Preferred
Stock, $.01 par value 1,580,779 shares authorized,
395,195 shares issued and outstanding, actual; no
shares issued and outstanding, pro forma............ -- -- 2,559,778 --
Stockholders' equity (deficit):
Common stock, $.01 par value, 30,000,000 shares
authorized, 7,331,895, 7,331,895 and 7,354,940
issued and outstanding, actual; 8,761,051 issued
and outstanding, pro forma........................ 73,320 73,320 73,550 $ 87,612
Additional paid-in capital.......................... 432,300 432,300 827,640 10,764,084
Accumulated deficit................................. (5,415,609) (6,770,890) (7,511,243) (7,511,243)
Foreign currency translation........................ (4,536) (24,500) 5,977 5,977
----------- ----------- ----------- -------------
Total stockholders' equity (deficit)......... (4,914,525) (6,289,770) (6,604,076) $ 3,346,430
----------- ----------- ----------- -------------
$31,479,208 $25,075,982 $27,946,079
============ ============ ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE> 57

LANDMARK SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of the consolidated financial
statements.

F-4
<PAGE> 58

LANDMARK SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 AND
THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
COMMON SHARES
---------------------------------- RETAINED
ADDITIONAL EARNINGS/ FOREIGN
PAID-IN (ACCUMULATED CURRENCY
ISSUED PAR VALUE CAPITAL DEFICIT) TRANSLATION TOTAL
--------- --------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993......... 7,331,745 $73,318 $324,456 $ 1,454,609 $ -- $ 1,852,383
Net loss........................... -- -- -- (1,920,908) -- (1,920,908)
Compensation for non-qualified
stock options.................... -- -- 17,577 -- -- 17,577
Series A Preferred Stock
dividends........................ -- -- -- (153,000) -- (153,000)
--------- --------- ---------- ------------ ----------- -----------
Balance at December 31, 1994......... 7,331,745 73,318 342,033 (619,299) -- (203,948)
Net loss........................... -- -- -- (4,169,010) -- (4,169,010)
Series A Preferred Stock redemption
value adjustment................. -- -- -- (474,300) -- (474,300)
Compensation for non-qualified
stock options.................... -- -- 89,769 -- -- 89,769
Common stock issued upon exercise
of non-qualified stock options... 150 2 498 -- -- 500
Foreign currency translation....... -- -- -- -- (4,536) (4,536)
Series A Preferred Stock
dividends........................ -- -- -- (153,000) -- (153,000)
--------- --------- ---------- ------------ ----------- -----------
Balance at December 31, 1995......... 7,331,895 73,320 432,300 (5,415,609) (4,536) (4,914,525)
Net loss........................... -- -- -- (1,202,281) -- (1,202,281)
Foreign currency translation....... -- -- -- -- (19,964) (19,964)
Series A Preferred Stock
dividends........................ -- -- -- (153,000) -- (153,000)
--------- --------- ---------- ------------ ----------- -----------
Balance at December 31, 1996......... 7,331,895 73,320 432,300 (6,770,890) (24,500) (6,289,770)
Net income (unaudited)............. -- -- -- 527,239 -- 527,239
Series A Preferred Stock redemption
value adjustment (unaudited)..... -- -- -- (1,096,500) -- (1,096,500)
Series B Preferred Stock redemption
value adjustment (unaudited)..... -- -- -- (59,778) -- (59,778)
Common stock issued upon exercise
of non-qualified stock options
(unaudited)...................... 14,805 148 55,495 -- -- 55,643
Issuance costs (unaudited)......... -- -- (52,115) -- -- (52,115)
Issuance of warrants (unaudited)... -- -- 48,000 -- -- 48,000
Compensation expense for options
granted to non-employees
(unaudited)...................... -- -- 106,934 -- -- 106,934
Foreign currency translation
(unaudited)...................... -- -- -- -- 30,477 30,477
Waiver of rights to require to
repurchase (unaudited)........... 8,240 82 237,026 -- -- 237,108
Series A Preferred Stock dividends
(unaudited)...................... -- -- -- (111,314) -- (111,314)
--------- --------- ---------- ------------ ----------- -----------
Balance at June 30, 1997
(unaudited)........................ 7,354,940 $73,550 $827,640 $(7,511,243) $ 5,977 $(6,604,076)
========= ========= ========= ============ ========== ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-5
<PAGE> 59

LANDMARK SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income....................... $(1,920,908) $(4,169,010) $(1,202,281) $(1,574,784) $ 527,239
Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities:
Depreciation and amortization......... 4,185,694 3,957,189 5,865,608 3,381,240 1,241,821
Provision for (reduction in) losses on
accounts receivable................. 304,163 191,960 (73,436) 64,761 158,272
Provision (benefit) for loss on
leases.............................. 779,008 265,816 (351,257) (351,257) --
Stock compensation expense
(benefit)........................... 32,463 766,214 (96,381) (75,485) 528,583
Writeoff of capitalized software...... -- 513,655 -- -- --
Decrease (increase) in accounts
receivable.......................... 599,588 (899,203) (433,803) 2,116,742 863,203
(Increase) decrease in deferred income
taxes............................... (1,104,968) (897,868) (1,598,539) (1,177,095) 44,629
(Increase) decrease in income taxes
receivable.......................... (1,838,508) (477,653) 3,158,371 2,256,020 2,559
(Increase) decrease in unbilled
accounts receivable................. (2,007,487) 568,816 564,018 761,452 (260,058)
(Decrease) increase in accounts
payable and accrued expenses........ (1,487,786) 580,219 (1,566,804) (1,186,580) (871,939)
Increase (decrease) in income taxes
payable............................. -- -- 271,288 1,273 (9,453)
Increase (decrease) in deferred
revenue............................. 3,132,268 439,622 157,187 (1,525,729) (128,850)
Increase (decrease) in other, net..... 637,313 (1,201,576) (549,862) (356,104) (155,543)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities........... 1,310,840 (361,819) 4,144,109 2,334,454 1,940,463
----------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures.................... (543,928) (2,224,579) (728,494) (457,846) (801,487)
Capitalized software costs.............. (1,491,159) (1,112,121) (734,574) (426,132) --
----------- ----------- ----------- ----------- -----------
Net cash used in investing
activities..................... (2,035,087) (3,336,700) (1,463,068) (883,978) (801,487)
----------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Principal payments on loans............. (13,862) (3,704) (414,487) (147,095) (241,716)
Proceeds from loans..................... -- 1,500,000 -- -- --
Net proceeds from (payments on) line of
credit................................ 500,000 1,822,118 (1,822,118) 177,882 (1,000,000)
Issuances of common stock............... 205,612 196,736 952,456 917,494 433,789
Repurchases of common stock............. (212,214) (142,500) (1,201,188) (1,181,622) (87,383)
Issuance of Series B Preferred Stock.... -- -- -- -- 2,447,885
Redemption of Series A Preferred
Stock................................. -- -- -- -- (375,000)
Payment of Series A Preferred Stock
dividends............................. (153,000) (153,000) (153,000) (76,500) (111,314)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities........... 326,536 3,219,650 (2,638,337) (309,841) 1,066,261
----------- ----------- ----------- ----------- -----------
Effect of exchange rate changes on cash... -- (4,536) (19,964) (20,500) 30,477
----------- ----------- ----------- ----------- -----------
Net (decrease) increase in cash and cash
equivalents............................. (397,711) (483,405) 22,740 1,120,135 2,235,714
Cash and cash equivalents, beginning of
period.................................. 1,197,449 799,738 316,333 316,333 339,073
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents, end of
period.................................. $ 799,738 $ 316,333 $ 339,073 $ 1,436,468 $ 2,574,787
============ ============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE> 60

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION AND OPERATIONS

Landmark Systems Corporation ("the Company") was incorporated in the
Commonwealth of Virginia in November 1982 and commenced operations in 1983. The
Company is engaged in the development, marketing and distribution of computer
software products and the provision of related services. The Company is a
supplier of performance management software products which measure, analyze,
report and predict performance for both the mainframe and client/server
computing environments.

In 1985, the Company formed a wholly-owned subsidiary, Landmark Systems
International, Inc. (Landmark International), which was an interest charge
domestic international sales corporation (DISC) under the Tax Reform Act of
1984. In March 1989, Landmark International revoked its election to be treated
as a DISC effective for the period beginning January 1, 1989. All tax benefits
of the DISC were fully utilized at December 31, 1995.

In January 1995, the Company established a wholly-owned subsidiary,
Landmark Systems Pacific Pty. Ltd. ("LSPPL"). LSPPL acts as its distributor in
Australia and New Zealand. LSPPL also provides technical support for Australia,
New Zealand and Southeast Asia.

In May 1995, the Company activated a subsidiary, SSG (Europe) Limited. The
subsidiary's name was subsequently changed to Landmark Systems (EMEA) Limited
("EMEA"). EMEA distributes the Company's products in the United Kingdom and
Spain. EMEA also provides marketing and distribution assistance in Europe, the
Middle East and Africa under a management agreement.

In May 1996, the Company established a wholly-owned subsidiary, Landmark
Systems (HK) Ltd., to act as its distributor of products in the Southeast Asian
market.

In January 1997, the Company established a wholly-owned subsidiary,
Landmark Systems GmbH, to act as its distributor in Germany, Switzerland and
Austria. Also in January 1997, the Company established a wholly-owned
subsidiary, Landmark Systems Benelux BV, to act as its distributor in the
Benelux countries (Note 12).

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying financial statements include the accounts of the Company
and its wholly-owned subsidiaries. Intercompany transactions and balances have
been eliminated.

Pro forma stockholders' equity

The Company plans to file an initial registration statement with the
Securities and Exchange Commission. If the contemplated offering is consummated
under terms presently anticipated, the following changes to the redeemable
common stock instruments and preferred stock will occur upon the closing of this
offering: (i) the conversion of the Series A Preferred Stock into 690,166 shares
of the Company's common stock so that a holder of the Series A Preferred Stock
may participate in the offering as a selling stockholder, (ii) the automatic
conversion of the Series B Preferred Stock into 592,793 shares of the Company's
common stock, and (iii) the lapse of the rights of certain holders of 123,155
shares of Common Stock and options to purchase 313,635 shares of Common Stock to
require the Company to repurchase such shares. The June 30, 1997 pro forma
stockholders' equity reflects the foregoing anticipated changes to the
redeemable common stock instruments and preferred stock, as well as the
mandatory redemption on August 1, 1997 of 54,946 shares of Series A Preferred
Stock for consideration of $375,000.

F-7
<PAGE> 61

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cash and cash equivalents

For purposes of the consolidated balance sheets and statements of cash
flows, the Company considers all highly liquid investment instruments purchased
with an original maturity of three months or less to be cash equivalents.

Revenue recognition

Revenues are recognized in accordance with AICPA Statement of Position
91-1, "Software Revenue Recognition." Sales of perpetual software licenses are
recorded as license revenues when performance under the related contract is
completed, collection is probable and no significant vendor obligations remain.
Service revenues, which consist primarily of maintenance fees, generally are
collected prior to the performance of the related services and are recorded as
deferred revenue and recognized ratably over the period during which the
services are performed, generally twelve months except as noted below. For
transactions involving both license and service revenues, the Company generally
allocates maintenance fees based upon the list price for such fees.

In certain circumstances, primarily where the Company is replacing its
mainframe competitors' products, the Company enters into a long-term payment
arrangement with a licensee. Under these types of arrangements, the Company
allows the licensee to pay the license fees plus service fees over a three to
five year period, generally in annual installments. If collectibility by the
Company is probable, the Company recognizes the present value of the contracted
stream of payments as an unbilled receivable in its financial statements. Of
this amount, the Company recognizes the underlying license fee as license
revenues and defers the underlying service fees. As installments are invoiced to
the licensee in accordance with the payment arrangement, the Company reflects a
reduction in its unbilled receivable and an increase in its accounts receivable.
Historically, the Company has not granted concessions nor experienced any
significant bad debts associated with these long-term arrangements. At December
31, 1995 and 1996, unbilled receivables have been reduced by $1,226,000 and
$1,200,000, respectively, to reflect such amounts at their present values.

The Company has relationships with a number of third party distributors to
market and distribute its products internationally. Under such arrangements, the
distributors report to, are invoiced by and remit payments to the Company based
upon transactions with the ultimate customer. The Company records license
revenues and service revenues based upon transactions reported to the Company.

Fixed assets

Fixed assets are stated at cost less accumulated depreciation and
amortization. Capital lease obligations are recorded at the present value of the
future lease obligations discounted at the interest rate implicit in each lease.
A corresponding amount is capitalized and depreciated over the term of the
lease. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets. The estimated useful lives for computing
depreciation are generally five years for computer equipment, office equipment
and furniture. Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the estimated useful lives of the
improvements or the terms of the related lease.

Impairment of long-lived assets

Long-lived assets subject to the requirements of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of", are evaluated for possible
impairment through a review of undiscounted expected future cash flows. If the
sum of the undiscounted expected future cash flows is less than the carrying
amount of the asset or if changes in facts and circumstances indicate, an
impairment loss is recognized.

F-8
<PAGE> 62

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Foreign currency translations

The functional currency for the Company's international subsidiaries is the
applicable local currency. The financial statements of international
subsidiaries are translated into U.S. dollars using exchange rates in effect at
period end for assets and liabilities and average exchange rates during each
reporting period for results of operations. Adjustments resulting from
translation of financial statements are reflected as a separate component of
stockholders' equity (deficit). The Company does not attempt to hedge its
foreign currency exposures. Foreign currency gains (losses) of $17,000,
$(102,000) and $(9,600) for the years ending December 31, 1994, 1995 and 1996,
respectively, are included in other income.

Software development costs

The Company accounts for its software development activities in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Cost of Computer Software to be Sold, Leased or Otherwise Marketed." The Company
capitalizes significant development costs incurred subsequent to the point of
demonstrated technological feasibility and up to the time the product is
available for release to customers. Amortization is computed on an individual
product basis and is the greater of (a) the ratio of current gross revenues for
a product to the total current and anticipated future gross revenues for the
product, or (b) the straight-line method over the estimated economic life of the
product. Effective January 1, 1996, the Company prospectively decreased the
estimated economic life of its capitalized software products from three to five
years to eighteen months. This reduction in estimated economic life is
considered by management to be necessary in light of (i) the increasingly rapid
pace of change in technology in the market, (ii) changes implemented by
management in early 1996 regarding the Company's pace of development efforts and
product enhancements and introductions, (iii) the fact that shortened
development cycles do not provide the opportunity to use a detail program
design, and (iv) the increased need for the Company to update its products for
the latest technological innovations. Amortization expense recorded in 1996
would have been $2.3 million lower if this change had not been made in 1996. The
Company periodically evaluates its capitalized software costs for recoverability
against anticipated future revenues, and writes down or writes off capitalized
software costs if recoverability is in question.

Stock-based compensation

The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," (APB No. 25) and related Interpretations. Under APB
No. 25, compensation cost is measured as the excess, if any, of the market price
of the Company's stock, as established by the Company's Board of Directors ("the
Board"), at the date of grant over the exercise price of the option granted.
Compensation cost for stock options, if any, is recognized ratably over the
vesting period. The Company provides additional pro forma disclosures as
required under Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation"(SFAS No. 123) (Note 10).

Transactions for which non-employees are issued equity instruments for
goods or services received are recorded by the Company based upon the fair value
of the equity instruments issued or the fair value of the goods or services
received, whichever is more reliably measured.

Income taxes

The Company provides for income taxes using the asset and liability
approach. The asset and liability approach requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of the assets and
liabilities. A valuation allowance is recorded if, based on the evidence
available, it is more likely than not that some portion or all of the deferred
tax asset will not be realized.

F-9
<PAGE> 63

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Fair value of financial instruments

The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, accounts receivable and accounts payable approximate fair
value due to the short maturity of those instruments. The carrying amounts of
notes payable to banks, which includes short-term borrowings at market rates and
long-term debt, and preferred stock approximate their fair value.

The Company has $7,825,000 and $7,261,000 of unbilled receivables
outstanding at December 31, 1995 and 1996, respectively; the estimated fair
values of these receivables are $8,116,000 and $7,486,000, respectively,
calculated using discounted cash flows.

Concentrations of credit risk

Financial instruments which subject the Company to concentrations of credit
risk consist principally of accounts receivable and unbilled receivables. Credit
risk is limited due to the large number and geographic dispersion of customers
comprising the Company's customer base. At December 31, 1996, one international
distributor accounted for approximately 7% of the Company's total receivables.
No other distributor or customer accounted for more than 5% of the Company's
total outstanding receivables.

Use of estimates

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

Unaudited interim financial statements

The accompanying unaudited interim financial statements have been prepared
by the Company in accordance with generally accepted accounting principles for
interim financial information and substantially in the form prescribed by the
Securities and Exchange Commission in instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company's management, the June 30,
1996 and 1997 unaudited interim financial statements include all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of results for these interim periods. The results of operations for
the six months ended June 30, 1997 are not necessarily indicative of the results
to be expected for the full year or for any future period.

Pro forma earnings per share

In light of the contemplated changes in the capital structure of the
Company, historical net (loss) income per share is not considered relevant as it
would differ materially from pro forma net (loss) income per share. Except as
noted below, pro forma net (loss) income per share is computed by dividing net
(loss) income by the pro forma weighted average number of shares of common stock
outstanding, assuming (i) the conversion of the Series A Preferred Stock into
690,166 shares of the Company's common stock, and (ii) the conversion of
dilutive common stock equivalent shares from common stock options. Common stock
equivalent shares are calculated using the treasury stock method. Pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 83 (SAB 83),
the pro forma earnings per share computations include all common stock and
common stock equivalent shares issued within the twelve months preceding the
initial filing date of the Company's contemplated registration statement as if
they were outstanding for all periods presented, using

F-10
<PAGE> 64

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the treasury stock method for common stock options and warrants at an assumed
initial public offering price and the as if converted method for the Series B
Preferred Stock.

The pro forma weighted average shares outstanding used for the calculation
of the primary and fully diluted pro forma earnings per share for the year ended
December 31, 1996 and the six months ended June 30, 1996 was 9,368,162. The
weighted average shares outstanding used for the calculation of the primary and
fully diluted pro forma earnings per share for the six months ended June 30,
1997 were 9,945,896 and 10,762,484, respectively.

New accounting standards

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128) entitled "Earnings Per
Share". This statement establishes standards for computing and presenting
earnings per share (EPS), simplifying previous standards for computing EPS and
making them comparable to international standards. SFAS 128 replaces the
presentation of primary EPS with a presentation of basic EPS, and requires dual
presentation of basic and diluted EPS on the face of the statement of operations
for all entities with complex capital structures. Basic EPS excludes dilution
and is computed by dividing income available for common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. SFAS 128 requires restatement of all prior period earnings per share
presented, and is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods. Early application of SFAS
128 is not permitted.

The Company will adopt SFAS 128 for its December 31, 1997 financial
statements and will restate all prior period EPS data. To illustrate the effect
of adoption, the pro forma basic and diluted EPS, taking into consideration the
requirements of SAB 83, for the year ended December 31, 1996 and for the six
months ended June 30, 1996 and 1997 are set forth below:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
YEAR ENDED --------------
DECEMBER 31, 1996 1996 1997
----------------- ------ -----
<S> <C> <C> <C>
Pro forma basic (loss) earnings per share.............. $ (0.13) $(0.17) $0.06
Pro forma diluted (loss) earnings per share............ $ (0.13) $(0.17) $0.05
</TABLE>

NOTE 3 -- FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
----------- -----------
<S> <C> <C>
Computer equipment.......................................... $ 2,423,536 $ 3,173,420
Office equipment............................................ 4,748,086 4,685,196
Furniture and fixtures...................................... 3,051,404 3,092,399
Leasehold improvements...................................... 1,226,080 1,226,080
----------- -----------
11,449,106 12,177,095
Less accumulated depreciation............................... (8,257,254) (9,280,870)
----------- -----------
$ 3,191,852 $ 2,896,225
========== ==========
</TABLE>

Depreciation expense totaled $1,018,000, $876,000 and $1,024,000 for the
years ended December 31, 1994, 1995 and 1996, respectively.

F-11
<PAGE> 65

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- CAPITALIZED SOFTWARE COSTS

Capitalized software costs consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
------------ ------------
<S> <C> <C>
Capitalized software costs................................ $ 19,171,402 $ 19,905,976
Less accumulated amortization............................. (13,414,150) (18,255,637)
------------ ------------
$ 5,757,252 $ 1,650,339
=========== ===========
</TABLE>

The Company capitalized software development costs of $1,491,000,
$1,112,000 and $735,000 during 1994, 1995 and 1996, respectively. Amortization
expense of capitalized software costs was $3,168,000, $3,081,000 and $4,841,000
for the years ended December 31, 1994, 1995 and 1996, respectively.

NOTE 5 -- DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996
----------- -----------
<S> <C> <C>
Bank line of credit, at prime plus 1.5% (9.75% at December
31, 1996) secured by all assets.......................... $ 2,822,118 $ 1,000,000
Note payable at 9%, due in monthly installments of $47,700,
beginning in February 1996 through January 1999, secured
by fixed assets.......................................... 1,500,000 1,085,513
----------- -----------
Total debt....................................... 4,322,118 2,085,513
Less amounts due within one year........................... (3,238,442) (1,493,763)
----------- -----------
Long-term debt................................... $ 1,083,676 $ 591,750
========== ==========
</TABLE>

The Company had available credit of $1,000,000 at December 31, 1996 under
its $2,000,000 revolving line of credit agreement. The line of credit expired on
June 30, 1997 (Note 13). The terms of the Company's line of credit agreement
contain a fee, payable quarterly, equal to 1/2% of the average daily unused
portion of the line of credit.

The Company's line of credit agreement contains various covenants
pertaining to the maintenance of profitability levels and debt service coverage
ratios. At December 31, 1996, the Company was in violation of certain covenants.
On April 30, 1997, the Company received waivers of the violations as of December
31, 1996.

The Company also had available credit of $500,000 at December 31, 1996
under its $1,000,000 restricted line of credit. The restricted line of credit,
which is secured by all assets, requires bank approval prior to utilization. The
amount available under this credit facility had been reduced by a $500,000
standby letter of credit issued to the Company's landlord in the event the
Company defaults on its lease obligations. Interest on any outstanding balance
is charged on this facility at prime plus 2%. The restricted line of credit
expired on June 30, 1997 (Note 13).

The Company paid interest of $155,000, $180,000 and $414,000 in 1994, 1995
and 1996, respectively.

F-12
<PAGE> 66

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- SEGMENT INFORMATION

The Company classifies its operations into one industry segment, software
development and related services. The Company reports international license and
service revenues net of distributor commissions. Distributor commissions were
$11,342,000, $11,581,000 and $11,649,000 for the years ended December 31, 1994,
1995 and 1996, respectively. International revenues by geographic area consist
of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Sales through international distributors:
Europe......................................... $6,079,268 $ 6,903,732 $ 7,121,934
Far East....................................... 1,755,302 2,193,173 2,183,904
Latin America.................................. 729,671 858,777 734,287
Australia and Southeast Asia................... 462,124 -- --
---------- ----------- -----------
9,026,365 9,955,682 10,040,125
---------- ----------- -----------
Sales through international subsidiaries:
Europe......................................... -- -- 144,661
Australia and Southeast Asia................... -- 1,211,720 1,662,777
---------- ----------- -----------
-- 1,211,720 1,807,438
---------- ----------- -----------
Total international revenues........... $9,026,365 $11,167,402 $11,847,563
========= ========== ==========
</TABLE>

NOTE 7 -- INCOME TAXES

The (loss) before income taxes consist of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
U.S............................................. $(3,079,152) $(4,806,941) $(1,559,453)
International subsidiaries...................... -- (302,482) (455,340)
----------- ----------- -----------
(Loss) before taxes............................. $(3,079,152) $(5,109,423) $(2,014,793)
========== ========== ==========
</TABLE>

The (benefit from) provision for income taxes consist of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
----------- --------- -----------
<S> <C> <C> <C>
Current taxes (receivable) payable:
U.S. Federal................................... $ (448,086) $(566,102) $ 226,835
Foreign........................................ 460,739 433,608 518,599
State and local................................ (65,929) 89,949 40,593
----------- --------- -----------
(53,276) (42,545) 786,027
----------- --------- -----------
Deferred tax (benefit) provision:
U.S. Federal................................... (1,054,108) (812,133) (1,534,972)
State and local................................ (50,860) (85,735) (63,567)
----------- --------- -----------
(1,104,968) (897,868) (1,598,539)
----------- --------- -----------
Benefit from income taxes.............. $(1,158,244) $(940,413) $ (812,512)
========== ========= ==========
</TABLE>

The Company paid income taxes of $1,128,000, $436,000 and $527,000 in the
years ended December 31, 1994, 1995 and 1996, respectively. Foreign taxes paid
relate primarily to taxes withheld from revenues remitted by international
distributors.

F-13
<PAGE> 67

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company provides deferred taxes for temporary differences between the
bases of assets and liabilities for financial reporting purposes and the bases
of assets and liabilities for tax return purposes. The deferred tax
asset/(liability) at December 31, 1995 and 1996 is attributable to the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
----------- ----------
<S> <C> <C>
Deferred Tax Assets:
Deferred revenue.......................................... $ 842,780 $ 827,289
Stock incentive plan...................................... 385,581 252,906
Allowance for doubtful accounts........................... 265,398 139,981
Tax credit carryforwards.................................. 874,122 1,221,719
Sublease and general sales tax accrual.................... 598,490 260,689
Capitalized software development costs.................... 204,451 181,734
Losses from international subsidiaries not utilized....... -- 185,000
Other..................................................... 202,510 120,303
Valuation allowance....................................... (690,885) (410,000)
----------- ----------
2,682,447 2,779,621
----------- ----------
Deferred Tax Liabilities:
Depreciation and amortization............................. (1,800,598) (288,059)
Other..................................................... -- (11,174)
----------- ----------
(1,800,598) (299,233)
----------- ----------
Net deferred tax asset............................ $ 881,849 $2,480,388
========== =========
Current deferred tax asset.................................. $ 1,354,059 $2,065,460
Non-current deferred tax (liability) asset.................. (472,210) 414,928
----------- ----------
Net deferred tax asset............................ $ 881,849 $2,480,388
========== =========
</TABLE>

During 1995, the Company recorded a valuation allowance of $690,885 to
reflect foreign tax credit carryforwards that, in the Company's estimation,
would more likely than not expire prior to utilization. During 1996, the Company
reduced the tax credit carryforward valuation allowance to $225,000 to reflect
the increased likelihood that certain of the foreign tax credits would be
realized. The Company also recorded in 1996 a valuation allowance of $185,000 to
reflect the tax effect of estimated international subsidiary net operating
losses that, in the Company's estimation, will more likely than not result in no
future tax benefit to the Company.

At December 31, 1996, the Company had foreign net operating loss
carryforwards of approximately $500,000, of which $100,000 expire in 2001 and
the remaining $400,000 carryforward indefinitely, and are available to offset
future foreign taxable income. In addition, the Company had foreign tax credit
carryforwards of $814,000 which expire in years 2000 through 2001, research and
development tax credit carryforwards of $241,000 which expire in years 2003
through 2004 and a minimum tax credit carryforward of $81,000 which
carryforwards indefinitely, which are available to offset future U.S. tax
liabilities.

F-14
<PAGE> 68

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The (benefit from) provision for income taxes differs from the amount of
taxes determined by applying the U.S. Federal statutory rate of 34% to income
(loss) before income taxes as a result of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
----------- ----------- ---------
<S> <C> <C> <C>
Computation of U.S. Federal income taxes at
34%............................................ $(1,046,912) $(1,634,359) $(685,030)
State and local taxes, net of Federal income tax
benefit........................................ (81,290) 21,769 (49,750)
Change in valuation allowance.................... -- 690,885 (280,885)
Provision for competent authority................ -- -- 148,386
Other............................................ (30,042) (18,708) 54,767
----------- ----------- ---------
Benefit from income taxes................... $(1,158,244) $ (940,413) $(812,512)
========== ========== =========
</TABLE>

Competent authority is a process to resolve unintended results between the
U.S. and foreign taxing jurisdictions. The provision for competent authority was
established in 1996 to reflect management's belief that the outcome of this
process would likely result in a liability.

NOTE 8 -- EMPLOYEE BENEFIT PLANS

The Company has a profit incentive plan ("PIP") which is a defined
contribution plan with a cash (or non-qualified) component covering all
employees with one year of service and providing for annual discretionary
contributions of up to 15% of eligible compensation. Employees are 100% vested
in all contributions to the PIP. The Company did not make contributions to the
PIP in 1994, 1995 or 1996.

The Company also has a 401(k) defined contribution plan. During 1994, 1995
and 1996, the Company matched 50% of the first 3% of employees' deferred
contributions. Employees are fully vested in all Company contributions. The
Company made matching contributions of $169,000, $192,000 and $205,000 during
1994, 1995 and 1996, respectively.

NOTE 9 -- MANDATORILY REDEEMABLE PREFERRED STOCK

The Company's Board of Directors (the "Board") has the authority to issue
up to 8,000,000 shares of preferred stock, and to determine the price, rights,
preferences and privileges of those shares without further vote or action by the
stockholders, subject to the consent of the holders of outstanding preferred
stock, if any.

The Company's Series A Preferred Stock paid cumulative dividends effective
May 1, 1992 at an annual rate of $0.15 per share until April 30, 1997, and
thereafter at an annual rate of $0.375 per share. The holders of Series A
Preferred Stock may convert all, but not less than all, of the preferred shares
into common stock at the time of an initial public offering ("IPO") of the
Company's common stock based upon the relationship between the redemption price
(discussed below) and the IPO price of the Company's common stock. In addition,
the holders of Series A Preferred Stock are entitled to convert all, but not
less than all, of the preferred shares into common stock if the Company fails to
make any dividend or redemption payment or, if applicable, any other payments
due to the holders. The holders of Series A Preferred Stock may not sell, assign
or transfer any of the stock without the Company's prior written consent. See
Notes 11 and 12.

The Company is required to redeem $1,500,000 of Series A Preferred Stock
each year ("redemption year") plus accumulated dividends, beginning May 1, 1997.
Additionally, the Company may redeem all or a portion of the outstanding Series
A Preferred Stock at any time. If the Company redeems all of the outstanding
shares, the Company may pay the redemption amount by any combination of cash and
promissory note. The redemption price will equal $5.00 per share plus 75% of the
amount, if any, by which the lesser (i) of the 1.5 multiplied by the fair market
value per share of the common stock as determined by the Board at the beginning
of the redemption year as of the date of redemption or (ii) $7.4333 per share,
exceeds $5.00 per share.

F-15
<PAGE> 69

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1995, the redemption price of the Series A Preferred Stock was adjusted
based upon the fair market value of the Company's common stock of $4.00 per
share. Accordingly, $474,300 was added to the redemption value.

As described in Note 12, subsequent to December 31, 1996, the Company
issued 395,195 shares of mandatorily redeemable Series B Preferred Stock.

The following table summarizes the activity with respect to the Series A
Preferred Stock and Series B Preferred Stock:

<TABLE>
<CAPTION>
SERIES A SERIES B
PREFERRED STOCK PREFERRED STOCK
---------------------- --------------------
REDEMPTION REDEMPTION
SHARES VALUE SHARES VALUE
--------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1993....................... 1,020,000 $5,390,700 -- $ --
Adjustment to redemption value..................... -- -- -- --
--------- ---------- ------- ----------
Balance at December 31, 1994....................... 1,020,000 5,390,700 -- --
Adjustment to redemption value..................... -- 474,300 -- --
--------- ---------- ------- ----------
Balance at December 31, 1995....................... 1,020,000 5,865,000 -- --
Adjustment to redemption value..................... -- -- -- --
--------- ---------- ------- ----------
Balance at December 31, 1996....................... 1,020,000 5,865,000 -- --
Issuance of Series B preferred stock............... -- -- 395,195 2,500,000
Redemption of Series A preferred stock
(unaudited)...................................... (54,945) (375,000) -- --
Adjustment to redemption value (unaudited)......... -- 1,096,500 -- 59,778
--------- ---------- ------- ----------
Balance at June 30, 1997 (unaudited)............... 965,055 $6,586,500 395,195 $2,559,778
======== ========= ======= =========
</TABLE>

NOTE 10 -- REDEEMABLE COMMON STOCK INSTRUMENTS AND STOCKHOLDERS' EQUITY

1994 Stock Incentive Plan

During 1994, the Company adopted the 1994 Stock Incentive Plan ("1994 SIP")
under which employees may acquire shares of the Company's common stock via stock
option grants, restricted stock awards and/or stock bonuses. The 1994 SIP is
administered by the Board, which has the sole discretion to grant options and
restricted stock awards. The 1994 SIP replaced the 1989 Stock Incentive Plan
("1989 SIP") and the 1992 Executive Stock Incentive Plan ("1992 ESIP"). Options
outstanding under the 1989 SIP and the 1992 ESIP will remain outstanding until
the options either expire or are exercised.

A total of 2,250,000 shares of common stock can be issued under the 1994
SIP through (i) qualified stock options, which qualify as incentive stock
options and have an exercise price equal to or greater than the fair market
value of the common stock, as determined by the Board, at the date of grant,
(ii) non-qualified stock options, which have an exercise price equal to or
greater than 85% of the fair market value of the common stock, as determined by
the Board, on the date of grant, (iii) restricted stock awards for common stock
at a price determined by the Board, but not less than 85% of the fair market
value of the stock at the date of grant, which is non transferable and subject
to repurchase at the holder's cost until Board designated conditions have been
met, or (iv) stock bonuses. See Note 13.

The Company has the right to repurchase at the fair market value, as
determined by the Board, at any time following the termination of a grantee's
employment with the Company for any reason (including retirement, death or
disability), all or any portion of the option shares, restricted stock or bonus
shares then held by the grantee. A grantee does not have the right to require
the Company to repurchase shares issued pursuant to the 1994 SIP.

F-16
<PAGE> 70

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1992 Executive Stock Incentive Plan

During 1992, the Company adopted the 1992 Executive Stock Incentive Plan
("1992 ESIP") under which key executives were granted options to purchase shares
of the Company's common stock. As of December 31, 1996, 304,688 options are
outstanding and exercisable. The 1992 ESIP is administered by the Board, which
has the sole discretion to grant options.

While employed by the Company and for a period of ninety days thereafter, a
grantee has the right to require the Company to repurchase at the fair market
value, as established by the Board, all or any portion of the employee's option
shares. The grantee's right to require the Company to repurchase at the fair
market value expires upon an IPO of the Company's common stock. The Company also
has the right to repurchase at the fair market value, at any time following the
termination of a grantee's employment with the Company, all or any portion of
the option shares then held by the grantee.

In 1994, the 1992 ESIP was replaced by the 1994 SIP. No additional grants
will be made under the 1992 ESIP. Options outstanding under the 1992 ESIP will
remain outstanding until the options either terminate or are exercised.

1989 Stock Incentive Plan

During 1989, the Company adopted the 1989 Stock Incentive Plan ("1989 SIP")
under which certain employees were granted options to purchase shares of
Company's common stock and/or restricted stock awards. The 1989 SIP is
administered by the Board, which has the sole discretion to grant options and
restricted stock awards.

While employed by the Company, a grantee has the right to require the
Company to repurchase at the fair market value, as established by the Board, all
or any portion of his (i) option shares and (ii) restricted stock with respect
to which all of the conditions have been met. The Company also has the right to
repurchase at the fair market value, at any time following the termination of a
grantee's employment with the Company, all or any portion of the option shares
or restricted stock then held by the grantee. To the extent that the number of
shares that the Company becomes obligated to purchase under the 1989 SIP during
any twelve-month period exceeds 2% of the outstanding common stock of the
Company, the Company has the right to pay the purchase price for the shares in
excess of the 2% threshold in twelve equal quarterly installments of principal,
with interest at the lesser of 9% or the "applicable Federal rate" applied to
installment purchases under Section 483 of the Internal Revenue Code.

In 1994, the 1989 SIP was replaced by the 1994 SIP. No additional grants
will be made under the 1989 SIP. Options outstanding under the 1989 SIP will
remain outstanding until the options either terminate or are exercised. At
December 31, 1996, 231,185 options under the 1989 SIP are exercisable; the
remaining 5,073 unvested options will be vested in 1997.

1996 Advisory Board Plan

In December 1996, the Company established the 1996 Advisory Board Stock
Incentive Plan ("1996 ABP"). Pursuant to the 1996 ABP, the Company can issue up
to 150,000 options to members of the Company's Advisory Board. In 1996, the
Company granted 120,000 options, which vest over a four year period at an
exercise price of $4.00 per share. The Company will record the fair value of the
options as stock compensation expense ratably over the vesting period. See Note
13.

F-17
<PAGE> 71

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Other Stock Options

In 1994, 1995 and 1996, the Company issued 42,525, 107,799 and 24,750
options, respectively, to former employees of the Company. These options were
primarily issued to replace options previously issued under the 1989 SIP, the
1992 ESIP and the 1994 SIP.

Options Outstanding and Exercisable

The following table summarizes information about options outstanding for
all stock option plans:

<TABLE>
<CAPTION>
SHARES PRICE PER WEIGHTED AVERAGE
OUTSTANDING SHARE EXERCISE PRICE
UNDER OPTION UNDER OPTION PER SHARE
------------ ------------ ----------------
<S> <C> <C> <C>
Balance at December 31, 1994.................. 2,150,564 $3.00-3.59 $ 3.29
Stock options granted....................... 618,537 3.00-4.00 3.81
Stock options exercised..................... (34,389) 3.33-3.59 3.43
Stock options canceled...................... (385,101) 3.00-4.00 3.35
Stock options expired....................... (29,691) 3.33 3.33
------------
Balance at December 31, 1995.................. 2,319,920 3.00-4.00 3.42
Stock options granted....................... 1,166,010 3.59-4.00 3.99
Stock options exercised..................... (286,083) 3.00-3.59 3.09
Stock options canceled...................... (406,215) 3.00-4.00 3.61
------------
Balance at December 31, 1996.................. 2,793,632 $3.00-4.00 $ 3.67
==========
</TABLE>

At December 31, 1996, 1,204,431 options, with an average exercise price per
share of $3.38, are exercisable. The unvested options vest primarily over a four
year period and will be fully vested in the year 2000. The remaining average
option life is 5.5 years. At December 31, 1996, 503,303 and 30,000 options are
available for future grants under the 1994 SIP and 1996 ABP, respectively.

The fair value of each employee option grant is estimated on the date of
grant using a minimum value model. The weighted-average assumptions included in
the Company's fair value calculations are as follows:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Expected life (years)......................................... 5 5
Risk-free interest rate....................................... 6-7 % 6-7 %
Volatility.................................................... 0 0
Dividend yield................................................ 0 % 0 %
</TABLE>

The weighted-average fair value of stock options granted under the employee
stock option plans during 1995 and 1996 was $1.01 and $1.08, respectively. Had
the Company determined compensation costs for these plans in accordance with
SFAS No. 123 (Note 2), the Company's pro forma net (loss) would have been
$(4,210,000) in 1995 and $(1,391,000) or $(0.15) per share in 1996. The SFAS No.
123 method of accounting does not apply to options granted prior to January 1,
1995 and, accordingly, the resulting pro forma compensation cost may not be
representative of that to be expected in the future.

Stock Bonuses

During 1994 and 1995, the Board approved stock bonuses of 1,200 and 750
shares, respectively, of common stock to be given to employees. The shares
issued were recorded as compensation expense of $4,304 and $3,000, respectively.
This stock was issued with the same restrictions as stock issued under the 1989
SIP. During 1996, the Board did not approve any stock bonuses.

F-18
<PAGE> 72

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Employee Stock Purchase Plan

During 1991, the Company adopted an Employee Stock Purchase Plan ("ESPP")
under which employees may purchase shares of the Company's common stock. The
Board will determine the number of shares of common stock made available under
this plan for each purchase year. For each of the plan years ended April 30,
1995, 1996 and 1997, 75,000 shares were made available for purchase. For the
plan years ended April 30, 1995 and 1996, 4,557 and 20,817 shares, respectively,
were purchased. For the plan year ended April 30, 1997, 5,192 shares were
purchased as of December 31, 1996 and the remaining 69,808 shares were
subsequently purchased. Shares are purchased at their fair market value as
determined by the Board. Eligible employees can purchase shares valued at up to
10% of their gross cash compensation.

The shares employees purchase under this plan are subject to certain
transfer restrictions. Without the prior written consent of the Company, an
employee cannot sell, assign or transfer any common stock purchased under this
plan to any person or entity other than the Company, another shareholder or
employee. Under certain conditions, the employee can elect to require the
Company to repurchase their shares at fair market value. At any time following
the termination of an individual's employment, the Company has the right to
repurchase the employee's shares acquired through this plan at fair market
value.

Stock Compensation Expense

The Company records stock compensation expense for the amount, if any, by
which the fair market value of the Company's common stock exceeds the option
exercise price at the date of the option grant. The Company also records stock
compensation expense for shares and options outstanding under the 1989 SIP, the
1992 ESIP and the ESPP to reflect any increase in the amount at which the
holders may require the Company to repurchase such shares. The Company records
stock compensation benefit to reflect any forfeitures of unvested stock options.
The Company recorded stock compensation expense (benefit) of $28,000, $763,000
and $(96,000) in 1994, 1995 and 1996, respectively. The fair market value of the
Company's common stock, as determined by the Board, was $3.59, $4.00 and $4.00
per share in 1994, 1995 and 1996, respectively.

Redeemable Common Stock Instruments

The redeemable common stock instruments represent shares of common stock
and options to acquire common stock issued by the Company to certain employees
pursuant to the 1989 SIP, the 1992 ESIP, the ESPP and other agreements whereby
the holder has the right to require the Company to repurchase such shares at
their current fair market value as determined by the Company's Board. The rights
of holders of Redeemable Common Stock Instruments to require the Company to
repurchase such shares automatically lapses on the closing of an initial public
offering of the Company's common stock.

F-19
<PAGE> 73

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the activity with respect to the redeemable
common stock instruments:

<TABLE>
<CAPTION>
SHARES OF COMMON REDEMPTION
STOCK UNDERLYING SHARES OF VALUE OF
REDEEMABLE REDEEMABLE COMMON STOCK
STOCK OPTIONS COMMON STOCK INSTRUMENTS
---------------- ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1993....................... 715,470 25,005 $ 310,578
Compensation for non-qualified redeemable stock
options....................................... -- -- 10,582
Redeemable common stock issued................... (57,080) 62,837 209,916
Redeemable common stock repurchased by the
Company....................................... -- (59,168) (212,214)
Redeemable stock option grants................... 698,941 -- --
Expiration of redeemable stock option grants..... (13,032) -- --
Cancellation of redeemable stock option grants... (162,525) -- --
--------- -------- ----------
Balance at December 31, 1994....................... 1,181,774 28,674 318,862
Compensation for non-qualified redeemable stock
options....................................... -- -- 673,445
Redeemable common stock issued................... (34,239) 55,806 199,236
Redeemable common stock repurchased by the
Company....................................... -- (37,363) (142,500)
Redeemable stock option grants................... 5,940 -- --
Cancellation of redeemable stock option grants... (223,097) -- --
--------- -------- ----------
Balance at December 31, 1995....................... 930,378 47,117 1,049,043
Redeemable common stock issued................... (286,083) 303,540 952,456
Redeemable common stock repurchased by the
Company....................................... (300,297) (1,201,188)
Cancellation of redeemable stock option grants... (66,345) -- --
Forfeiture of unvested redeemable stock
options....................................... -- -- (96,381)
--------- -------- ----------
Balance at December 31, 1996....................... 577,950 50,360 703,930
Adjustment to redemption value (unaudited)....... -- -- 425,834
Redeemable common stock issued (unaudited)....... (29,598) 99,296 378,147
Redeemable common stock repurchased by the
Company (unaudited)........................... -- (18,261) (87,384)
Cancellation of redeemable stock option grants
(unaudited)................................... (20,967) -- (4,185)
Waiver of rights to require repurchase
(unaudited)................................... (213,750) (8,240) (237,108)
--------- -------- ----------
Balance at June 30, 1997........................... 313,635 123,155 $1,179,234
========= ======== ==========
</TABLE>

F-20
<PAGE> 74

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11 -- COMMITMENTS

During 1988, the Company entered into a ten-year lease for office space
which included a rent abatement for one and one-half years. Rental expense has
been calculated as total rental payments spread ratably over the life of the
lease. An accrued rent expense is created in years when rent expense exceeds
cash payments. In 1996, the Company extended the lease commitment by five years.
The current and long-term portions of the deferred rent abatement at December
31, 1996 are $87,000 and $479,000, respectively, and have been included in
accrued expenses or other liabilities, as appropriate.

The Company is committed for the payment of minimum rentals, exclusive of
escalation charges and renewal options, under office space, computer and other
equipment operating lease agreements through 2003 in the following amounts:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------------------------------------------ -----------
<S> <C>
1997................................................. $ 2,267,000
1998................................................. 2,538,000
1999................................................. 2,649,000
2000................................................. 2,313,000
2001................................................. 2,379,000
Thereafter........................................... 3,687,000
-----------
$15,833,000
==========
</TABLE>

Additionally, the Company leases certain equipment under cancelable
operating leases. The total rental expense under all equipment and office space
operating leases was approximately $3,700,000, $3,600,000 and $3,500,000 in
1994, 1995 and 1996, respectively.

During 1994, the Company subleased office space for rates below the
Company's then current lease rates and recognized expenses of $651,000 for the
sublease rate differential. Additionally, during 1994 and 1995, the Company
attempted to sublease additional office space below market rates and recorded
expenses of $128,000 and $266,000 in 1994 and 1995, respectively, for the
anticipated rate differential. During 1996, the Company was able to terminate
its lease for the office space it was attempting to sublease and reversed a
reserve of $351,000.

The Company has entered into a five-year non-compete agreement with a
former officer who is also a common stockholder and a Series A Preferred
stockholder. The Company will pay the former officer $240,000 per year through
April 1997. In addition, the former officer will serve as a member of the
Company's Board for which he will receive a fee of $15,000 per year.

NOTE 12 -- SUBSEQUENT EVENTS

Infarmedica Transaction

In January 1997, the Company signed an agreement to acquire certain rights
and related assets from Infarmedica Holding AG ("Infarmedica"), a former
distributor of the Company's products. Under the terms of the agreement
governing this relationship, Infarmedica held exclusive rights to market certain
of the Company's products in Austria, the Benelux countries, Germany and
Switzerland. As a result of the 1997 agreement, the Company gained access to its
significant customer base in these European countries (including an assignment
of license and maintenance agreements) and established subsidiaries in Germany
and The Netherlands to support these customers directly. In consideration for
the acquisition of these rights, the Company will pay Infarmedica $1,800,000 in
installment payments from 1997 through 1999, of which a minimum of $900,000 is
required to be paid in 1997. In addition, the Company granted Infarmedica a
warrant to purchase 225,000 shares of the Company's common stock at $4.00 per
share, which was fully vested upon

F-21
<PAGE> 75

LANDMARK SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

issuance, expires on January 1, 2007 and is transferable only with the Company's
consent. The Company recorded the acquisition of the customer base as an
intangible asset representing the present value of the cash payments plus the
fair value of the warrant issued. The related intangible asset will be amortized
over three years.

Mandatorily Redeemable Series B Preferred Stock

In March 1997, the Company amended its articles to designate 1,580,779
shares of Series B Preferred Stock and authorized the sale and issuance of such
shares. The Series B Preferred Stock is convertible, at the option of the
holder, into the Company's common stock based on a ratio of $6.326 to a
conversion price. Additionally, the Series B Preferred Stock is redeemable at
the holder's option at the earlier of December 31, 2000 or six months after an
IPO of the Company's common stock. The conversion price is initially established
at $6.326, but may be adjusted downward in the event that the Company issues
additional shares of common stock (or other securities convertible into common
stock) at a price less than the conversion price. The redemption price of the
Series B Preferred Stock is the sum of (i) $6.326 per share, plus interest of 8%
per annum, (ii) dividends declared but unpaid thereon, and (iii) interest of 8%
per annum on dividends declared but unpaid. Each outstanding share of Series B
Preferred Stock will be automatically converted into 1.5 shares of the Company's
common stock immediately upon the closing of a qualified public offering, as
defined. If a conversion does not occur, each holder of Series B Preferred Stock
may require the Company to redeem all or part of such holder's outstanding
Series B Preferred Stock at any time after the earliest of December 31, 2000 or
six months following the filing by the Company of a registration of its shares
with the Securities and Exchange Commission.

Concurrent with the authorization of Series B Preferred Stock, the Company
issued 316,156 shares of Series B Preferred Stock at a price of $6.326 per share
and, in April 1997, an additional 79,039 shares of Series B Preferred Stock at a
price of $6.326 per share. Based on these issuances, the purchaser is entitled
to elect a representative to the Board.

NOTE 13 -- EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF ACCOUNTANTS' REPORT

On September 15, 1997, the Board approved a three-for-two stock split of
the Company's Common Stock, effective immediately prior to the date of this
Prospectus, and an increase in the number of authorized shares of Common Stock
from 15 million to 30 million. All references to the number of shares
authorized, issued and outstanding and per share information for all periods
presented have been adjusted to give effect to the aforementioned stock split
and share authorizations.

In July 1997, the Company amended its 1996 ABP to allow the Company to
issue options to designated outside members of the Company's Board and to rename
the 1996 ABP to the 1996 Advisory Board and Directors Stock Incentive Plan. At
the same time, the Company amended the 1996 ABP to increase the maximum options
issuable for grant from 150,000 to 300,000.

In July 1997, the Company amended its 1994 SIP to increase the maximum
number of options issuable from 2,250,000 to 3,000,000.

The revolving line of credit expired on June 30, 1997. The Company has
received a letter offering a commitment for a new facility.

F-22
<PAGE> 76

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

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

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Financial Data............... 15
Management's Discussion and Analysis
of Results of Operations and
Financial Condition................. 16
Business.............................. 25
Management............................ 37
Certain Transactions.................. 44
Principal and Selling Stockholders.... 45
Description of Capital Stock.......... 46
Shares Eligible for Future Sale....... 49
Underwriting.......................... 51
Legal Matters......................... 52
Experts............................... 52
Additional Information................ 52
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

------------------------
Until , 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This requirement
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.

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

3,200,000 SHARES

LANDMARK SYSTEMS
CORPORATION

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

PROSPECTUS
------------------------
UNTERBERG HARRIS

WHEAT FIRST BUTCHER SINGER

, 1997

=========================================================
<PAGE> 77

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses to be paid by the Registrant in connection with the
distribution of the securities being registered, other than underwriting
discounts and commissions, are as follows:

<TABLE>
<CAPTION>
AMOUNT*
--------
<S> <C>
Securities and Exchange Commission Filing Fee..................... $ 11,153
NASD Filing Fee................................................... 4,180
Nasdaq National Market Listing Fee................................ 17,500
Accounting Fees and Expenses...................................... 250,000
Blue Sky Fees and Expenses........................................ 5,000
Legal Fees and Expenses........................................... 200,000
Transfer Agent and Registrar Fees and Expenses.................... 15,000
Printing Expenses................................................. 100,000
Miscellaneous Expenses............................................ 17,167
--------
Total................................................... $620,000
========
</TABLE>

- ---------------
* All amounts are estimates except the SEC filing fee, the NASD filing fee and
the Nasdaq National Market listing fee.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 13.1-697 of the Virginia Stock Corporation Act, as amended,
authorizes a corporation to indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the proceeding if
such individual has conducted himself in good faith and if, in the course of
conduct in his official capacity, he believed that his conduct was in the best
interest of the corporation, and in all other cases, he believed that his
conduct was at least not opposed to the corporation's best interest. A
corporation is also authorized to indemnify a director in the case of any
criminal proceeding if the director had no reasonable cause to believe his
conduct was unlawful. The termination of the proceeding by judgment, order,
settlement or conviction is not, of itself, determinative that the director did
not meet the prescribed standard of conduct. A corporation may not indemnify a
director in connection with a proceeding by or in the right of the corporation
in which the director was adjudged liable to the corporation or in connection
with any other proceeding charging the director whether or not involving action
in his official capacity in which the director was adjudged liable on the basis
that personal benefit was improperly received by him.

Sections 13.1-698 and 13.1-702 of the VSCA provide that unless limited by
its articles of incorporation, a corporation shall indemnify each director,
officer, employee or agent who entirely prevails in the defense of any
proceeding to which he was a party because he is or was a director, officer,
employee or agent of the corporation against reasonable expenses incurred by him
in connection with the proceeding.

Section 13.1-704(B) of the VSCA provides that any corporation shall have
the power to make any further indemnity, including indemnity with respect to a
proceeding by or in the right of the corporation, and to make additional
provisions for advances and reimbursement of expenses to any director, officer,
employee or agent that may be authorized by the articles of incorporation or by
any bylaw made by the shareholders or any resolution adopted, before or after
the event, by the shareholders except an indemnity against willful misconduct or
a knowing violation of criminal law.

Article Ninth of the Registrant's Articles of Incorporation provides for
indemnification of officers and directors in the situations authorized by the
VSCA. In addition, the Underwriting Agreement provides for certain
indemnification of officers, directors and controlling persons of the
Registrant.

II-1
<PAGE> 78

The Registrant intends to obtain prior to the effective date of the
Registration Statement a policy of directors' and officers' liability insurance
that insures the Company's directors and officers against the cost of defense,
settlement or payment of a judgment under certain circumstances.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liability arising under the Securities
Act or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Set forth below is information concerning sales of unregistered securities
by the Company from July 1, 1994 to June 30, 1997 on an actual basis (without
regard to the pro forma adjustments appearing in the Prospectus):

(i) The Company granted stock options to employees and advisors
pursuant to the Stock Incentive Plans covering an aggregate of 1,903,792
shares of Common Stock exercisable at prices ranging from $4.50 to $7.45
per share.

(ii) The Company issued and sold an aggregate of 248,780 shares of
Common Stock to employees and advisors for an aggregate cash consideration
of $1,183,358 pursuant to exercises of stock options granted under the
Stock Incentive Plans.

(iii) The Company issued and sold an aggregate of 74,396 shares of
Common Stock to employees for an aggregate cash consideration of $437,577
pursuant to the Stock Purchase Plan.

(iv) On January 1, 1997, the Company issued warrants to purchase an
aggregate of 150,000 shares of Common Stock at $6.00 per share.

(v) On March 7, 1997 and April 1, 1997, the Company issued an
aggregate of 395,195 shares of Series B Preferred Stock to an accredited
investor for an aggregate cash consideration of $2,500,000.

No underwriters were involved in any of the foregoing transactions. The
issuances described in Items 15(i), (ii) and (iii) were deemed exempt from
registration under the Securities Act in reliance on Rule 701 and were granted
in compensatory arrangements pursuant to a written compensatory benefit plan or
pursuant to a written contract relating to compensation. The issuance described
in Item 15(iv) was deemed exempt from registration under the Securities Act in
reliance on Section 4(2). The issuance described in Item 15(v) was deemed exempt
from registration under the Securities Act in reliance on Rule 506. In addition,
the recipients of securities described in the transactions described in Items
15(i) to (v) represented their intentions to acquire securities for investment
only and not with a view to or for sale in connection with any distribution
thereof. Appropriate legends were affixed to the stock certificates issued in
the above transactions.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Articles of Incorporation
3.2* Amended and Restated Bylaws
4.1 Reference is made to Exhibits 3.1 and 3.2
4.2* Specimen certificate for Common Stock
5.1* Opinion of Shaw, Pittman, Potts & Trowbridge as to the legality of the Common
Stock
10.1* Employment agreement between the Company and Ralph E. Alexander dated April
9, 1997
10.2 1989 Stock Incentive Plan
10.3 1991 Employee Stock Purchase Plan
10.4 1992 Executive Stock Incentive Plan
10.5 1994 Stock Incentive Plan
</TABLE>

II-2
<PAGE> 79

<TABLE>
<C> <S>
10.6 1996 Advisory Board and Directors Stock Incentive Plan
10.7* Registration Rights Agreement, dated as of March 7, 1997, among the Company,
certain Purchasers, Patrick H. McGettigan, Katherine K. Clark and Jeffrey H.
Bergman
11.1 Statement regarding calculation of net (loss) income per share
22.1 Subsidiaries of the Company
23.1* Consent of Shaw, Pittman, Potts & Trowbridge (included in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP
24.1 Power of Attorney (included on signature page)
27 Financial Data Schedule
</TABLE>

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

(b) Financial Statement Schedules

The following financial statement schedule is submitted under Item 16(b):

Schedule II -- Valuation and Qualifying Accounts

Schedules other than those listed above have been omitted since they are
not required or are not applicable or the required information is shown in the
Consolidated Financial Statements or Notes thereto.

ITEM 17. UNDERTAKINGS.

The Registrant hereby undertakes to provide 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 Securities Act
of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant 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 Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The Registrant hereby undertakes that:

(1) For the purpose 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 issuer pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time the Commission declared it 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-3
<PAGE> 80

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 Vienna,
State of Virginia on the 15th day of September, 1997.

LANDMARK SYSTEMS CORPORATION
(Registrant)

By: /s/ KATHERINE K. CLARK
------------------------------------
Katherine K. Clark
Chief Executive Officer and Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Katherine K. Clark, Ralph E. Alexander
and Leslie J. Collins, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments and registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- --------------------------------- -------------------
<C> <S> <C>
/s/ PATRICK H. MCGETTIGAN Chairman of the Board September 15, 1997
- -------------------------------------
Patrick H. McGettigan

/s/ KATHERINE K. CLARK Chief Executive Officer and September 15, 1997
- ------------------------------------- Director (Principal Executive
Katherine K. Clark Officer)

/s/ RALPH E. ALEXANDER President, Chief Operating September 15, 1997
- ------------------------------------- Officer, Chief Financial
Ralph E. Alexander Officer, Secretary, Treasurer
and Director (Principal
Financial Officer)

/s/ HENRY D. BARRATT, JR. Director September 15, 1997
- -------------------------------------
Henry D. Barratt, Jr.

/s/ JEFFREY H. BERGMAN Director September 15, 1997
- -------------------------------------
Jeffrey H. Bergman
</TABLE>

II-4
<PAGE> 81

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

/s/ T. EUGENE BLANCHARD Director September 15, 1997
- -------------------------------------
T. Eugene Blanchard

/s/ PATRICK W. GROSS Director September 15, 1997
- -------------------------------------
Patrick W. Gross

/s/ LESLIE J. COLLINS Vice President and Controller September 15, 1997
- ------------------------------------- (Principal Accounting Officer)
Leslie J. Collins
</TABLE>

II-5
<PAGE> 82

LANDMARK SYSTEMS CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
COL. B
------------ COL. E
COL. C ----------
COL. A BALANCE AT ---------- COL. D BALANCE AT
- ---------------------------------------------- BEGINNING OF CHARGED TO ---------- END OF
DESCRIPTION PERIOD OPERATIONS DEDUCTIONS PERIOD
- ---------------------------------------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1994
Allowance for uncollectible accounts $297,961 $855,249 $ (539,394)(A) $ 613,816
Deferred tax asset valuation allowance $ -- $ -- $ -- $ --

Year Ended December 31, 1995
Allowance for uncollectible accounts $613,816 $761,425 $ (650,902)(A) $ 724,339
Deferred tax asset valuation allowance $ -- $690,885 $ -- $ 690,885

Year Ended December 31, 1996
Allowance for uncollectible accounts $724,339 $303,913 $ (646,208)(A) $ 382,044
Deferred tax asset valuation allowance $680,885 $ -- $ (280,885)(B) $ 410,000
</TABLE>

(A) Uncollectible accounts written off
(B) Reduction in the tax valuation allowance

S-1
<PAGE> 83

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGE
- --------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
1.1* Form of Underwriting Agreement
3.1* Articles of Incorporation
3.2* Amended and Restated Bylaws
4.1 Reference is made to Exhibits 3.1 and 3.2
4.2* Specimen certificate for Common Stock
5.1* Opinion of Shaw, Pittman, Potts & Trowbridge as to the legality of the
Common Stock
10.1* Employment agreement between the Company and Ralph E. Alexander dated
April 9, 1997
10.2 1989 Stock Incentive Plan
10.3 1991 Employee Stock Purchase Plan
10.4 1992 Executive Stock Incentive Plan
10.5 1994 Stock Incentive Plan
10.6 1996 Advisory Board and Directors Stock Incentive Plan
10.7* Registration Rights Agreement, dated as of March 7, 1997, among the
Company, certain Purchasers, Patrick H. McGettigan, Katherine K.
Clark and Jeffrey H. Bergman
11.1 Statement regarding calculation of net (loss) income per share
22.1 Subsidiaries of the Company
23.1* Consent of Shaw, Pittman, Potts & Trowbridge (included in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP
24.1 Power of Attorney (included on signature page)
27 Financial Data Schedule
</TABLE>

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

<PAGE> 1
EXHIBIT 10.2

LANDMARK SYSTEMS CORPORATION
FIRST AMENDED AND RESTATED
1989 STOCK INCENTIVE PLAN

1. Purpose.

The purpose of this Amended and Restated Stock Incentive Plan (this
"Plan") is to offer to those key employees who contribute materially to the
successful operation of LANDMARK SYSTEMS CORPORATION (the "Company') additional
incentive and encouragement to remain in the service of the Company by
increasing their personal participation in the Company through stock ownership.
This Plan provides a means whereby these individuals may acquire shares of the
Company's Common Stock pursuant to Qualified Options, Nonqualified Options,
Restricted Stock Awards and Stock Bonuses.

2. Definitions.

A. "Board" means the Board of Directors of the Company.

B. "Bonus Stock" means the shares of Common Stock issued to a Grantee
pursuant to a Stock Bonus.

C. "Code" means the Internal Revenue Code of 1986, as amended.

D. "Common Stock" means the common stock of the Company, $.01 par value
per share.

E. "Conditions" means the conditions attached to a Restricted Stock Award
pursuant to Section 7.B which if not met will result in the repurchase of
Restricted Stock at the price paid by the Grantee for such Restricted Stock as
provided in Section 7.E.

F. "Employee" means any employee of the Company or of any Parent or
Subsidiary, including an employee who serves as an officer or director of the
Company or of a Parent or Subsidiary.

G. "Fair Market Value" means the most recent determination of the fair
market value of each share of Common Stock made in accordance with Section 9.

H. "Grantee" includes both Optionees and recipients of Restricted Stock
Awards and Stock Bonuses.

I. "Nonqualified Option" means a stock option granted under this Plan
which is NOT intended to qualify as an incentive stock option under Section 422
of the Code.

J. "Option" includes both Nonqualified Options and Qualified Options.

K. "Option Shares" mean the shares of Common stock purchased by a Grantee
upon
<PAGE> 2

exercise of an Option.

L. "Optionee" means an Employee to whom an option has been granted.

M. "Parent" means a parent corporation of the Company within the meaning
of Section 425(e) of the Code.

N. "Qualified Option" means a stock option granted under this Plan which
qualifies as an incentive stock option under Section 422 of the Code.

O. "Restricted Stock" means the shares of Common Stock issued to a Grantee
pursuant to a Restricted Stock Award.

P. "Restricted Stock Award" means the grant under this Plan, at a price
determined by the Board, of Common Stock which is nontransferable and subject
to substantial risk of being repurchased at the price paid for such Common
Stock until the Conditions have been met.

Q. "Stock Bonus" means the grant under this Plan of Common Stock as a
bonus for services rendered by an Employee.

R. "Subsidiary" means a subsidiary corporation of the Company within the
meaning of Section 425(f) of the Code.

S. "Terminating Event" means the consummation of a merger or
consolidation of the Company into or with another corporation under
circumstances in which the Company is not the surviving corporation (other than
circumstances involving a mere change in the identity, form or place of
organization of the Company); (ii) the consummation of a sale of more than 50%
of the Company's outstanding stock to persons who are not shareholders of the
Company on the date of grant of the Option, Restricted Stock Award or Stock
Bonus; or (iii) the liquidation or dissolution of the Company.

3. Administration of the Plan.

This Plan will be administered by the Board, which will have the right to
delegate any and all of its powers under this Plan to a committee of members of
the Board comprised of no fewer than three members (the "Committee"). If the
Board appoints a Committee to administer this Plan, in whole or in part, the
Committee's determination will not be subject to approval by the Board, and to
the extent of such delegation, references in this Plan to the Board shall be
deemed to refer to the Committee. The Committee, however, shall report to the
Board periodically concerning its administration of the Plan.

-2-
<PAGE> 3

be granted, the option price of the shares subject to each Option and the price
at which a Restricted Stock Award is made, the number of shares subject to each
Option, Restricted Stock Award and Stock Bonus, the vesting schedule of
Options, the method of payment for shares acquired upon the exercise of
Options, the expiration dates of the Options, and the Conditions attached to
each Restricted Stock Award. In addition, the Board will have the authority,
in connection with any Option, Restricted Stock Award Or Stock Bonus granted or
to be granted to any Employee, to eliminate, restrict, expand or otherwise
modify, in such manner as the Board, in its discretion, deems appropriate, the
put and call rights granted under Section 10 of this Plan, provided that any
modification of such rights are set forth in a written agreement signed by the
Company and such Employee. The Board's actions, including any interpretation
or construction of any provisions or this Plan and any Option, Restricted Stock
Award and Stock Bonus, shall be final, conclusive and binding. No member of
the Board shall be liable for any action or determination made in good faith.

4. Eligibility.

All Employees will be eligible to receive Options, Restricted Stock
Awards and Stock Bonuses. An Employee may be granted more than one Option,
Restricted Stock A-ward or Stock Bonus.

5. Shares of Stock Subject to the Plan.

The number of shares which may be issued pursuant to this Plan shall not
exceed 800,000 shares of Common Stock. Only 40,000 shares of Common Stock may
be issued under this Plan as Stock Bonuses. A proportionate adjustment in the
number of shares subject to the Plan shall be made to account for any increase
or decrease in the number of issued shares of Common Stock of the Company
resulting from a stock split (whether by subdivision or consolidation of
shares) or any payment of a share dividend (but only on the Common Stock). Any
or all shares subject to this Plan may be issued under Qualified Options.
Shares subject to this Plan may be authorized and unissued shares or shares
previously acquired by the Company and held in its treasury. Any shares
subject to an Option which expires for any reason or is terminated unexercised
as to such shares, and any Restricted Stock, Bonus Stock and Option Shares
which are repurchased by the Company, may again be subject to an Option,
Restricted Stock Award or Stock Bonus under this Plan.

6. Terms and Conditions of Options.

A. Option Agreement. Each Option shall be evidenced by
a written agreement between the Company and the Optionee (an "Option
Agreement"), which sets forth ( i) the number of shares subject to the Option;
(ii) the exercise price, vesting schedule and expiration date of the Option;
(iii) the method of payment on exercise of the Option; (iv) whether the Option
is a Qualified Option or Nonqualified Option; and (v) such additional
provisions, not inconsistent with this Plan, as the Board may prescribe.

B. Grant of Options. No Option may be granted after the expiration of
ten years from the

-3-
<PAGE> 4

date this Plan is adopted.

C. Exercise of Options. Optionees may exercise at any time or from time
to time all or any portion of a vested Option. An Option shall be exercisable
only to the extent it is vested. Options will vest either immediately or
periodically over a period not exceeding ten years as set forth in the Option
Agreement. Vesting of all or any portion of an option may be accelerated at
the discretion of the Board.

To the extent that the aggregate Fair Market Value of the Common Stock
with respect to which options qualifying as incentive stock options under
Section 422 of the Code are exercisable by the Grantee for the first time
during any calendar year (under all stock option plans of the Company, its
Parents and Subsidiaries) exceeds $100,000, such Options are not incentive
stock options. For the purposes of this paragraph, the Fair Market Value of
the Common Stock shall be determined as of the time the option with respect to
such Common Stock is granted. This paragraph shall be applied by taking
options into account in the order in which they were granted.

An Optionee shall exercise an Option by delivering to the Secretary of
the Company a written notice signed by the Optionee which states the Optionee's
election to exercise the option and the number of shares of Common Stock the
Optionee elects to purchase. The Optionee's notice shall be accompanied by
payment of the exercise price. Payment, may be (i) in cash, (ii) by exchange
of Common Stock having an aggregate Fair Market Value equal to the cash
exercise price, or (iii) partly in cash and partly by exchange of Common Stock.

The Optionee's right to pay the exercise price by exchange of Common
Stock is subject to the following limitations:

(a) Common Stock being exchanged must have been held by the
Optionee for more than one month, and

(b) if the Common Stock being exchanged was acquired upon the
Optionee's exercise of a Qualified Option, the Common Stock must have been held
by the Optionee at least one year, and the Qualified Option must have been
granted at least two years, before the date the Optionee exchanges the Common
Stock.

As soon as Practicable following payment of the exercise price, the
Company will deliver to the Optionee a certificate representing the Option
Shares, provided that the Optionee has made appropriate arrangements with the
Company for any federal, state or local taxes required to be withheld. An
Optionee shall not have any of the rights and privileges of a shareholder of
the Company in respect of any of the Option Shares until the Company has
delivered the certificate.

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<PAGE> 5

Company, or of its Parent or Subsidiary, the exercise price of the Qualified
Option shall be at least 110% of the Fair Market Value of the Common Stock on
the date the Qualified Option is granted.

The exercise price of each Nonqualified Option shall be at least equal to
85% of the Fair Market Value of the Common Stock on the date the Nonqualified
Option is granted. In the case of a Nonqualified Option granted to a person
who owns, immediately after the grant of such Nonqualified Option, stock
possessing more than 10% of the total combined voting power of the Company, or
its Parent or Subsidiary, the exercise price of the Nonqualified Option shall
be at least 110% of the Fair Market Value of the Common Stock on the date such
Nonqualified Option is granted.

E. Expiration of Options. Each Option shall expire on the date set forth
in the Option Agreement, provided that (i) each Option shall expire not later
than ten years after the date it is granted, and (ii) each Qualified Option
granted to any person who owns stock possessing more than 10% of the total
combined voting power of the Company, or of its Parent or Subsidiary, shall
expire not later than five years after the date it is granted. Notwithstanding
the foregoing, if an Optionee's employment with the Company is terminated for
any reason before the expiration date set forth in the Option Agreement, the
Option granted under the Option Agreement shall terminate on the date the
Optionee's employment is terminated provided, however, that the portion of the
Option which is vested as of the date of such termination of employment shall
be exercisable for a period of sixty days thereafter (or, if employment is
terminated due to the Optionee's death or disability, for a period ending no
later than (i) the six-month anniversary of the date of termination or (ii)
sixty days following the appointment of a personal representative for the
Optionee's estate).

F. Non-Transferability of Options. Options may not be transferred by the
Optionee otherwise than by will or the laws of descent and distribution, and
each Option shall be exercisable during the Optionee's lifetime only by the
Optionee. Upon any attempt to transfer an Option or any interest therein
contrary to the provisions of this Plan, or to subject the Option or any
interest therein to execution, attachment or similar process, the Option shall
immediately terminate and become null and void.

G. Adjustment Provisions. Subject to any required action by the
shareholders of the Company, the Board will make a proportionate adjustment in
the number of shares of Common Stock covered by each outstanding Option and the
exercise price per share to account for any increase or decrease in the number
of issued shares of Common Stock of the Company resulting from a stock split
(whether by subdivision or consolidation of shares) or any payment of a share
dividend (but only on the Common Stock).

In the event of a change in the Common Stock of the Company as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be
Common Stock within the meaning of this Plan.

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<PAGE> 6

H. Terminating Event. All Options shall terminate immediately prior to
the occurrence of a Terminating Event. The Company will provide each Grantee
with at least fifteen days advance notice of the occurrence of a Terminating
Event.

I. Notice of Disposition of Shares. The Optionee shall give written
notice to the Company of his intent to make any disposition of the shares
acquired upon exercise of a Qualified Option if such disposition occurs within
two years after the date the Qualified Option was granted or within one year
after the date the Qualified Option was exercised. The Optionee shall be
required to make appropriate arrangements with the Company for satisfaction of
any federal, state or local taxes the Company is required to withhold as a
result of such disposition.

7. Terms and Conditions of Restricted Stock Awards.

A. Restricted Stock Award Agreement. Each Restricted Stock Award shall
be evidenced by a written agreement between the Company and the recipient of
the Restricted Stock Award (a "Restricted Stock Award Agreement"), which sets
forth (i) the number of shares awarded to the recipient, (ii) the price the
recipient is required to pay for such shares, (iii) the Conditions applicable
to such Restricted Stock Award, and (iv) such additional provisions, not
inconsistent with this Plan, as the Board may prescribe.

B. Conditions. The Board may impose such Conditions on any Restricted
Stock as it may deem advisable, including Conditions based on the continuing
performance of services as an Employee and the achievement of individual, group
and/or Company performance objectives. The Board may require the recipient of
a Restricted Stock Award to enter into an escrow agreement providing that the
certificates representing Restricted Stock will remain in the physical custody
of an escrow agent, which may be the Company, until all Conditions have been
met. Each certificate representing Restricted Stock will bear a legend making
appropriate reference to the Conditions imposed.

C. Purchase Price. The Board may set the price at which Restricted Stock
may be purchased at any amount which is not less than 85% of the Fair Market
Value of the Common Stock on the date of the Restricted Stock Award. In the
case of a Restricted Stock Award to a person who owns, immediately after the
award, stock possessing more than 10% of the total combined voting power of the
Company, or of its Parent or Subsidiary, the purchase price of the Restricted
Stock shall be at least 100% of the Fair Market Value of the Common Stock on
the date of the Restricted Stock Award.

D. Terminating Event. Unless otherwise provided in the Restricted Stock
Award Agreement , all Conditions imposed on Restricted Stock will lapse
immediately prior to the occurrence of a Terminating Event.

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<PAGE> 7

Stock subject to any such Conditions shall be repurchased by the Company at the
price paid by the holder for such Restricted Stock. The closing of any
repurchase of Restricted Stock shall take place at a mutually convenient time
at the Company's headquarters within forty-five days after the date the
Condition fails. At the closing, the holder shall surrender his stock
certificates and the Company shall pay to the holder in cash the repurchase
price of the Restricted Stock.

F. Rights as Shareholder. Subject to the provisions of this Section 7,
the holder shall have all rights of a shareholder with respect to the
Restricted Stock, including the right to vote the shares and receive
distributions.

G. Section 83 Election. The holder of a Restricted Stock Award may make
an election under Section 83(b) of the Code, within thirty days of the date the
Restricted Stock Award is granted, if the holder wishes to include in income
for the taxable year in which the grant of the Restricted Stock Award occurs,
the difference between the Fair Market Value of the Common Stock granted
pursuant to a Restricted Stock Award and the price the holder was required to
pay for such Common Stock. If the holder intends to make such election, a copy
of the completed election form required to be filed with the Internal Revenue
Service shall be provided to the Company and shall be attached to the
Restricted Stock Award Agreement as an exhibit.

H. Payment of Withholding Tax. The holder of a Restricted Stock Award
shall be responsible for the payment of all federal and state income taxes and
Social Security (FICA) taxes required to be withheld and paid with respect to a
Restricted Stock Award. At the Company's option, the Company may (i) withhold
the appropriate amount from the holder's regular compensation and from any
dividends paid on Restricted Stock, or (ii) require the holder to pay the
amount of the withholding tax to the Company and treat the holder's timely
payment of such amount to the Company as an additional Condition.

I. Adjustment Provisions. Subject to any required action by the
shareholders of the Company, the Board will make a proportionate adjustment in
the number of shares of Restricted Stock covered by each Restricted Stock Award
to account for any increase or decrease in the number of issued shares of
Common Stock of the Company resulting from a stock split (whether by
subdivision or consolidation of shares) or the payment of a share dividend (but
only on the Common Stock).

8. Stock Bonuses.

Each Stock Bonus shall be evidenced by a written agreement between the
Company and the recipient of the Stock Bonus (a "Stock Bonus Agreement"), which
sets forth (i) the number of shares awarded to the recipient, and (ii) such
additional provisions, not inconsistent with this Plan, as the Board may
prescribe. The recipient of a Stock Bonus shall be responsible for the payment
of all federal and state income taxes and Social Security (FICA) taxes required
to be withheld and paid with respect to a Stock Bonus. At the Company's
option, the Company may withhold the appropriate amount from the recipient's
regular compensation and from any dividends paid on Bonus Stock, or the Company
may require the recipient to pay the amount of

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<PAGE> 8

the withholding tax to the Company.

9. Valuation of Common Stock.

The Fair Market Value of each share of Common Stock will be determined by
the Board as of the end of each fiscal year of the Company and, in the Board's
discretion, at any other time during any fiscal year. In its discretion, the
Board may retain an independent appraiser to assist it in the determination of
the Fair Market Value of the Common Stock. The Board's determination of the
Fair Market Value of the Common Stock shall be final, binding and conclusive.

10. Repurchase of Shares.

A. Put and Call Rights. During the period of a Grantee's employment with
the Company and for a period of ninety days thereafter (or, if employment is
terminated due to the Grantee's death, for a period of ninety days following
the appointment of a personal representative for his estate), the Grantee shall
have the right to require the Company to repurchase at their Fair Market Value
all or any portion of his (i) Option Shares, (ii) Restricted Stock with respect
to which all of the Conditions have been met, and (iii) Bonus Stock. The
Grantee shall exercise this put right by providing written notice to the
Secretary of the Company stating the number of shares he desires the Company to
repurchase at any time before the put right expires.

The Company shall have the right to repurchase at their Fair Market
Value, at any time following the termination of the Grantee's employment with
the Company for any reason (including retirement, death or disability), all or
any portion of the Option Shares, Restricted Stock or Bonus Stock then held by
the Grantee. The Company shall exercise this call right by providing written
notice to the Grantee stating the number of shares the Company desires to
repurchase. If the Company is required under Section 7.E to repurchase
Restricted Stock as a result of the termination of the Grantee's employment,
the provisions of Section 7.E shall govern the repurchase of such Restricted
Stock.

B. Payment Terms. The closing of any repurchase of shares pursuant to
this Section 10 shall take place at a mutually convenient time at the Company's
headquarters within forty-five days after the date of the Grantee's or the
Company's notice, as applicable. At the closing, the Grantee shall surrender
his stock certificates and the Company shall pay to the Grantee in cash the
repurchase price of such shares. Notwithstanding the foregoing, if the sum of:

(i) the number of Option Shares and shares of
Restricted Stock and Bonus Stock which the
Company has become obligated to repurchase
from all Grantees (both under this Section
10 and Section 7.E) during the twelve month
period immediately preceding the date of the
Grantee's notice invoking his put right, and

(ii) the number of shares the Grantee puts to the
Company,

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<PAGE> 9

exceeds 2% of the sum of:

(a) the number of issued and outstanding shares
of Common Stock of the Company as of the
date of the Grantee's notice, and

(b) the number of shares under item (i) above
which the Company has repurchased prior to
that date,

then the Company shall have the right to pay the repurchase price to the
Grantee over a period of three years in twelve equal quarterly installments of
principal beginning on the date of the closing. The Company's obligation to
pay the repurchase price to the Grantee shall be evidenced by a promissory note
made by the Company which contains such terms and provisions as are customary
and reasonable. The Company shall pay interest on the unpaid principal balance
of the promissory note at the rate of 9% per annum or the "applicable federal
rate" applied to installment purchases pursuant to Section 483 of the Code,
whichever is less.

11. Transfer Restrictions.

A. General. Without the prior written consent, of the Company, which
consent may be withheld in its sole discretion, a Grantee may not sell, assign
or otherwise transfer any Option Shares, Restricted Stock or Bonus Stock to any
person or entity other than the Company, another shareholder of the Company or
another Grantee who is an Employee. Further, Restricted Stock may not be sold
to any person or entity other than to the Company until all Conditions have
been met. With regard to any Option Shares, Restricted Stock and Bonus Stock
which the Grantee proposes to sell, assign or otherwise transfer to another
shareholder of the Company or another Grantee who is an Employee (a "Permitted
Transferee"), the Company shall have a right of first refusal (the "Right of
First Refusal") to purchase such shares in the manner set forth below:

1. Upon receiving an offer to Purchase or otherwise acquire any Option
Shares, Restricted Stock or Bonus Stock, a Grantee shall require the Permitted
Transferee to submit a written offer with respect to such shares stating his
name and accompanied by a deposit in the form of a certified or cashier's check
in an amount equal to not less than 10% of the proposed purchase price (a "Bona
Fide Offer"). The Grantee then shall transmit a copy of the Bona Fide Offer
to the Company. The Company shall have thirty days following receipt of the
Bona Fide Offer in which to purchase all, but not less than all, of the shares
referred to in the Bona Fide Offer at the price stated in the Bona Fide Offer.
In its discretion, the Company may either pay the entire purchase price for the
shares in cash or on the terms stated in the Bona Fide Offer. If the Company
falls to tender the full cash purchase price (or to match such other terms as
are stated in the Bona Fide Offer) for such shares against the proper
endorsement and delivery of the certificate(s) evidencing the shares within
such thirty day period, the Right of First Refusal shall expire with respect to
that particular Bona Fide Offer, but shall remain in full force and effect with
respect to all material modifications of the Bona Fide Offer and all future
offers.

2. Any offered shares which are not purchased by the Company as provided
in

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<PAGE> 10

(1) above may be sold to the Permitted Transferee named in the Bona Fide Offer,
but not at a lower price, or upon more favorable terms to the Permitted
Transferee, than the price and terms set forth in the Bona Fide Offer. Title
to the offered shares shall pass not later than ninety days after the
expiration of the thirty day period referred to in (1) above. The Permitted
Transferee shall take such shares subject to the same rights and restrictions
regarding transferability and repurchase as would have applied to him had he
acquired such shares upon exercise of an Option granted to him under this Plan
or upon issuance to him of Restricted Stock or Bonus Stock under this Plan. If
the Grantee desires to sell such shares to the Permitted Transferee at a lower
price, or upon terms more favorable to the Permitted Transferee, than the price
and terms stated in the Bona Fide Offer, the Grantee shall, before he can sell
to the Permitted Transferee, again offer the shares in accordance with the
procedure set forth in this Section 11.

B. Transfer Restrictions Imposed by the 1933 Act.

1. Notwithstanding any other provision of this Plan, any
Option Agreement, any Restricted Stock Award Agreement or any Stock Bonus
Agreement, no transfer for value of any Option Shares or Restricted Stock shall
be valid unless (i) there is an effective registration statement under the
Securities Act of 1933 (the "1933 Act") covering the stock; (ii) the holder has
furnished an opinion of counsel satisfactory to the Company that such
registration is not required; or (iii) the holder has furnished a "no-action"
letter from the staff of the Securities and Exchange Commission satisfactory to
the Company that such registration is not required.

2. There shall be imprinted on the face of each certificate
for such shares a legend stating the transferability of such shares is
restricted, and the following legend shall be imprinted on the back of each
such certificate:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE (I) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE
STATE LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SUCH ACT OR LAWS OR AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL TO THE COMPANY) SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH
REGISTRATION IS NOT REQUIRED, AND (2) ARE SUBJECT TO, AND ARE
TRANSFERABLE ONLY UPON COMPLIANCE WITH, CERTAIN TRANSFER AND OTHER
RESTRICTIONS CONTAINED IN AN AGREEMENT BETWEEN LANDMARK SYSTEMS
CORPORATION AND THE HOLDER OF THIS CERTIFICATE, A COPY OF WHICH IS
ON FILE AT THE

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<PAGE> 11

OFFICE OF THE COMPANY."

3. Optionees and holder of Restricted Stock Awards and Stock
Bonuses may acquire stock only for their own account and not with a view to, or
for resale in connection with, any distribution thereof within the meaning of
the 1933 Act, and may dispose of such stock only in a manner consistent with
the provisions of this Section. The Company may require Optionees and holders
of Restricted Stock Awards and Stock Bonuses to execute and be bound by an
"Investment Letter" representing such investment intent.

12. Lapse of Repurchase Rights and Transfer Restrictions.

Notwithstanding anything to the contrary in this Plan, the repurchase
rights set forth in Section 10 and the transfer restrictions set forth in
Section 11(A) shall lapse under the earlier to occur of (i) the effective date
of a registration statement filed with the Securities and Exchange Commission
under the 1933 Act covering securities of the Company whether or not such
shares are covered, or (ii) the date on which a class of securities of the
Company is registered under Section 12 of the Securities Exchange Act of 1934.

13. Indemnification of Board.

In addition to such other rights as they may have as directors, the
members of the Board (in their capacity as such and also as members of the
Committee) shall be indemnified by the Company against the reasonable expenses
(including attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, and in connection with any appeal therein, to which
they or any of them may be a party by reason of any action or failure to act in
connection with this Plan, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be finally adjudged in such action, suit or proceeding that the Board
member is liable for willful misconduct or gross negligence in the performance
of his duties or that the Board member knowingly violated criminal law;
provided that within 60 days after institution of any such action, suit, or
proceeding (or within 30 days after service upon such member of legal process
in such case, if later) the Board member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.

14. Termination and Amendment of the Plan.

Unless sooner terminated as provided herein, this Plan shall remain in
effect through April 12, 2009. The Board may terminate this Plan at any time
or modify or amend it as it deems advisable and may from time to time suspend,
discontinue or abandon this Plan, except that (i) the number of shares
available under this Plan shall not be increased (except as provided in Section
5) and the class of eligible employees shall not be modified without
shareholder approval, and (ii) no such action by the Board shall adversely
affect any right or obligation with respect to any grant previously made unless
the written consent of the affected Grantee is

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<PAGE> 12

obtained.

15. Miscellaneous.

The provisions of this Plan shall be binding upon, and inure to the
benefit of, all successors of any Grantee, including, without limitation, his
estate and the executors, administrators or trustees thereof, his heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Grantee.

Nothing contained in this Plan or in any Option Agreement, Restricted
Stock Award Agreement or Stock Bonus Agreement shall confer upon any Employee
the right to continued employment or shall interfere in any way with the right
to terminate the employment of such Employee at any time, with or without
cause.

Except as expressly provided in this Plan, Grantees shall have no rights
by reason of any subdivision or consolidation of shares of stock of any class
or the payment of any stock dividend of any other increase or decrease in the
number of shares of stock of any class; the dissolution or liquidation of the
Company; the merger or consolidation of the Company with or into any other
corporation; the sale or other transfer of assets or stock of the Company; or
any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.

The grant of an Option, Restricted Stock Award or Stock Bonus pursuant to
this Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, or to merge or consolidate, or to dissolve or liquidate, or
to sell or transfer all or any part of its business or assets.

All Grantees, including those who have exercised their Options, shall be
furnished at least annually financial statements and management's discussion
and analysis of the financial condition and results of operations of the
Company. Such information shall be subject to any agreements regarding the
confidentiality of proprietary information between the Company and any Grantee;
however, each Grantee shall be permitted to remove and copy such information
and review and discuss such information with an attorney or other financial
adviser for the legitimate personal investment planning of such Grantee.

16. Approval of Plan.

This Plan was adopted by resolution of the Board on April 12, 1989 and
approved by the shareholders on April 12, 1989, in each case subject to an
amendment to the Company's Articles of Incorporation becoming effective which
increases the number of authorized shares of Common Stock from 2,000 to
2,000,000 and decreases the par value per share from $1.00 to $.001.

This Plan was amended and restated by resolution of the Board effective
as of June 26, 1992.

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<PAGE> 1
EXHIBIT 10.3

LANDMARK SYSTEMS CORPORATION
FIRST AMENDED AND RESTATED
1991 EMPLOYEE STOCK PURCHASE PLAN

1. Purpose.

The purpose of this Employee Stock Purchase Plan (the "Plan") is to
make available to employees of LANDMARK SYSTEMS CORPORATION (the "Company") an
opportunity to purchase shares of common stock of the Company. The Company
believes that stock ownership by its employees will encourage greater employee
dedication to the Company's growth, development and success.

2. General Information.

This Plan is not an employee stock purchase plan under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code") or a qualified plan
under Section 401(a) of the Code. Further, this Plan is not subject to the
Employee Retirement Income Security Act of 1974.

3. Definitions.

A. "Board" means the Board of Directors of the Company.

B. "Common Stock" means the common stock of the Company, $.01 par
value per share.

C. "Committee" means three or more members of the Board appointed to
administer the Plan.

D. "Employee" means any full-time employee of the Company or of any
subsidiary, including an employee who serves as an officer or director of the
Company or of a subsidiary.

E. "Fair Market Value" means the most recent determination of the
fair market value of each share of Common Stock made in accordance with Section
8.

F. "Plan Year" means a twelve-month period selected by the Board.

G. "Plan Year Quarter" means any of the four consecutive 3-month
periods during any Plan Year. The first Plan Year Quarter begins on the first
day of the Plan Year.

H. "Stock Purchase Agreement" means the Employee's agreement to
purchase shares of Common Stock under this Plan as provided in Section 7.

I. "Subsidiary" means a subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.
<PAGE> 2

4. Administration of the Plan.

This Plan will be administered by the Board, which will have the
right to delegate any and all of its powers under this Plan to a committee of
at least three members of the Board. If the Board appoints a Committee to
administer this Plan, in whole or in part, the Committee's determination will
not be subject to approval by the Board, and to the extent of such delegation,
references in this Plan to the Board shall be deemed to refer to the Committee.
The Committee, however, shall report to the Board periodically concerning its
administration of the Plan.

The Board will have the authority and discretion to adopt and revise
such rules and regulations as it deems necessary for the administration of this
Plan. The Board's actions, including any interpretation or construction of any
provisions of this Plan, shall be final, conclusive and binding. No member of
the Board shall be liable for any action or determination made in good faith.

5. Eligibility.

All Employees who have been employed by the Company on a full-time
basis for a period of six continuous months will be eligible to purchase shares
of Common Stock under this Plan. An Employee may purchase shares of Common
Stock under this Plan and also receive benefits under other plans of the
Company.

6. Shares of Stock Subject to the Plan.

The Board will determine the number of shares of Common Stock made
available under this Plan for purchase each Plan Year. Shares will be
available for purchase on a first come, first serve basis according to the date
the Company receives a properly completed Stock Purchase Agreement from the
Employee. Such shares may be authorized and unissued shares or shares
previously acquired by the Company and held in its treasury. At the discretion
of the Board, an Employee who fails for any reason to purchase any shares of
Common Stock in accordance with the Employee's Stock Purchase Agreement will
forfeit the right to purchase those shares and the shares may be purchased by
another Employee.

7. Election to Purchase Shares.

Subject to the availability of shares of Common Stock for purchase,
each eligible Employee may elect to purchase shares under this Plan by
completing and delivering to the Company a Stock Purchase Agreement in the form
required by the Board.

8. Purchase Price.

The purchase price of shares of Common Stock issued to an Employee
under this Plan shall be their Fair Market Value on the date the Employee
elects to purchase such shares. The Fair Market Value of the Common Stock will
be determined by the Board at least once each year. In

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<PAGE> 3

its discretion the Board may retain an independent appraiser to assist it in
the determination of the Fair Market Value of the Common Stock. The Board's
determination of the Fair Market Value of the Common Stock will be final,
binding and conclusive.

9. Limitation on Number of Shares Purchased.

An Employee may not purchase during a Plan Year more than the number
of shares of Common Stock (rounded to the nearest whole share) determined by
dividing 10% of the Employee's "Cash Compensation" by the purchase price of the
Common Stock. "Cash Compensation" is the sum of the following:

(a) the Employee's gross annual rate of base salary as of
the first day of the Plan Year (or, if applicable,
gross annual hourly compensation for the Plan Year
based on the Employee's hourly rate as of the first
day of the Plan Year and a 37 1/2 hour work week),
including salary deferrals to the Landmark Systems
Corporation Profit Incentive/401(k) Plan and the
Landmark Systems Corporation Flexible Benefits Account
Cafeteria Plan, but excluding fringe benefits and other
compensation paid in kind; and

(b) the amount of the Employee's cash bonus, commissions,
and royalties, if any, paid during the most recent
calendar year ending prior to the first day of the
Plan Year.

If the Employee elects to purchase shares in excess of this limitation, the
Company may, in its discretion, reduce the number of shares to be purchased.

10. Payment of the Purchase Price.

An Employee may elect to pay the purchase price of his shares
through payroll deductions or by direct payment in cash or check. If the
Employee elects payroll deductions of the purchase price, the purchase price
will be deducted in substantially equal amounts over the remaining payroll
periods in the Plan Year or any shorter period agreed to by the Employee and
the Company. An Employee who has elected to pay the purchase price through
payroll deductions may change this election at any time and pay the remaining
balance of the purchase price by direct payment in cash or check.

Simple interest equal to the rate payable by the Company on the
Company's outstanding line of credit on the first business day of the current
Plan Year will accrue on payroll deductions from the dates the payroll
deductions are made until the shares which are purchased through those payroll
deductions are issued to the Employee. The accrued interest will be applied as
a credit toward payment of the purchase price of such shares.

Upon at least 30 days' written notice to the Company, an Employee may
discontinue payroll deductions as of the end of any Plan Year Quarter, in which
case the Employee will be issued shares purchased through the end of such Plan
Year Quarter as provided in Section 11, but will have no further obligation to
purchase shares during the remainder of the Plan Year

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<PAGE> 4

(notwithstanding the Employee's election in his Stock Purchase Agreement to
purchase a greater number of shares during the Plan Year). If the Employee
later desires to purchase additional shares during the Plan Year, he must make
a new election to purchase shares in accordance with Section 7.

11. Issuance of Common Stock.

Shares of Common Stock will be issued to an Employee purchasing shares
through payroll deductions on the last day of each Plan Year Quarter. The
number of shares issued each Plan Year Quarter will be equal to the Employee's
total payroll deductions pursuant to this Plan during such Plan Year Quarter
(including credits for accrued interest) divided by the purchase price of the
shares. If the Employee's employment with the Company is terminated for any
reason during the Plan Year, the Employee will be issued shares for which
payroll deductions were made prior to the termination of his employment on the
last day of the Plan Year Quarter in which his employment is terminated, and
the Employee will not be entitled to purchase any additional shares under this
Plan notwithstanding his election to purchase a greater number of shares during
the Plan Year under his Stock Purchase Agreement.

An Employee purchasing Common Stock by direct payment in cash or
check will be issued shares on the date the Company receives a properly
completed Stock Purchase Agreement and payment in full of the purchase price.

An Employee will not be considered to be a holder of shares of Common
Stock which the Employee has elected to purchase until the date of issuance of
such shares as provided above.

Certificates evidencing ownership of shares issued to Employees will
be delivered on the date of issuance of the shares or as soon thereafter as
administratively feasible.

12. Repurchase of Shares.

A. Put and Call Rights. An Employee may elect, at times determined by
the Board, to require the Company to repurchase ("put") at Fair Market Value
all or any portion of the Common Stock received under this Plan that has been
held by the Employee for at least one year. An Employee may also elect to
require the Company to repurchase at any time at Fair Market Value all or any
portion of the Common Stock received under this Plan that has been held by the
Employee for at least one year upon written certification by the Employee that
the funds are needed for (a) purchase of a principal residence, (b) payment of
college or graduate school tuition, or (c) payment of medical expenses. If an
Employee's employment with the Company is terminated for any reason, the
Employee may elect, during the 90 days following termination of employment, to
require the Company to repurchase at Fair Market Value all or any portion of
the Common Stock received under this Plan, even though the Employee has not
held the Common Stock for one year. The Employee shall exercise the put right
by providing written notice to the Secretary of the Company.

The Company may elect, at any time following the termination of an Employee's

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<PAGE> 5

employment with the Company for any reason to repurchase ("call") at Fair
Market Value all or any portion of the Common Stock received by the Employee
under this Plan. The Company shall exercise the call right by providing written
notice to the Employee stating the number of shares the Company desires to
repurchase.

B. Payment Terms. The closing of any repurchase of Common Stock
pursuant to this Section 12 shall take place at a mutually convenient time at
the Company's headquarters within forty-five days after the date of the
Employee's or the Company's notice, whichever applies. At the closing, the
Employee will surrender the stock certificates and the Company will pay to the
Employee in cash the repurchase price of such shares. Notwithstanding the
foregoing, if the sum of:

(i) the number of shares of Common Stock which the Company
has become obligated to purchase from all employees,
whether under this Plan, or any other plan, or other
agreement with Employees, during the twelve month
period immediately preceding the date of the Employee's
put notice, and

(ii) the number of shares the Employee puts to the Company,

exceeds 2% of the sum of:

(a) the number of issued and outstanding shares of Common
Stock of the Company as of the date of the Employee's
notice, and

(b) the number of shares under item (i) above which the
Company has purchased prior to that date,

then the Company shall have the right to pay the repurchase price to the
Employee over a period of three years in twelve equal quarterly installments of
principal beginning on the date of the closing. The Company's obligation to pay
the repurchase price to the Employee shall be evidenced by a promissory note
made by the Company which contains such terms and provisions as are customary
and reasonable. The Company shall pay interest on the unpaid principal balance
of the promissory note at the rate of 9% per annum or the "applicable federal
rate" applied to installment purchases pursuant to Section 483 of the Code,
whichever is less.

13. Transfer Restrictions.

A. General. Without the prior written consent of the Company, which
consent may be withheld in its sole discretion, an Employee may not sell,
assign or otherwise transfer any Common Stock received under this Plan to any
person or entity other than the Company, another shareholder of the Company or
another Employee. With regard to any Common Stock which the Employee proposes
to sell, assign or otherwise transfer to another shareholder of the Company or
another Employee (a "Permitted Transferee"), the Company shall have a right of
first refusal (the "Right of First Refusal") to purchase such shares in the
manner set forth below:

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<PAGE> 6

1. Upon receiving an offer to Purchase or otherwise acquire any
Common Stock, an Employee shall require the Permitted Transferee to submit a
written offer with respect to such shares stating his name and accompanied by a
deposit in the form of a certified or cashier's check in an amount equal to not
less than 10% of the proposed purchase price (a "Bona Fide Offer"). The
Employee then shall transmit a copy of the Bona Fide Offer to the Company. The
Company shall have thirty days following receipt of the Bona Fide Offer in
which to purchase all, but not less than all, of the shares referred to in the
Bona Fide Offer at the price stated in the Bona Fide Offer. In its discretion,
the Company may either pay the entire purchase price for the shares in cash or
on the terms stated in the Bona Fide Offer. If the Company falls to tender the
full cash purchase price (or to match such other terms as are stated in the
Bona Fide Offer) for such shares against the proper endorsement and delivery of
the certificate(s) evidencing the shares within such thirty day period, the
Right of First Refusal shall expire with respect to that particular Bona Fide
Offer, but shall remain in full force and effect with respect to all material
modifications of the Bona Fide Offer and all future offers.

2. Any offered shares which are not purchased by the Company
as provided in (1) above may be sold to the Permitted Transferee named in the
Bona Fide Offer, but not at a lower price, or upon more favorable terms to the
Permitted Transferee, than the price and terms set forth in the Bona Fide
Offer. Title to the offered shares shall pass not later than ninety days after
the expiration of the thirty-day period referred to in (1) above. The Permitted
Transferee shall take such shares subject to the same rights and restrictions
regarding transferability and repurchase as would have applied to the Permitted
Transferee had the Permitted Transferee acquired such shares under this Plan.
If the Employee desires to sell such shares to the Permitted Transferee at a
lower price, or upon terms more favorable to the Permitted Transferee, then
the price and terms stated in the Bona Fide Offer, the Employee shall, before
he can sell to the Permitted Transferee, again offer the shares in accordance
with the procedure set forth in this Section 13.

B. Transfer Restrictions Imposed by the 1933 Act.

1. Notwithstanding any other provision of this Plan or the
Stock Purchase Agreement, no transfer for value of Common Stock shall be valid
unless (i) there is an effective registration statement under the Securities
Act of 1933 (the "1933 Act") covering the stock; (ii) the holder has furnished
an opinion of counsel satisfactory to the Company that such registration is not
required; or (iii) the holder has furnished a "no-action" letter from the staff
of the Securities and Exchange Commission satisfactory to the Company that such
registration is not required.

2. There shall be imprinted on the face of each certificate
for such shares a legend stating that the transferability of such shares is
restricted, and the following legend shall be imprinted on the back of each
such certificate:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE (I) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR
APPLICABLE STATE

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<PAGE> 7

LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SUCH ACT OR LAWS OR
AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE COMPANY)
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR A "NO ACTION" LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED,
AND (2) ARE SUBJECT TO, AND ARE TRANSFERABLE ONLY UPON
COMPLIANCE WITH, CERTAIN TRANSFER AND OTHER RESTRICTIONS
CONTAINED IN AN AGREEMENT BETWEEN LANDMARK SYSTEMS CORPORATION
AND THE HOLDER OF THIS CERTIFICATE, A COPY OF WHICH IS ON FILE
AT THE OFFICE OF THE COMPANY."

3. Employees may acquire Common Stock only for their own
account and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the 1933 Act, and may dispose of
such stock only in a manner consistent with the provisions of this Section
13(B). The Company may require Employee to execute and be bound by an
"Investment Letter" representing such investment intent.

14. Lapse of Purchase Rights and Transfer Restrictions.

Notwithstanding anything to the contrary in this Plan, the repurchase
rights set forth in Section 12 and the transfer restrictions set forth in
Section 13(A) shall lapse under the earlier to occur of (i) the effective date
of a registration statement filed with the Securities and Exchange Commission
under the 1933 Act covering securities of the Company whether or not such
shares are covered, or (ii) the date on which a class of securities of the
Company is registered under Section 12 of the Securities Exchange Act of 1934.

15. Adjustment Provisions.

Subject to any required action by the shareholders of the Company,
the Board will make a proportionate adjustment in the number of shares of
Common Stock subject to this Plan in any Plan Year and the purchase price of
such shares to account for any stock split (whether by subdivision or
consolidation of shares) or share dividend (but only on the Common Stock).

In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be Common Stock within the meaning of this Plan.

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<PAGE> 8

16. Indemnification of Board.

17. Termination and Amendment of the Plan.

The Board may terminate this Plan at any time or modify or amend the
Plan as the Board deems advisable and may from time to time suspend,
discontinue or abandon this Plan, except that no such action by the Board shall
adversely affect any right or obligation of an Employee under any Stock
Purchase Agreement unless the Employee consents in writing. Unless otherwise
specified in writing by the Board, all repurchase rights and obligations and
stock transfer restrictions set forth in this Plan shall survive the
expiration, termination, suspension, discontinuance or abandonment of this
Plan.

18. Miscellaneous.

The provisions of this Plan shall be binding upon, and inure to the
benefit of, all successors of any Employee, including, without limitation, his
estate and the executors, administrators or trustees thereof, his heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.

Nothing contained in this Plan or the Stock Purchase Agreement shall
confer upon any Employee the right to continued employment or compensation in
any amount, or shall interfere in any way with the Company's right to terminate
the employment of such Employee at any time, with or without cause.

Except as expressly provided in this Plan, Employees shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend of any other increase or decrease in
the number of shares of stock of any class; the dissolution or liquidation of
the Company; the merger or consolidation of the Company with or into any other
corporation; the sale or other transfer of assets or stock of the Company; or
any

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<PAGE> 9

issue by the Company of shares of stock of any class or securities convertible
into shares of stock of any class.

The transfer of Common Stock under this Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, or to merge or
consolidate, or to dissolve or liquidate, or to sell or transfer all or any
part of its business or assets.

All persons who purchase stock under this Plan shall be furnished at
least annually with financial statements and management's discussion and
analysis of the financial condition and results of operations of the Company.
Such information shall be subject to any agreements regarding the
confidentiality of proprietary information between the Company and any
purchaser; however, each purchaser shall be permitted to remove and copy such
information and review and discuss such information with an attorney or other
financial adviser for the legitimate personal investment planning of such
purchaser.

19. Approval of Plan.

This Plan was originally adopted by resolution of the Board on May
29, 1991, subject to an amendment to the Company's Articles of Incorporation
becoming effective which increases the number of authorized shares of Common
Stock from 2,000,000 to 8,000,000 and increases the par value per share from
$.001 to $.01.

This Plan was amended and restated by resolution of the Board
effective as of June 26, 1992.

-9-

<PAGE> 1
EXHIBIT 10.4

LANDMARK SYSTEMS CORPORATION
1992 EXECUTIVE STOCK INCENTIVE PLAN

1. Purpose.

The purpose of this Executive Stock Incentive Plan (this "Plan") is to
offer to employees of LANDMARK SYSTEMS CORPORATION (the "Company") who are not
residents of the State of California additional incentive and encouragement to
remain in the service of the Company by increasing their personal participation
in the Company through stock ownership. This Plan provides a means whereby
these individuals may acquire shares of the Company's Common Stock pursuant to
Qualified Options, Nonqualified Options, Restricted Stock Awards and Stock
Bonuses.

2. Definitions.

A. "Board" means the Board of Directors of the Company.

B. "Bonus Stock" means the shares of Common Stock issued to a Grantee
pursuant to a Stock Bonus.

C. "Code" means the Internal Revenue Code of 1986, as amended.

D. "Common Stock" means the common stock of the Company, $.01 par
value per share.

E. "Conditions" means the conditions attached to a Restricted Stock
Award pursuant to Section 7.B which if not met will result in the repurchase of
Restricted Stock at the price paid by the Grantee for such Restricted Stock as
provided in Section 7.E.

F. "Employee" means any employee of the Company or any Parent or
Subsidiary who is not a resident of the State of California, including an
employee who serves as an officer or director of the Company or of a Parent or
Subsidiary.

G. "Fair Market Value" means the most recent determination of the fair
market value of each share of Common Stock made in accordance with Section 9.

H. "Grantee" includes both Optionees and recipients of Restricted
Stock Awards and Stock Bonuses.

I. "Nonqualified Option" means a stock option granted under this
Plan which is not intended to qualify as an incentive stock option under
Section 422 of the Code.

J. "Option" includes both Nonqualified Options and Qualified Options.

K. "Option Shares" mean the shares of Common stock purchased by a
Grantee upon
<PAGE> 2

exercise of an Option.

L. "Optionee" means an Employee to whom an option has been granted.

M. "Parent" means a parent corporation of the Company within the
meaning of Section 425(e) of the Code.

N. "Qualified Option" means a stock option granted under this Plan
which qualifies as an incentive stock option under Section 422 of the Code.

O. "Restricted Stock" means the shares of Common Stock issued to a
Grantee pursuant to a Restricted Stock Award.

P. "Restricted Stock Award" means the grant under this Plan, at a
price determined by the Board, of Common Stock which is nontransferable and
subject to substantial risk of being repurchased at the price paid for such
Common Stock until the Conditions have been met.

Q. " Stock Bonus" means the grant under this Plan of Common Stock as a
bonus for services rendered by an Employee.

R. "Subsidiary" means a subsidiary corporation of the Company within
the meaning of Section 425(f) of the Code.

S. "Terminating Event" means (i) the consummation of a merger or
consolidation of the Company into or with another corporation under
circumstances in which the Company is not the surviving corporation (other than
circumstances involving a mere change in the identity, form or place of
organization of the Company); (ii) the consummation of a sale of more than 50%
of the Company's outstanding stock to persons who are not shareholders of the
Company on the date of grant of the Option, Restricted Stock Award or Stock
Bonus; or (iii) the liquidation or dissolution of the Company.

3. Administration of the Plan.

This Plan will be administered by the Board, which will have the right
to delegate any and all of its powers under this Plan to a committee of members
of the Board comprised of no fewer than three members (the "Committee"). If the
Board appoints a Committee to administer this Plan, in whole or in part, the
Committee's determination will not be subject to approval by the Board, and to
the extent of such delegation, references in this Plan to the Board shall be
deemed to refer to the Committee. The Committee, however, shall resort to the
Board periodically concerning its administration of the Plan.

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<PAGE> 3

be granted, the option price of the shares subject to each Option and the price
at which a Restricted Stock Award is made, the number of shares subject to each
Option, Restricted Stock Award and Stock Bonus, the vesting schedule of
Options, the method of payment for shares acquired upon the exercise of
Options, the expiration dates of the Options, and the Conditions attached to
each Restricted Stock Award. In addition, the Board will have the authority, in
connection with any Option, Restricted Stock Award or Stock Bonus granted or to
be granted to any Employee, to eliminate, restrict, expand or otherwise modify,
in such manner as the Board, in its discretion, deems appropriate, the put and
call rights granted under Section 10 of this Plan and the transfer restrictions
set forth in Section 11 of this Plan, provided that any modification of such
rights are set forth in a written agreement signed by the Company and such
Employee. The Board's actions, including any interpretation or construction of
any provisions of this Plan and any Option, Restricted Stock Award and Stock
Bonus, shall be final, conclusive and binding. No member of the Board shall be
liable for any action or determination made in good faith.

4. Eligibility.

All Employees will be eligible to receive Options, Restricted Stock
Awards and Stock Bonuses. An Employee may be granted more than one Option,
Restricted Stock Award or Stock Bonus.

5. Shares of Stock Subject to the Plan.

The number of shares which may be issued pursuant to this Plan shall
not exceed 1,000,000 shares of Common Stock, subject to a proportionate
adjustment to account for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a stock split (whether by
subdivision or consolidation of shares) or any payment of a share dividend (but
only on the Common Stock). Any or all of such shares may be issued under
Qualified Options. Such shares may be authorized and unissued shares or shares
previously acquired by the Company and held in its treasury. Any shares subject
to an Option which expires for any reason or is terminated unexercised as to
such shares, and any Restricted Stock, Bonus Stock and Option Shares which are
repurchased by the Company, may again be subject to an Option, Restricted Stock
Award or Stock Bonus under this Plan.

6. Terms and Conditions of Options.

A. Option Agreement. Each Option shall be evidenced by a written
agreement between the Company and the Optionee (an "Option Agreement'), which
sets forth ( i) the number of shares subject to the Option; (ii) the exercise
price, vesting schedule and expiration date of the Option; (iii) the method of
payment on exercise of the Option; (iv) whether the Option is a Qualified
Option or Nonqualified Option; and (v) such additional provisions, not
inconsistent with this Plan, as the Board may prescribe.

B. Grant of Options. No Option may be granted after the expiration of
ten years from the date this Plan is adopted.

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<PAGE> 4

C. Exercise of Options. Optionees may exercise at any time or from
time to time all or any portion of a vested Option. An Option shall be
exercisable only to the extent it is vested. Options will vest either
immediately or periodically over a period not exceeding ten years as set forth
in the Option Agreement. Vesting of all or any portion of an Option may be
accelerated at the discretion of the Board.

To the extent that the aggregate Fair Market Value of the Common Stock
with respect to which options qualifying as incentive stock options under
Section 422 of the Code are exercisable by the Grantee for the first time
during any calendar year (under all stock option plans of the Company, its
Parents and Subsidiaries) exceeds $100,000, such Options are not incentive
stock options. For the purposes of this paragraph, the Fair Market Value of
the Common Stock shall be determined as of the time the option with respect to
such Common Stock is granted. This paragraph shall be applied by taking options
into account in the order in which they were granted.

An Optionee shall exercise an Option by delivering to the Secretary of
the Company a written notice signed by the Optionee which states the Optionee's
election to exercise the option and the number of shares of Common Stock the
Optionee elects to purchase. The Optionee's notice shall be accompanied by
payment or the exercise price. Payment, may be (i) in cash, (ii) by exchange of
Common Stock having an aggregate Fair Market Value equal to the cash exercise
price, or (iii) partly in cash and partly by exchange of Common Stock.

The Optionee's right to pay the exercise price by exchange of Common
Stock is subject to the following limitations:

(a) the Common Stock being exchanged must have been held by
the Optionee for more than one month, and

As soon as practicable following payment of the exercise price, the
Company will deliver to the Optionee a certificate representing the Option
Shares, provided that the Optionee has made appropriate arrangements with the
Company for any federal, state or local taxes required to be withheld. An
Optionee shall not have any of the rights and privileges of a shareholder of
the Company in respect of any of the Option Shares until the Company has
delivered the certificate.

D. Exercise Price. The exercise price of each Qualified Option shall
be at least equal to the Fair Market Value of the Common Stock on the date the
Qualified Option is granted. In the case of a Qualified Option granted to a
person who owns, immediately after the grant of such Qualified Option, stock
possessing more than 10% of the total combined voting power of the Company, or
of its Parent or Subsidiary, the exercise price of the Qualified Option shall
be at

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<PAGE> 5

least 110% of the Fair Market Value of the Common Stock on the date the
Qualified Option is granted.

The Board may set the exercise price of any Nonqualified Option at any
price which is not less than the par value, if any, of the Common Stock.

E. Expiration of Options. Each Option shall expire on the date set
forth in the Option Agreement, provided that (i) each Option shall expire not
later than ten years after the date it is granted, and (ii) each Qualified
Option granted to any person who owns stock possessing more than 10% of the
total combined voting power of the Company, or of its Parent or Subsidiary,
shall expire not later than five years after the date it is granted.
Notwithstanding the foregoing, if an Optionee's employment with the Company is
terminated for any reason before the expiration date set forth in the Option
Agreement, the Option granted under the Option Agreement shall terminate on the
date the Optionee's employment is terminated; provided, however, that the
portion of the Option which is vested as of the date of such termination of
employment shall be exercisable for a period of sixty days thereafter (or, if
employment is terminated due to the Optionee's death or disability, for a
period ending no later than (i) the six-month anniversary of the date of
termination or (ii) sixty days following the appointment of a personal
representative of the Optionee's estate).

F. Non-Transferability of Options. Options may not be transferred by
the Optionee otherwise than by will or the laws of descent and distribution,
and each Option shall be exercisable during the Optionee's lifetime only by the
Optionee. Upon any attempt to transfer an Option or any interest therein
contrary to the provisions of this Plan, or to subject the Option or any
interest therein to execution, attachment or similar process, the Option shall
immediately terminate and become null and void.

In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall be
deemed to be Common Stock within the meaning of this Plan.

H. Terminating Event. Notwithstanding the vesting schedule set forth
in any Option Agreement, the unvested portions of all Options shall vest, and
such Options shall be exercisable in full, immediately prior to the occurrence
of a Terminating Event. All Options shall terminate immediately following the
occurrence of a Terminating Event. The Company will provide each Grantee with
at least fifteen days advance notice of the occurrence of a Terminating Event.

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<PAGE> 6

7. Terms and Conditions of Restricted Stock Awards.

B. Conditions. The Board may impose such Conditions on any Restricted
Stock as it may deem advisable, including Conditions based on the continuing
performance of services as an Employee and the achievement of individual, group
and/or Company performance objectives. The Board may require the recipient of a
Restricted Stock Award to enter into an escrow agreement providing that the
certificates representing Restricted Stock will remain in the physical custody
of an escrow agent, which may be the Company, until all Conditions have been
met. Each certificate representing Restricted Stock will bear a legend making
appropriate reference to the Conditions imposed.

C. Purchase Price. The Board may set the price at which Restricted
Stock may be purchased at any amount which is not less than the par value, if
any, of the Common Stock.

D. Terminating Event. Unless otherwise provided in the Restricted
Stock Award Agreement , all Conditions imposed on Restricted Stock will lapse
immediately prior to the occurrence of a Terminating Event.

E. Repurchase of Restricted Stock. If any of the Conditions set forth
in a Restricted Stock Award Agreement shall not have been met within the
prescribed period, or upon the occurrence of an event which makes it impossible
for one or more of the Conditions to be met, all Restricted Stock subject to
any such Conditions shall be repurchased by the Company at the price paid by
the holder for such Restricted Stock. The closing of any repurchase of
Restricted Stock shall take place at a mutually convenient time at the
Company's headquarters within forty-five days after the date the Condition
fails. At the closing, the holder shall surrender his stock certificates and
the Company shall pay to the holder in cash the repurchase price of the
Restricted Stock.

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<PAGE> 7

G. Section 83 Election. The holder of a Restricted Stock Award may
make an election under Section 83(b) of the Code, within thirty days of the
date the Restricted Stock Award is granted, if the holder wishes to include in
income for the taxable year in which the grant of the Restricted Stock Award
occurs, the difference between the Fair Market Value of the Common Stock
granted pursuant to a Restricted Stock Award and the price the holder was
required to pay for such Common Stock. If the holder intends to make such
election, a copy of the completed election form required to be filed with the
Internal Revenue Service shall be provided to the Company and shall be attached
to the Restricted Stock Award Agreement as an exhibit.

8. Stock Bonuses.

Each Stock Bonus shall be evidenced by a written agreement between the
Company and the recipient of the Stock Bonus (a "Stock Bonus Agreement"), which
sets forth (i) the number of shares awarded to the recipient, and (ii) such
additional provisions, not inconsistent with this Plan, as the Board may
prescribe. The recipient of a Stock Bonus shall be responsible for the payment
of all federal and state income taxes and Social Security (FICA) taxes required
to be withheld and paid with respect to a Stock Bonus. At the Company's
option, the Company may withhold the appropriate amount from the recipient's
regular compensation and from any dividends paid on Bonus Stock, or require the
recipient to pay the amount of the withholding tax to the Company.

9. Valuation of Common Stock.

The Fair Market Value of each share of Common Stock will be determined
by the Board as of the end of each fiscal year of the Company and, in the
Board's discretion, at any other time during any fiscal year. In its
discretion, the Board may retain an independent appraiser to assist it in the
determination of the Fair Market Value of the Common Stock. The Board's
determination of the Fair Market Value of the Common Stock shall be final,
binding and conclusive.

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<PAGE> 8

10. Repurchase of Shares.

A. Put and Call Rights. During the period of a Grantee's employment
with the Company and for a period of ninety days thereafter (or, if employment
is terminated due to the Grantee's death, for a period of ninety days following
the appointment of a personal representative for his estate), the Grantee shall
have the right to require the Company to repurchase at their Fair Market Value
all or any portion of his (i) Option Shares, (ii) Restricted Stock with respect
to which all of the Conditions have been met, and (iii) Bonus Stock. The
Grantee shall exercise this put right by providing written notice to the
Secretary of the Company stating the number of shares he desires the Company to
repurchase at any time before the put right expires.

(i) the number of Option Shares, shares of Restricted Stock
and Bonus Stock, and other shares of Common Stock, which
the Company has become obligated to repurchase from all
employees of the Company (and of any Parent or
Subsidiary), including employees who are California
residents, under this Plan, any other plan, or other
agreements with Employees, during the twelve month
period immediately preceding the date of the Grantee's
notice invoking his put right, and

(ii) the number of shares the Grantee puts to the Company,

exceeds 2% of the sum of:

(a) the number of issued and outstanding shares of Common
Stock of the Company as of the date of the Grantee's
notice, and

(b) the number of shares under item (i) above which the
Company has repurchased prior to that date,

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<PAGE> 9

then the Company shall have the right to pay the repurchase price to the
Grantee over a period of three years in twelve equal quarterly installments of
principal beginning on the date of the closing. The Company's obligation to pay
the repurchase price to the Grantee shall be evidenced by a promissory note
made by the Company which contains such terms and provisions as are customary
and reasonable. The Company shall pay interest on the unpaid principal balance
of the promissory note at the rate of 9% per annum or the "applicable federal
rate" applied to installment purchases pursuant to Section 483 of the Code,
whichever is less.

11. Transfer Restrictions.

1. Upon receiving an offer to Purchase or otherwise acquire
any Option Shares, Restricted Stock or Bonus Stock, a Grantee shall require the
Permitted Transferee to submit a written offer with respect to such shares
stating his name and accompanied by a deposit in the form of a certified or
cashier's check in an amount equal to not less than 10% of the proposed
purchase price (a "Bona Fide Offer"). The Grantee then shall transmit, a copy
of the Bona Fide Offer to the Company. The Company shall have thirty days
following receipt of the Bona Fide Offer in which to purchase all, but not less
than all, of the shares referred to in the Bona Fide Offer at the price stated
in the Bona Fide Offer. In its discretion, the Company may either pay the
entire purchase price for the shares in cash or on the terms stated in the Bona
Fide Offer. If the Company falls to tender the full cash purchase price (or to
match such other terms as are stated in the Bona Fide Offer) for such shares
against the proper endorsement and delivery of the certificate(s) evidencing
the shares within such thirty day period, the Right of First Refusal shall
expire with respect to that particular Bona Fide Offer, but shall remain in
full force and effect with respect to all material modifications of the Bona
Fide Offer and all future offers.

2. Any offered shares which are not purchased by the
Company as provided in (1) above may be sold to the Permitted Transferee named
in the Bona Fide Offer, but not at a lower price, or upon more favorable terms
to the Permitted Transferee, than the price and terms set forth in the Bona
Fide Offer. Title to the offered shares shall pass not later than ninety days
after the expiration of the thirty day period referred to in (1) above. The
Permitted Transferee shall take such shares subject to the same rights and
restrictions regarding transferability and repurchase as would have applied to
him had he acquired such shares upon exercise of an Option granted to him under
this Plan or upon issuance to him of Restricted Stock or Bonus Stock under this
Plan. If the Grantee desires to sell such shares to the Permitted Transferee at
a lower price,

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<PAGE> 10

or upon terms more favorable to the Permitted Transferee, then the price and
terms stated in the Bona Fide Offer, the Grantee shall, before he can sell to
the Permitted Transferee, again offer the shares in accordance with the
procedure set forth in this Section.

B. Transfer Restrictions Imposed by the 1933 Act.

1. Notwithstanding any other provision of this Plan, any
Option Agreement, any Restricted Stock Award Agreement or any Stock Bonus
Agreement, no transfer for value of any Option Shares, Restricted Stock or Bonus
Stock shall be valid unless (i) there is an effective registration statement
under the Securities Act of 1933 (the "1933 Act") covering the stock; (ii) the
holder has furnished an opinion of counsel satisfactory to the Company that
such registration is not required; or (iii) the holder has furnished a
"no-action" letter from the staff of the Securities and Exchange Commission
satisfactory to the Company that such registration is not required.

2. There shall be imprinted on the face of each
certificate for such shares a legend stating the transferability of such shares
is restricted, and the following legend shall be imprinted on the back of each
such certificate:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE (I)
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
OR APPLICABLE STATE LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SUCH ACT OR LAWS OR AN OPINION OF COUNSEL (WHICH MAY BE
COUNSEL TO THE COMPANY) SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR A "NO ACTION" LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH
REGISTRATION IS NOT REQUIRED, AND (2) ARE SUBJECT TO, AND
ARE TRANSFERABLE ONLY UPON COMPLIANCE WITH, CERTAIN
TRANSFER AND OTHER RESTRICTIONS CONTAINED IN AN AGREEMENT
BETWEEN LANDMARK SYSTEMS CORPORATION AND THE HOLDER OF THIS
CERTIFICATE, A COPY OF WHICH IS ON FILE AT THE OFFICE OF
THE COMPANY."

3. Optionees and holder of Restricted Stock Awards and
Stock Bonuses may acquire stock only for their own account and not with a view
to, or for resale in connection with, any distribution thereof within the
meaning of the 1933 Act, and may dispose of such stock only in a manner
consistent with the provisions of this Section. The Company may require
Optionees and holders of Restricted Stock Awards and Stock Bonuses to execute
and be bound by an "Investment Letter" representing such investment intent.

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<PAGE> 11

12. Lapse of Repurchase Rights and Transfer Restrictions.

13. Indemnification of Board.

14. Termination and Amendment of the Plan.

Unless sooner terminated as provided herein, this Plan shall remain in
effect through October 27, 2012. The Board may terminate this Plan at any time
or modify or amend it as it deems advisable and may from time to time suspend,
discontinue or abandon this Plan, except that (i) the number of shares
available under this Plan shall not be increased (except as provided in Section
5) and the class of eligible employees shall not be modified without
shareholder approval, and (ii) no such action by the Board shall adversely
affect any right or obligation with respect to any grant previously made unless
the written consent of the affected Grantee is obtained.

15. Miscellaneous.

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<PAGE> 12

Except as expressly provided in this Plan, Grantees shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend of any other increase or decrease in
the number of shares of stock of any class; the dissolution or liquidation of
the Company; the merger or consolidation of the Company with or into any other
corporation; the sale or other transfer of assets or stock of the Company; or
any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.

The grant of an Option, Restricted Stock Award or Stock Bonus pursuant
to this Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, or to merge or consolidate, or to dissolve or liquidate,
or to sell or transfer all or any part of its business or assets.

All Grantees, including those who have exercised their Options, shall
be furnished at least annually financial statements and management's discussion
and analysis of the financial condition and results of operations of the
Company. Such information shall be subject to any agreements regarding the
confidentiality of proprietary information between the Company and any Grantee;
however, each Grantee shall be permitted to remove and copy such information
and review and discuss such information with an attorney or other financial
adviser for the legitimate personal investment planning of such Grantee.

16. Approval of Plan.

This Plan was adopted by resolution of the Board on October 27, 1992
and approved by the shareholders on May ___, 1993.

-12-

<PAGE> 1
EXHIBIT 10.5

LANDMARK SYSTEMS CORPORATION
1994 STOCK INCENTIVE PLAN

1. PURPOSE.

The purpose of this Stock Incentive Plan (this "Plan") is to offer to
those employees who contribute materially to the successful operation of
LANDMARK SYSTEMS CORPORATION (the "Company") additional incentive and
encouragement to remain in the service of the Company by increasing their
personal participation in the Company through stock ownership. This Plan
provides a means whereby these individuals may acquire shares of the Company's
Common Stock pursuant to Qualified Options, Nonqualified Options, Restricted
Stock Awards and Stock Bonuses.

2. DEFINITIONS.

A. "Board" means the Board of Directors of the Company.

B. "Bonus Stock" means the shares of Common Stock issued to a Grantee
pursuant to a Stock Bonus.

C. "Code" means the Internal Revenue Code of 1986, as amended.

D. "Common Stock" means the common stock of the Company, $.01 par
value per share.

E. "Conditions" means the conditions attached to a Restricted Stock
Award pursuant to Section 7.B which if not met will result in the repurchase of
Restricted Stock at the price paid by the Grantee for such Restricted Stock as
provided in Section 7.E.

F. "Employee" means any employee of the Company or of any Parent or
Subsidiary, including an employee who serves as an officer or director of the
Company or of a Parent or Subsidiary.

G. "Fair Market Value" means the most recent determination of the fair
market value of each share of Common Stock made in accordance with Section 9.

H. "Grantee" includes both Optionees and recipients of Restricted
Stock Awards and Stock Bonuses.

I. "Nonqualified Option" means a stock option granted under to this
Plan which is not intended to qualify as an incentive stock option under
Section 422 of the Code.

<PAGE> 2
J. "Option" includes both Nonqualified Options and Qualified Options.

K. "Option Shares" mean the shares of Common Stock purchased by a
Grantee upon exercise of an Option.

L. "Optionee" means an Employee to whom an Option has been granted.

M. "Parent" means a parent corporation of the Company within the
meaning of Section 425(e) of the Code.

N. "Qualified Option" means a stock option granted under this Plan
which qualifies as an incentive stock option under Section 422 of the Code.

O. "Restricted Stock" means the shares of Common Stock issued to a
Grantee pursuant to a Restricted Stock Award.

P. "Restricted Stock Award" means the grant under this Plan, at a
price determined by the Board, of Common Stock which is nontransferable and
subject to substantial risk of being repurchased at the price paid for such
Common Stock until the Conditions have been met.

Q. "Stock Bonus" means the grant under this Plan of Common Stock as a
bonus for services rendered by an Employee.

R. "Subsidiary" means a subsidiary corporation of the Company within
the meaning of Section 425(f) of the Code.

3. ADMINISTRATION OF THE PLAN.

This Plan will be administered by the Board, which will have the right
to delegate any and all of its powers under this Plan to a committee of members
of the Board comprised of no fewer than three members (the "Committee"). If the
Board appoints a Committee to administer this Plan, in whole or in part, the
Committee's determination will not be subject to approval by the Board, and to
the extent of such delegation, references in this Plan to the Board shall be
deemed to refer to the Committee. The

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<PAGE> 3
Committee, however, shall report to the Board periodically concerning its
administration of the Plan.

The Board will have the authority and discretion to adopt and revise
such rules and regulations as it deems necessary for the administration of this
Plan and to determine, consistent with the provisions of this Plan, the
Employees to be granted Options, Restricted Stock Awards and Stock Bonuses, the
times at which Options, Restricted Stock Awards and Stock Bonuses will be
granted, the option price of the shares subject to each Option and the price at
which a Restricted Stock Award is made, the number of shares subject to each
Option, Restricted Stock Award and Stock Bonus, the vesting schedule of
Options, the method of payment for shares acquired upon the exercise of
Options, the expiration dates of the Options, and the Conditions attached to
each Restricted Stock Award. In addition, the Board will have the authority, in
connection with any Option, Restricted Stock Award or Stock Bonus granted or to
be granted to any Employee, to eliminate, restrict, expand or otherwise modify,
in such manner as the Board, in its discretion, deems appropriate, the call
rights granted under Section 10 of this Plan and the transfer restrictions set
forth in Section 11 of this Plan, provided that any modification of such rights
are set forth in a written agreement signed by the Company and such Employee.
The Board's actions, including any interpretation or construction of any
provisions of this Plan and any Option, Restricted Stock Award and Stock Bonus,
shall be final, conclusive and binding. No member of the Board shall be liable
for any action or determination made in good faith.

4. ELIGIBILITY.

All Employees will be eligible to receive Options, Restricted Stock
Awards and Stock Bonuses. An Employee may be granted more than one Option,
Restricted Stock Award or Stock Bonus.

5. SHARES OF STOCK SUBJECT TO THE PLAN.

The number of shares which may be issued pursuant to this Plan shall
not exceed 2,000,000 shares of Common Stock, subject to a proportionate
adjustment to account for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from any stock split (whether
by subdivision or consolidation of shares) or any payment of a share dividend
(but only on the Common Stock). Any or all of such shares may be issued under
Qualified Options. Such shares may be authorized and unissued shares or shares
previously acquired by the Company and held in its treasury. Any shares subject
to an Option which expires for any reason or is terminated unexercised as to
such shares, and any Restricted Stock, Bonus Stock and Option Shares which are
repurchased by the Company, may again be subject to an Option, Restricted Stock
Award or Stock Bonus under this Plan.

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<PAGE> 4
6. TERMS AND CONDITIONS OF OPTIONS.

A. Option Agreement. Each Option shall be evidenced by a written
agreement between the Company and the Optionee (an "Option Agreement"), which
sets forth (i) the number of shares subject to the Option; (ii) the exercise
price, vesting schedule and expiration date of the Option; (iii) the method of
payment on exercise of the Option; (iv) whether the Option is a Qualified
Option or Nonqualified Option; and (v) such additional provisions, not
inconsistent with this Plan, as the Board may prescribe.

B. Grant of Options. No Option may be granted after the expiration of
ten years from the date this Plan is adopted.

C. Exercise of Options. Optionees may exercise at any time or from
time to time all or any portion of a vested Option. An Option shall be
exercisable only to the extent it is vested. Options will vest either
immediately or periodically over a period not exceeding ten years as set forth
in the Option Agreement. Vesting of all or any portion of an Option may be
accelerated at the discretion of the Board.

To the extent that the aggregate Fair Market Value of the Common Stock
with respect to which options qualifying as incentive stock options under
Section 422 of the Code are exercisable by the Grantee for the first time
during any calendar year (under all stock option plans of the Company, its
Parents and Subsidiaries) exceeds $100,000, such Options are not incentive
stock options. For the purposes of this paragraph, the Fair Market Value of the
Common Stock shall be determined as of the time the option with respect to such
Common Stock is granted. This paragraph shall be applied by taking options into
account in the order in which they were granted.

The Optionee's right to pay the exercise price by exchange of Common
Stock is subject to the following limitations:

(a) the Common Stock being exchanged must have been held by the
Optionee for more than one month, and

4
<PAGE> 5
As soon as practicable following payment of the exercise price, the
Company will deliver to the Optionee a certificate representing the Option
Shares, provided that the Optionee has made appropriate arrangements with the
Company for any federal, state or local taxes required to be withheld. An
Optionee shall not have any of the rights and privileges of a shareholder of
the Company in respect of any of the Option Shares until the Company has
delivered the certificate.

The exercise price of each Nonqualified Option shall be at least equal
to 85% of the Fair Market Value of the Common Stock on the date the
Nonqualified Option is granted. In the case of a Nonqualified Option granted to
a person who owns, immediately after the grant of such Nonqualified Option,
stock possessing more than 10% of the total combined voting power of the
Company, or its Parent or Subsidiary, the exercise price of the Nonqualified
Option shall be at least 110% of the Fair Market Value of the Common Stock on
the date such Nonqualified Option is granted.

The exercise price of any Option shall not be less than the par value
of the Common Stock.

E. Expiration of Options. Each Option shall expire on the date set
forth in the Option Agreement, provided that (i) each Option shall expire not
later than ten years after the date it is granted, and (ii) each Qualified
Option granted to any person who owns stock possessing more than 10% of the
total combined voting power of the Company, or of its Parent or Subsidiary,
shall expire not later than five years after the date it is granted.
Notwithstanding the foregoing, if an Optionee's employment with the Company is
terminated for any reason before the expiration date set forth in the Option
Agreement, the Option granted under the Option Agreement shall terminate on the
date the Optionee's employment is terminated; provided, however, that the
portion of the Option which is vested as of the date of such termination of
employment shall be exercisable for a period of sixty days thereafter (or, if
employment is terminated due to the Optionee's death or disability, for a
period ending no later than (i) the six-month anniversary of the date of
termination or (ii) sixty days following the appointment of a personal
representative for the Optionee's estate).

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<PAGE> 6
subject the Option or any interest therein to execution, attachment or similar
process, the Option shall immediately terminate and become null and void.

In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be Common Stock within the meaning of this Plan.

7. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.

6
<PAGE> 7
Award to enter into an escrow agreement providing that the certificates
representing Restricted Stock will remain in the physical custody of an escrow
agent, which may be the Company, until all Conditions have been met. Each
certificate representing Restricted Stock will bear a legend making appropriate
reference to the Conditions imposed.

C. Purchase Price. The Board may set the price at which Restricted
Stock may be purchased at any amount which is not less than 85% of the Fair
Market Value of the Common Stock on the date of the Restricted Stock Award. In
the case of a Restricted Stock Award to a person who owns, immediately after
the award, stock possessing more than 10% of the total combined voting power of
the Company, or of its Parent or Subsidiary, the purchase price of the
Restricted Stock shall be at least 100% of the Fair Market Value of the Common
Stock on the date of the Restricted Stock Award.

The purchase price of the Restricted Stock shall not be less than the
par value of the Common Stock.

D. Terminating Event. Unless otherwise provided in the Restricted
Stock Award Agreement, all Conditions imposed on Restricted Stock will lapse
immediately prior to the occurrence of a Terminating Event.

G. Section 83 Election. The holder of a Restricted Stock Award may
make an election under Section 83(b) of the Code, within thirty days of the
date the Restricted Stock Award is granted, if the holder wishes to include in
income for the taxable year in which the grant of the Restricted Stock Award
occurs, the difference between the Fair Market Value of the Common Stock
granted pursuant to a Restricted Stock Award and the price the holder was
required to pay for such Common Stock. If the holder intends to make such
election, a copy of the completed election form required to be filed with the
Internal Revenue Service shall be provided to the Company and shall be attached
to the Restricted Stock Award Agreement as an exhibit.

7
<PAGE> 8
H. Payment of Withholding Tax. The holder of a Restricted Stock Award
shall be responsible for the payment of all federal and state income taxes and
Social Security (FICA) taxes required to be withheld and paid with respect to a
Restricted Stock Award. At the Company's option, the Company may (i) withhold
the appropriate amount from the holder's regular compensation and from any
dividends paid on Restricted Stock, or (ii) require the holder to pay the
amount of the withholding tax to the Company and treat the holder's timely
payment of such amount to the Company as an additional Condition.

8. STOCK BONUSES.

Each Stock Bonus shall be evidenced by a written agreement between the
Company and the recipient of the Stock Bonus (a "Stock Bonus Agreement"), which
sets forth (i) the number of shares awarded to the recipient, and (ii) such
additional provisions, not inconsistent with this Plan, as the Board may
prescribe. The recipient of a Stock Bonus shall be responsible for the payment
of all federal and state income taxes and Social Security (FICA) taxes required
to be withheld and paid with respect to a Stock Bonus. At the Company's option,
the Company may withhold the appropriate amount from the recipient's regular
compensation and from any dividends paid on Bonus Stock, or require the
recipient to pay the amount of the withholding tax to the Company.

9. VALUATION OF COMMON STOCK.

The Fair Market Value of each share of Common Stock will be determined
by the Board as of the end of each fiscal year of the Company and, in the
Board's discretion, at any other time during any fiscal year. In its
discretion, the Board may retain an independent appraiser to assist it in the
determination of the Fair Market Value of the Common Stock. The Board's
determination of the Fair Market Value of the Common Stock shall be final,
binding and conclusive.

10. REPURCHASE OF SHARES.

A. Call Right. The Company shall have the right to repurchase at their
Fair Market Value, at any time following the termination of the Grantee's
employment with the Company for any reason (including retirement, death or
disability), all or any portion of the Option Shares, Restricted Stock or Bonus
Stock then held by the Grantee. The Company shall exercise this call right by
providing written notice to the Grantee stating the number of shares the
Company desires to repurchase. If the Company is required

8
<PAGE> 9
under Section 7.E to repurchase Restricted Stock as a result of the termination
of the Grantee's employment, the provisions of Section 7.E shall govern the
repurchase of such Restricted Stock.

(i) the number of Option Shares, shares of Restricted Stock
and Bonus Stock, and other shares of Common Stock, which
the Company has elected or becomes obligated to repurchase
from all employees of the Company (and of any Parent or
Subsidiary) under this Plan, any other plan, or other
agreements with Employees, during the twelve month period
immediately preceding the date of the Company's notice
invoking its call right, and

(ii) the number of shares the Company elects to repurchase from
the Grantee under its call right,

exceeds 2% of the sum of:

(a) the number of issued and outstanding shares of
Common Stock of the Company as of the date of the
Company's notice, and

(b) the number of shares under item (i) above which
the Company has repurchased prior to that date,

then the Company shall have the right to pay the repurchase price to the Grantee
over a period of three years in twelve equal quarterly installments of principal
beginning on the date of the closing. The Company's obligation to pay the
repurchase price to the Grantee shall be evidenced by a promissory note made by
the Company which contains such terms and provisions as are customary and
reasonable. The Company shall pay interest on the unpaid principal balance of
the promissory note at the rate of 9% per annum or the "applicable federal rate"
applied to installment purchases pursuant to Section 483 of the Code, whichever
is less.

11. TRANSFER RESTRICTIONS.

A. General. Without the prior written consent of the Company, which
consent may be withheld in its sole discretion, a Grantee may not sell, assign
or otherwise transfer any Option Shares, Restricted Stock or Bonus Stock to any
person or entity other than

9
<PAGE> 10
the Company, another shareholder of the Company or another Grantee who is an
Employee. Further, Restricted Stock may not be sold to any person or entity
other than to the Company until all Conditions have been met. With regard to
any Option Shares, Restricted Stock and Bonus Stock which the Grantee proposes
to sell, assign or otherwise transfer to another shareholder of the Company or
another Grantee who is an Employee (a "Permitted Transferee"), the Company
shall have a right of first refusal (the "Right of First Refusal") to purchase
such shares in the manner set forth below:

(1) Upon receiving an offer to purchase or otherwise acquire
any Option Shares, Restricted Stock or Bonus Stock, a Grantee shall require the
Permitted Transferee to submit a written offer with respect to such shares
stating his name and accompanied by a deposit in the form of a certified or
cashier's check in an amount equal to not less than 10% of the proposed
purchase price (a "Bona Fide Offer"). The Grantee then shall transmit a copy of
the Bona Fide Offer to the Company. The Company shall have thirty days
following receipt of the Bona Fide Offer in which to purchase all, but not less
than all, of the shares referred to in the Bona Fide Offer at the price stated
in the Bona Fide Offer. In its discretion, the Company may either pay the
entire purchase price for the shares in cash or on the terms stated in the Bona
Fide Offer. If the Company fails to tender the full cash purchase price (or to
match such other terms as are stated in the Bona Fide Offer) for such shares
against the proper endorsement and delivery of the certificate(s) evidencing
the shares within such thirty day period, the Right of First Refusal shall
expire with respect to that particular Bona Fide Offer, but shall remain in
full force and effect with respect to all material modifications of the Bona
Fide Offer and all future offers.

(2) Any offered shares which are not purchased by the Company
as provided in (1) above may be sold to the Permitted Transferee named in the
Bona Fide Offer, but not at a lower price, or upon more favorable terms to the
Permitted Transferee, than the price and terms set forth in the Bona Fide
Offer. Title to the offered shares shall pass not later than ninety days after
the expiration of the thirty day period referred to in (1) above. The Permitted
Transferee shall take such shares subject to the same rights and restrictions
regarding transferability and repurchase as would have applied to him had he
acquired such shares upon exercise of an Option granted to him under this Plan
or upon issuance to him of Restricted Stock or Bonus Stock under this Plan. If
the Grantee desires to sell such shares to the Permitted Transferee at a lower
price, or upon terms more favorable to the Permitted Transferee, than the price
and terms stated in the Bona Fide Offer, the Grantee shall, before he can sell
to the Permitted Transferee, again offer the shares in accordance with the
procedure set forth in this Section.

B. Transfer Restrictions Imposed by the 1933 Act.

(1) Notwithstanding any other provision of this Plan, any
Option Agreement, any Restricted Stock Award Agreement or any Stock Bonus
Agreement, no transfer for value of any Option Shares, Restricted Stock or
Bonus Stock shall be valid

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<PAGE> 11
unless (i) there is an effective registration statement under the Securities
Act of 1933 (the "1933 Act") covering the stock; (ii) the holder has furnished
an opinion of counsel satisfactory to the Company that such registration is not
required; or (iii) the holder has furnished a "no-action" letter from the staff
of the Securities and Exchange Commission satisfactory to the Company that such
registration is not required.

(2) There shall be imprinted on the face of each certificate
for such shares a legend stating that the transferability of such shares is
restricted, and the following legend shall be imprinted on the back of each
such certificate:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE (1) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR
APPLICABLE STATE LAWS, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SUCH ACT OR
LAWS OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE
COMPANY) SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED OR A "NO ACTION" LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED,
AND (2) ARE SUBJECT TO, AND ARE TRANSFERABLE ONLY UPON
COMPLIANCE WITH, CERTAIN TRANSFER AND OTHER RESTRICTIONS
CONTAINED IN AN AGREEMENT BETWEEN LANDMARK SYSTEMS CORPORATION
AND THE HOLDER OF THIS CERTIFICATE, A COPY OF WHICH IS ON FILE
AT THE OFFICE OF THE COMPANY."

(3) Optionees and holders of Restricted Stock Awards and Stock
Bonuses may acquire stock only for their own account and not with a view to, or
for resale in connection with, any distribution thereof within the meaning of
the 1933 Act, and may dispose of such stock only in a manner consistent with
the provisions of this Section. The Company may require Optionees and holders
of Restricted Stock Awards and Stock Bonuses to execute and be bound by an
"Investment Letter" representing such investment intent.

12. LAPSE OF REPURCHASE RIGHTS AND TRANSFER RESTRICTIONS.

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<PAGE> 12
13. INDEMNIFICATION OF BOARD.

14. TERMINATION AND AMENDMENT OF THE PLAN.

Unless sooner terminated as provided herein, this Plan shall remain in
effect through September 27, 2004. The Board may terminate this Plan at any
time or modify or amend it as it deems advisable and may from time to time
suspend, discontinue or abandon this Plan, except that (i) the number of shares
available under this Plan shall not be increased (except as provided in Section
5) and the class of eligible employees shall not be modified without
shareholder approval, and (ii) no such action by the Board shall adversely
affect any right or obligation with respect to any grant previously made unless
the written consent of the affected Grantee is obtained.

15. MISCELLANEOUS.

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<PAGE> 13
of any class; the dissolution or liquidation of the Company; the merger
or consolidation of the Company with or into any other corporation; the sale or
other transfer of assets or stock of the Company; or any issue by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class.

The grant of an Option, Restricted Stock Award or Stock Bonus pursuant
to this Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, or to merge or consolidate, or to dissolve or liquidate,
or to sell or transfer all or any part of its business or assets.

All Grantees, including those who have exercised their Options, shall
be furnished at least annually financial statements and management's discussion
and analysis of the financial condition and results of operations of the
Company. Such information shall be subject to any agreements regarding the
confidentiality of proprietary information between the Company and any Grantee;
however, each Grantee shall be permitted to remove and copy such information
and review and discuss such information with an attorney or other financial
adviser for the legitimate personal investment planning of such Grantee.

16. APPROVAL OF PLAN.

This Plan was adopted by resolution of the Board on September 27,
1994, as amended by the Board July 23,1996, as further amended by the Board
July 22, 1997, and as approved by the shareholders on August 26, 1997.

<PAGE> 1
EXHIBIT 10.6

LANDMARK SYSTEMS CORPORATION
1996 ADVISORY BOARD AND DIRECTORS
STOCK INCENTIVE PLAN

1. PURPOSE.

The purpose of this Advisory Board and Outside Directors Stock
Incentive Plan (this "Plan") is to offer to advisory board members and
designated outside directors of LANDMARK SYSTEMS CORPORATION (the "Company")
who are not employees of the Company additional incentive and encouragement to
remain in the service of the Company by increasing their personal participation
in the Company through stock ownership. This Plan provides a means whereby
these individuals may acquire shares of the Company's Common Stock pursuant to
Nonqualified Options.

2. DEFINITIONS.

"Advisory Board" means the Advisory Board of Directors of the Company.

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

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

"Common Stock" means the common stock of the Company, $.01 par value
per share.

"Effective Date" means December 19, 1996.

"Employee" means any employee of the Company or of any Parent or
Subsidiary, including an employee who serves as an officer or director of the
Company or of a Parent or Subsidiary.

"Fair Market Value" means the most recent determination of the fair
market value of each share of Common Stock made in accordance with Section 7.

"Option" means a stock option granted under this Plan which is not
intended to qualify as an incentive stock option under Section 422 of the Code.

"Option Shares" mean the shares of Common Stock purchased by an
Optionee upon exercise of an Option.

"Optionee" means an Advisory Board member to whom an Option has been
granted.

"Outside Director" means a Board member who is not an Employee of the
Company or of any Parent or Subsidiary and who has been designated as a
participant in the Plan by the Board.
<PAGE> 2
"Parent" means a parent corporation of the Company within the meaning
of Section 424(e) of the Code.

"Subsidiary" means a subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.

"Terminating Event" means (i) the consummation of a merger or
consolidation of the Company with or into another corporation under
circumstances in which the Company is not the surviving corporation (other than
circumstances involving a mere change in the identity, form or place of
organization of the Company); (ii) the consummation of a sale of more than 50%
of the Company's outstanding stock to persons who are not shareholders of the
Company on the date of grant of the Option; or (ii) the liquidation or
dissolution of the Company.

3. ADMINISTRATION OF THE PLAN.

This Plan will be administered by the Board, which will have the right
to delegate any and all of its powers under this Plan to a committee of members
of the Board comprised of no fewer than three members (the "Committee"). If
the Board appoints a Committee to administer this Plan, in whole or in part,
the Committee's determination will not be subject to approval by the Board, and
to the extent of such delegation, references in this Plan to the Board shall be
deemed to refer to the Committee. The Committee, however, shall report to the
Board periodically concerning its administration of the Plan.

The Board will have the authority and discretion to adopt and revise
such rules and regulations as it deems necessary for the administration of this
Plan. Subject to the terms of this Plan, the Board shall determine the Outside
Directors who shall participate in the Plan, the times at which Options will be
granted, the option price of the shares subject to each Option, the number of
shares subject to each Option, the vesting schedule of Options, the method of
payment for shares acquired upon the exercise of Options, or the expiration
dates of the Options. In addition, the Board will have the authority, in
connection with any Option, to eliminate, restrict, expand or otherwise
modify, in such manner as the Board, in its discretion, deems appropriate, the
call rights granted under Section 8 of this Plan and the transfer restrictions
set forth in Section 9 of this Plan, provided that any modification of such
rights are set forth in a written agreement signed by the Company and such
Optionee. The Board's actions, including any interpretation or construction of
any provisions of this Plan and any Option shall be final, conclusive and
binding. No member of the Board shall be liable for any action or
determination made in good faith.

4. ELIGIBILITY.
<PAGE> 3
All members of the Advisory Board who are not Employees and Outside
Directors will be eligible to receive Options. As of the Effective Date
(subject to and conditioned upon shareholder approval of this Plan within one
year of the Effective Date), each member of the Advisory Board who is not an
Employee and each Outside Director shall be granted an Option to purchase the
greater of 4,000 shares of Common Stock or the difference between 16,000 shares
of Common Stock and the number of shares of Common Stock subject to any option
previously granted to such member of the Advisory Board or Outside Director by
the Company. Each new member of the Advisory Board and each new Outside
Director shall be granted an Option to purchase the greater of 4,000 shares of
Common Stock or the difference between 16,000 shares of Common Stock and the
number of shares of Common Stock subject to any option previously granted to
such Advisory Board member or Outside Director by the Company. As of the date
of each annual meeting of the Company beginning with the 1997 annual meeting,
each member of the Advisory Board who is not an Employee and each Outside
Director who has not previously received a grant during such calendar year
shall be granted an Option to purchase 4,000 shares of Common Stock.

5. SHARES OF STOCK SUBJECT TO THE PLAN.

The number of shares which may be issued pursuant to this Plan shall
not exceed 200,000 shares of Common Stock, subject to a proportionate
adjustment to account for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from any stock split (whether
by subdivision or consolidation of shares) or any payment of a share dividend
(but only on the Common Stock). Such shares may be authorized and unissued
shares or shares previously acquired by the Company and held in its treasury.
Any shares subject to an Option which expires for any reason or is terminated
unexercised as to such shares, and any Option Shares which are repurchased by
the Company, may again be subject to an Option under this Plan.

6. TERMS AND CONDITIONS OF OPTIONS.

A. Option Agreement. Each Option shall be evidenced by a written
agreement between the Company and the Optionee (an "Option Agreement"), which
sets forth (i) the number of shares subject to the Option; (ii) the exercise
price, vesting schedule and expiration date of the Option; (iii) the method of
payment on exercise of the Option; and (iv) such additional provisions, not
inconsistent with this Plan, as the Board may prescribe.

B. Grant of Options. No Option may be granted after the expiration
of ten years from the date this Plan is adopted.

C. Exercise of Options. Optionees may exercise at any time or from
time to time all or any portion of a vested Option. An Option shall be
exercisable only to the extent it
<PAGE> 4
is vested. Options shall vest over of a period of four years as set forth in
the Option Agreement.

An Optionee shall exercise an Option by delivering to the Secretary of
the Company a written notice signed by the Optionee which states the Optionee's
election to exercise the Option and the number of shares of Common Stock the
Optionee elects to purchase. The Optionee's notice shall be accompanied by
payment of the exercise price. Payment may be (i) in cash, (ii) by exchange of
Common Stock having an aggregate Fair Market Value equal to the cash exercise
price, or (iii) partly in cash and partly by exchange of Common Stock. Upon
completion of the Company's initial public offering of Common Stock, subject to
compliance with applicable registration requirements, the Optionee may deliver
to the Company (i) irrevocable instructions to deliver directly to a broker the
stock certificates representing the Option Shares and (ii) irrevocable
instructions to such broker to sell such Option Shares and promptly deliver to
the Company the portion of the proceeds equal to the exercise price and any
applicable withholding taxes.

The Optionee's right to pay the exercise price by exchange of Common
Stock is subject to the following limitations:

(a) the Common Stock being exchanged must have been held by
the Optionee for more than one month, and

(b) if the Common Stock being exchanged was acquired upon the
Optionee's exercise of an Option, the Common Stock must have been held by the
Optionee at least one year, and the Option must have been granted at least six
months before the date the Optionee exchanges the Common Stock.

D. Exercise Price. The exercise price of each Option shall be at
least equal to the Fair Market Value of the Common Stock on the date the Option
is granted, provided that the exercise price of any Option is not less than the
par value, if any, of the Common Stock.

E. Expiration of Options. Each Option shall expire on the date ten
years after the date it is granted, subject to earlier expiration as provided
herein. If an Optionee's service as a member of the Advisory Board or Outside
Director is terminated for any reason before the expiration date set forth in
the Option Agreement, the Option granted under the Option Agreement shall
expire on the date the Optionee's service as a
<PAGE> 5
member of the Advisory Board or Outside Director is terminated; provided,
however, that the portion of the Option which is vested as of the date of such
termination of the Optionee's service on the Advisory Board or Board shall be
exercisable for a period of sixty days thereafter (or, if service as a member
of the Advisory Board or as an Outside Director is terminated due to the
Optionee's death or disability, for a period ending no later than (i) the
six-month anniversary of the date of termination or (ii) sixty days following
the appointment of a personal representative for the Optionee's estate). A
member of the Advisory Board who becomes an Outside Director shall not be
deemed to have terminated service.

F. Non-Transferability of Options. Options may not be transferred by
the Optionee otherwise than by will or the laws of descent and distribution,
and each Option shall be exercisable during the Optionee's lifetime only by the
Optionee. Upon any attempt to transfer an Option or any interest therein
contrary to the provisions of this Plan, or to subject the Option or any
interest therein to execution, attachment or similar process, the Option shall
immediately terminate and become null and void.

In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be Common Stock within the meaning of this Plan.

H. Terminating Event. Notwithstanding the vesting schedule set forth
in any Option Agreement, the unvested portions of all Options shall vest, and
such Options shall be exercisable in full, immediately prior to the occurrence
of a Terminating Event. All Options shall terminate immediately following the
occurrence of a Terminating Event. The Company will provide each Optionee with
at least fifteen days advance notice of the occurrence of a Terminating Event.

7. VALUATION OF COMMON STOCK.

Prior to the Company's initial public offering, the Fair Market Value
of each share of Common Stock will be determined by the Board as of the end of
each fiscal year of the Company and, in the Board's discretion, at any other
time during any fiscal year. In its discretion, the Board may retain an
independent appraiser to assist it in the
<PAGE> 6
determination of the Fair Market Value of the Common Stock. In the event the
Company completes an initial public offering of its Common Stock, the Fair
Market Value shall be the closing price of the Common Stock as reported by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or by an established stock exchange on the date on which the Option
is granted, provided that if there should be no sales of Common Stock reported
on such date, the Fair Market Value on such date shall be deemed equal to the
closing price as reported by NASDAQ or such exchange on the last preceding date
on which sales of Common Stock were reported. In the event that the Common
Stock is listed upon an established stock exchange or exchanges, Fair Market
Value shall mean the closing price of the Common Stock on the exchange that
trades the greatest volume of Common Stock on the determination date. The
Board's determination of the Fair Market Value of the Common Stock shall be
final, binding and conclusive.

8. REPURCHASE OF SHARES.

A. Call Right. The Company shall have the right to repurchase at
their Fair Market Value, at any time following the termination of the
Optionee's service as a member of the Advisory Board or as an Outside Director
for any reason (including retirement, death or disability), all or any portion
of the Option Shares then held by the Optionee, provided that a member of the
Advisory Board who becomes an Outside Director shall not be deemed to have
terminated service. The Company shall exercise this call right by providing
written notice to the Optionee stating the number of shares the Company desires
to repurchase.

B. Payment Terms. The closing of any repurchase of shares pursuant
to this Section shall take place at a mutually convenient time at the Company's
headquarters within forty-five days after the date of the Company's notice. At
the closing, the Optionee shall surrender his stock certificates and the
Company shall pay to the Optionee in cash the repurchase price of such shares.
Notwithstanding the foregoing, if the sum of the number of Option Shares and
other shares of Common Stock, which the Company has become obligated to
repurchase from all members of the Advisory Board and employees of the Company
(and of any Parent or Subsidiary), including employees who are California
residents, under this Plan, any other plan, or other agreements with Employees,
during the twelve month period immediately preceding the date of the Company's
notice invoking its call right, and the number of shares the Company elects to
repurchase from the Optionee under its call right, exceeds 2% of the sum of:

the number of issued and outstanding shares of Common
Stock of the Company as of the date of the Company's
notice, and

the number of shares under item (i) above which the
Company has repurchased prior to that date,
<PAGE> 7
then the Company shall have the right to pay the repurchase price to the
Optionee over a period of three years in twelve equal quarterly installments of
principal beginning on the date of the closing. The Company's obligation to
pay the repurchase price to the Optionee shall be evidenced by a promissory
note made by the Company which contains such terms and provisions as are
customary and reasonable. The Company shall pay interest on the unpaid
principal balance of the promissory note at the rate of 9% per annum or the
"applicable federal rate" applied to installment purchases pursuant to Section
483 of the Code, whichever is less.

9. TRANSFER RESTRICTIONS.

A. General. Without the prior written consent of the Company, which
consent may be withheld in its sole discretion, an Optionee may not sell,
assign or otherwise transfer any Option Shares to any person or entity other
than the Company or another shareholder of the Company. With regard to any
Option Shares which the Optionee proposes to sell, assign or otherwise transfer
to another shareholder of the Company (a "Permitted Transferee"), the Company
shall have a right of first refusal (the "Right of First Refusal") to purchase
such shares in the manner set forth below:

(1) Upon receiving an offer to purchase or otherwise acquire
any Option Shares, an Optionee shall require the Permitted Transferee to submit
a written offer with respect to such shares stating his name and accompanied by
a deposit in the form of a certified or cashier's check in an amount equal to
not less than 10% of the proposed purchase price (a "Bona Fide Offer"). The
Optionee then shall transmit a copy of the Bona Fide Offer to the Company. The
Company shall have thirty days following receipt of the Bona Fide Offer in
which to purchase all, but not less than all, of the shares referred to in the
Bona Fide Offer at the price stated in the Bona Fide Offer. In its discretion,
the Company may either pay the entire purchase price for the shares in cash or
on the terms stated in the Bona Fide Offer. If the Company fails to tender the
full cash purchase price (or to match such other terms as are stated in the
Bona Fide Offer) for such shares against the proper endorsement and delivery of
the certificate(s) evidencing the shares within such thirty day period, the
Right of First Refusal shall expire with respect to that particular Bona Fide
Offer, but shall remain in full force and effect with respect to all material
modifications of the Bona Fide Offer and all future offers.

(2) Any offered shares which are not purchased by the Company
as provided in (1) above may be sold to the Permitted Transferee named in the
Bona Fide Offer, but not at a lower price, or upon more favorable terms to the
Permitted Transferee, than the price and terms set forth in the Bona Fide
Offer. Title to the offered shares shall pass not later than ninety days after
the expiration of the thirty day period referred to in (1) above. The
Permitted Transferee shall take such shares subject to the same rights and
restrictions regarding transferability and repurchase as would have applied to
him had he acquired such shares upon exercise of an Option
<PAGE> 8
granted to him under this Plan or upon issuance to him of Restricted Stock or
Bonus Stock under this Plan. If the Optionee desires to sell such shares to
the Permitted Transferee at a lower price, or upon terms more favorable to the
Permitted Transferee, than the price and terms stated in the Bona Fide Offer,
the Optionee shall, before he can sell to the Permitted Transferee, again offer
the shares in accordance with the procedure set forth in this Section.

B. Transfer Restrictions Imposed by the 1933 Act.

(1) Notwithstanding any other provision of this Plan or any
Option Agreement, no transfer for value of any Option Shares shall be valid
unless (i) there is an effective registration statement under the Securities
Act of 1933 (the "1933 Act") covering the stock; (ii) the holder has furnished
an opinion of counsel satisfactory to the Company that such registration is not
required; or (iii) the holder has furnished a "no-action" letter from the staff
of the Securities and Exchange Commission satisfactory to the Company that such
registration is not required.

(3) Optionees may acquire stock only for their own account
and not with a view to, or for resale in connection with, any distribution
thereof within the meaning of the 1933 Act, and may dispose of such stock only
in a manner consistent with the
<PAGE> 9
provisions of this Section. The Company may require Optionees to execute and
be bound by an "Investment Letter" representing such investment intent.

10. LAPSE OF REPURCHASE RIGHTS AND TRANSFER RESTRICTIONS.

Notwithstanding anything to the contrary in this Plan, the repurchase
rights set forth in Section 8 and the transfer restrictions set forth in
Section 9(A) shall lapse under the earlier to occur of (i) the effective date
of a registration statement filed with the Securities and Exchange Commission
under the 1933 Act covering securities of the Company whether or not such
shares are covered, or (ii) the date on which a class of securities of the
Company is registered under Section 12 of the Securities Exchange Act of 1934.

11. INDEMNIFICATION OF BOARD.

12. TERMINATION AND AMENDMENT OF THE PLAN.

Unless sooner terminated as provided herein, this Plan shall remain in
effect through December 18, 2006, except that Options granted under the Plan
before its termination shall continue to be administered under the terms of the
Plan until the Options terminate or are exercised. The Board may terminate
this Plan at any time or modify or amend it as it deems advisable and may from
time to time suspend, discontinue or abandon this Plan, except that (i) the
number of shares available under this Plan shall not be increased (except as
provided in Section 5) and the class of eligible Optionees shall not be
modified without shareholder approval, and (ii) no such action by the Board
shall adversely affect any right or obligation with respect to any grant
previously made unless the written consent of the affected Optionee is
obtained.
<PAGE> 10
13. MISCELLANEOUS.

The provisions of this Plan shall be binding upon, and inure to the
benefit of, all successors of any Optionee, including, without limitation, his
estate and the executors, administrators or trustees thereof, his heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Optionee.

Nothing contained in this Plan or in any Option Agreement shall confer
upon any Optionee the right to continue as an Advisory Board member or shall
interfere in any way with the right to terminate the Optionee's service as an
Advisory Board member at any time, with or without cause.

Except as expressly provided in this Plan, Optionees shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class; the dissolution or liquidation of
the Company; the merger or consolidation of the Company with or into any other
corporation; the sale or other transfer of assets or stock of the Company; or
any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.

The grant of an Option pursuant to this Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, or to merge or
consolidate, or to dissolve or liquidate, or to sell or transfer all or any
part of its business or assets.

All Optionees, including those who have exercised their Options, shall
be furnished at least annually financial statements and management's discussion
and analysis of the financial condition and results of operations of the
Company. Such information shall be subject to any agreements regarding the
confidentiality of proprietary information between the Company and any
Optionee; however, each Optionee shall be permitted to remove and copy such
information and review and discuss such information with an attorney or other
financial adviser for the legitimate personal investment planning of such
Optionee.

14. APPROVAL OF PLAN.

This Plan was adopted by resolution of the Board on December 19, 1996.
Options granted under this Plan prior to the date on which this Plan is
approved by the shareholders shall be subject to and conditioned upon
shareholder approval of the Plan within one year of the Effective Date.

<PAGE> 1
LANDMARK SYSTEMS CORPORATION
COMPUTATION OF PRO FORMA NET (LOSS) INCOME PER SHARE
JUNE 30, 1997
EXHIBIT 11.1

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DEC 31 JUN 30 JUN 30
PRIMARY NET INCOME (LOSS) PER SHARE 1996 1996 1997
- ----------------------------------- -------------- -------------- -------------
<S> <C> <C> <C>
Weighted average common shares outstanding(1) 7,546,656 7,546,656 7,540,170

Conversion of mandatorily redeemable Series A Preferred Stock 690,166 690,166 690,166

Conversion of SAB 83 shares:
Mandatorily redeemable Series B Preferred Stock (as if converted method) 592,793 592,793 592,793
Common stock options and warrants (treasury stock method) 538,548 538,548 538,548

Conversion of common stock options and warrants (treasury stock method)(1) - - 584,220
-------------- -------------- ------------

Total weighted average common and common equivalent shares 9,368,162 9,368,162 9,945,896

Net Income $ (1,202,281) (1,574,784) $ 527,961
-------------- -------------- ------------

Pro forma primary net (loss) income per share $ (0.13) $ (0.17) $ 0.05
============== ============== ============

FULLY DILUTED NET (LOSS) INCOME PER SHARE
- -----------------------------------------

Weighted average common shares outstanding(1) 7,546,656 7,546,656 7,540,170

Conversion of mandatorily redeemable Series A Preferred Stock 690,166 690,166 690,166

Conversion of common stock options and warrants (treasury stock method)(1) - - 1,400,808
-------------- -------------- -------------

Total weighted average common and common equivalent shares 9,368,162 9,368,162 10,762,484

Net Income $ (1,202,281) (1,574,784) $ 527,961
-------------- -------------- -------------

Pro forma fully diluted net (loss) income per share
$ (0.13) $ (0.17) $ 0.05
============= ============== =============
</TABLE>

Note: All items reflect a 3 for 2 split of the Company's common stock expected
to take effect immediately prior to the closing of the offering.

(1) Includes redeemable common stock instruments.

<PAGE> 1
Exhibit 22.1

List of Subsidiaries

Landmark Systems International, Inc.

Landmark Systems Pacific Pty. Ltd.

Landmark Systems (EMEA) Limited

Landmark Systems (HK) Ltd.

Landmark Systems GmbH

Landmark Systems Benelux BV

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated April 30, 1997, relating
to the consolidated financial statements of Landmark Systems Corporation, which
appears in such Prospectus. We also consent to the application of such report to
the Financial Statement Schedule for the three years ended December 31, 1996
listed under Item 16(b) of this Registration Statement when such schedule is
read in conjunction with the financial statements referred to in our report. The
audits referred to in such report also included such schedule. We also consent
to the references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data."

PRICE WATERHOUSE LLP

Falls Church, Virginia
September 15, 1997

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,574,787
<SECURITIES> 0
<RECEIVABLES> 9,571,381
<ALLOWANCES> 453,000
<INVENTORY> 0
<CURRENT-ASSETS> 17,374,426
<PP&E> 12,909,399
<DEPRECIATION> 9,766,694
<TOTAL-ASSETS> 27,946,079
<CURRENT-LIABILITIES> 20,129,624
<BONDS> 327,259
10,325,512
0
<COMMON> 73,550
<OTHER-SE> (6,677,626)
<TOTAL-LIABILITY-AND-EQUITY> 27,946,079
<SALES> 6,831,666
<TOTAL-REVENUES> 19,954,875
<CGS> 1,292,278
<TOTAL-COSTS> 2,906,813
<OTHER-EXPENSES> 16,324,747
<LOSS-PROVISION> 158,272
<INTEREST-EXPENSE> 196,407
<INCOME-PRETAX> 879,194
<INCOME-TAX> 351,955
<INCOME-CONTINUING> 527,239
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 527,239
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05

</TABLE>