VIASOFT INC /DE/
10-Q, 1996-11-14
PREPACKAGED SOFTWARE
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              ---------------------
                                    FORM 10-Q
                              ---------------------
(Mark One)

[X]      QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 or 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended September  30, 1996

                                       OR

[ ]      TRANSITION  REPORT  PURSUANT  TO  SECTION 13 or 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from ________________ to __________________

                         Commission File Number 0-25472

                                  VIASOFT, INC.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<CAPTION>
                         Delaware                                                 94-2892506
<S>                                                                   <C>
(State or other jurisdiction of incorporation or organization)        (I.R.S. Employer Identification No.)
</TABLE>


                 3033 North 44th Street, Phoenix, Arizona 85018
               (Address of principal executive offices) (Zip Code)

                                 (602) 952-0050
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.                                Yes [X] No [ ]

As of October  31,  1996,  there were  16,961,337  outstanding  shares of Common
Stock, par value $.001 per share, of VIASOFT, Inc.
<PAGE>
                         VIASOFT, INC. AND SUBSIDIARIES
                                      INDEX


                                                                           Page
                                                                           ----
PART I.  FINANCIAL INFORMATION

   Item 1.        Financial Statements

                  Consolidated Balance Sheets as of September 30, 1996
                  and June 30, 1996                                          3

                  Consolidated Statements of Operations for the
                  three months ended September 30, 1996 and 1995             4

                  Consolidated Statements of Cash Flows for the three
                  months ended September 30, 1996 and 1995                   5

                  Notes to Consolidated Financial Statements                 6

   Item 2.        Management's Discussion and Analysis of Consolidated
                  Financial Condition and Results of Operations              7

PART II. OTHER INFORMATION

   Item 6.        Exhibits and Reports on Form 8-K                          12
<PAGE>
                         VIASOFT, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       ( in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                      September 30,    June 30,
                                                                                          1996           1996
                                                                                      -------------    --------
<S>                                                                                      <C>           <C>
                                             ASSETS                                    (unaudited)
Current assets:
             Cash and cash equivalents                                                   $ 12,751      $  5,009
             Investments, at amortized cost                                                17,793        23,795
             Accounts receivable (less allowance for doubtful accounts
                         of $324 and $279, respectively)                                   11,421        13,335
             Prepaid expenses and other                                                     1,240         1,130
                                                                                         --------      --------
                         Total current assets                                              43,205        43,269
                                                                                         --------      --------

Furniture and equipment:
             Computer equipment                                                             3,230         2,692
             Office furniture and equipment                                                 1,912         1,905
             Capitalized leased equipment                                                     264           264
                                                                                         --------      --------
                         Total furniture and equipment                                      5,406         4,861
             Less:  Accumulated depreciation                                               (3,097)       (2,895)
                                                                                         --------      --------
                         Furniture and equipment, net                                       2,309         1,966
                                                                                         --------      --------

Other assets:                                                                               2,202         1,356
                                                                                         --------      --------
                         Total assets                                                    $ 47,716      $ 46,591
                                                                                         ========      ========

                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
             Accounts payable                                                            $  1,245      $  1,456
             Accrued compensation                                                           1,025         1,491
             Accrued income taxes payable                                                   2,236         1,824
             Other accrued expenses                                                         3,462         3,100
             Deferred revenue                                                               9,255         9,985
             Current maturities of obligations under capital leases                            25            25
                                                                                         --------      --------
                         Total current liabilities                                         17,248        17,881
                                                                                         --------      --------
Deferred revenue, recognized after one year                                                   300           298
                                                                                         --------      --------
Obligations under capital leases, less current maturities                                      12            18
                                                                                         --------      --------
Other long term liabilities                                                                   140           135
                                                                                         --------      --------
Commitments and contingencies
Stockholders' equity:
             Preferred stock, $.001 par value, 2,000,000 shares authorized,
                         no shares issued or outstanding                                     --            --
             Common stock, $.001 par value, 24,000,000 shares authorized,
                          16,811,905 and 16,718,556 shares issued and outstanding at
                         September 30 and June 30, 1996, respectively                          17            17
             Capital in excess of par value                                                27,965        27,771
             Common stock subscriptions receivable                                            (59)          (59)
             Retained earnings                                                              2,062           506
             Cumulative translation adjustment                                                 31            24
                                                                                         --------      --------
                         Total stockholders' equity                                        30,016        28,259
                                                                                         --------      --------
                         Total liabilities and stockholders' equity                      $ 47,716      $ 46,591
                                                                                         ========      ========
</TABLE>

  The accompanying notes are an integral part of these consolidated statements.
                                       3
<PAGE>
                         VIASOFT, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     ( in thousands, except per share data)
                                   (unaudited)


                                                       Three Months Ended
                                                          September 30,
                                                     ----------------------
                                                       1996          1995
                                                     --------      --------
Revenue:
         Software license fees                       $  4,714      $  3,602
         Maintenance fees                               4,047         3,312
         Professional services fees                     5,177         1,491
         Other                                             38            35
                                                     --------      --------
                    Total revenues                     13,976         8,440
                                                     --------      --------

Operating expenses:
         Cost of software license and
                    maintenance fees                      624           659
         Cost of professional services fees             3,921         1,464
         Sales and marketing                            5,168         3,664
         Research and development                       1,127           936
         General and administrative                     1,115           763
                                                     --------      --------
                    Total operating expenses           11,955         7,486
                                                     --------      --------

Income from operations                                  2,021           954
                                                     --------      --------

Other income (expense):
         Interest income                                  386           306
         Interest expense                                  (1)           (3)
         Other income (expense), net                        4            (2)
                                                     --------      --------
                    Total other income (expense)          389           301
                                                     --------      --------

Income before income taxes                              2,410         1,255
         Provision for income taxes                       854           314
                                                     --------      --------
Net income                                           $  1,556      $    941
                                                     ========      ========

Earnings per common and
         common share equivalent                     $   0.09      $   0.06
                                                     ========      ========
Weighted average number of common
         and common share equivalents
         outstanding                                   17,668        17,040
                                                     ========      ========


  The accompanying notes are an integral part of these consolidated statements.
                                       4
<PAGE>
                         VIASOFT, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 ( in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                   September 30,
                                                                              ----------------------
                                                                                1996          1995
                                                                              --------      --------
<S>                                                                           <C>           <C>     
Operating activities:
Net income                                                                    $  1,556      $    941
                                                                              --------      --------
Adjustments to reconcile net income to net cash
        provided by operating activities -
        Depreciation and amortization                                              228           186
Changes in operating assets and liabilities:
        Decrease in accounts receivable                                          1,914           255
        (Increase) decrease in prepaid expenses and other                         (887)          131
        Increase (decrease) in accrued income taxes                                412          (125)
        Increase in accounts payable and other accrued expenses                    156           432
        Decrease in accrued compensation                                          (466)         (169)
        Increase (decrease) in deferred revenue                                   (728)           69
                                                                              --------      --------
               Total adjustments                                                   629           779
                                                                              --------      --------
                      Net cash provided by operating activities                  2,185         1,720
                                                                              --------      --------

Investing activities:
        Capital expenditures                                                      (545)         (105)
        Purchase of investments                                                 (8,828)      (11,885)
        Investment maturities                                                   14,740         6,999
                                                                              --------      --------
                      Net cash provided by (used in) investing activities        5,367        (4,991)
                                                                              --------      --------

Financing activities:
        Principal payments under equipment lease obligations                        (6)          (43)
        Proceeds from issuance of common stock                                     194            39
        Payments received on common stock subscriptions receivable                --              31
                                                                              --------      --------
                      Net cash provided by financing activities                    188            27
                                                                              --------      --------

Effect of exchange rate changes on cash                                              2             1
                                                                              --------      --------
Net increase(decrease) in cash and cash equivalents                              7,742        (3,243)
Cash and cash equivalents, beginning period                                      5,009         7,680
                                                                              --------      --------
Cash and cash equivalents, end of period                                      $ 12,751      $  4,437
                                                                              ========      ========

Supplemental cash flow information:
        Interest paid                                                         $      1      $      3
        Income taxes paid                                                          375            41
</TABLE>
  The accompanying notes are an integral part of these consolidated statements.
                                       5
<PAGE>
                         VIASOFT, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                      Three Months Ended September 30, 1996
                                   (Unaudited)

1.   Summary of Significant Accounting Policies

     Basis of Presentation

     The consolidated financial statements include the accounts of VIASOFT, Inc.
and its wholly owned  subsidiaries  (the  "Company")  after  elimination  of all
significant  intercompany balances and transactions.  The accompanying unaudited
consolidated   financial  statements  have  been  prepared  in  accordance  with
generally accepted accounting  principles for interim financial  information and
the  instructions  to  Form  10-Q.  Accordingly,  they  do not  include  all the
information and footnotes required by Generally Accepted  Accounting  Principles
("GAAP") for complete financial  statements.  In the opinion of management,  all
adjustments  (which include only normal recurring  adjustments)  necessary for a
fair  presentation  of the results for the interim  periods  presented have been
made.  The results for the three month period ended  September  30, 1996 may not
necessarily  be indicative of the results for the entire year.  These  financial
statements  should be read in  conjunction  with the Company's  Annual Report on
Form 10-K for the year ended June 30, 1996.

     Cash and Cash Equivalents and Investments

     The Company's policy is to invest cash in excess of operating  requirements
in  income-producing  investments.  Temporary  cash  investments  are all highly
liquid  investments with maturity of three months or less when purchased and are
considered  to be cash  equivalents  for  cash  flow  purposes.  Investments  in
commercial  paper,  government-backed  securities,  and US Treasury  bills,  are
classified as in accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities".

     Earnings per Common Share and Common Share Equivalent

     Earnings  per share is  computed  by  dividing  net income by the  weighted
average number of common share and common share equivalents  assumed outstanding
during the period.  Primary and fully diluted  earnings per share are considered
to be the same in all periods presented.

     On August 16, 1996, the Company's Board of Directors approved a two-for-one
stock split of its  outstanding  common  stock,  to be effected in the form of a
stock dividend. Each holder of shares of the Company's common stock of record on
August 30, 1996  received  one  additional  share of common  stock for every one
share of stock  held.  All share and per share  information  presented  in these
financial statements reflects the retroactive effect of this stock dividend.
                                       6
<PAGE>

Item 2. Management's Discussion and Analysis of Consolidated Financial Condition
and Results of Operations.

Overview

     The Company  derives its revenues  primarily  from  software  license fees,
software  maintenance  fees,  and  professional  services  fees.  The  Company's
software is licensed  primarily to Fortune 1000  companies and  similarly  sized
organizations worldwide.  Professional services are provided in conjunction with
software   products  and  are  also   provided   separately   to  similar  large
organizations.  The  Company's  products and  services are marketed  through its
United States sales force, both domestically and in Latin America,  and in other
international  markets through foreign branches and subsidiaries and independent
distributors.

     The  Company  licenses   software   products   directly  to  customers  and
distributors for resale.  Software license revenues are recognized upon delivery
and acceptance of the software,  receipt of an executed  noncancellable  license
agreement from the customer or the  distributor's end user and completion of any
significant  remaining  obligations under the agreement.  Revenues from software
licensing  related  to the  Company's  obligation  to provide  certain  customer
support are  deferred and  recognized  straight-line  over the contract  support
period,  which  is  generally  one  year.  Software  maintenance  contracts  are
generally  renewable on an annual  basis,  although the Company also  negotiates
long-term  maintenance  contracts from time to time.  Revenues from  maintenance
contract renewals are deferred and recognized straight-line over the term of the
contracts.  Revenues  from  professional  services  fees are  recognized  as the
related services are provided.

     On November 11, 1996,  the Company  announced the proposed  acquisition  of
Rottger & Osterberg Software Technik GmbH ("R&O"), a privately held company that
provides client/server repository technology.  Headquartered in Munich, Germany,
R&O has approximately  115 employees in several offices located in Germany,  the
United States and the United Kingdom.

     VIASOFT and R&O have entered into an  agreement  pursuant to which  VIASOFT
will  acquire  all of the  outstanding  shares  of R&O for a  purchase  price of
approximately $29.3 million.  The shareholders of R&O will receive $18.5 million
of VIASOFT  Common  Stock , to be valued at an  average  trading  price  shortly
before the  transaction  closes,  and $10  million in cash.  Up to  $800,000  in
expenses of the sellers  shall be paid by VIASOFT  upon  closing.  In  addition,
VIASOFT will assume certain debt of approximately $4.0 million and the agreement
provides  for  earn-out  payments  of up to $4  million  to be made if R&O meets
established revenue targets between closing and June 30, 1997.

     The  transaction  is subject,  among other  conditions,  to  completion  of
VIASOFT's due diligence review and the approval of VIASOFT's Board of Directors.
The  transaction  is expected to close during the second  quarter of fiscal 1997
and will be  accounted  for  under  the  purchase  method.  VIASOFT  anticipates
allocating a substantial  portion of the purchase  price to acquired  in-process
                                       7
<PAGE>
technology, resulting in a significant charge to the Company's operations in the
quarter in which the transaction is completed.

Comparison of Three Months Ended September 30, 1996 and September 30, 1995

     Revenues.  Total  revenues  were  $13,976,000  for the three  months  ended
September 30, 1996, an increase of  approximately  66% from  $8,440,000  for the
three months ended September 30, 1995. Software license fees were $4,714,000 for
the three months ended September 30, 1996, an increase of approximately 31% from
$3,602,000  for the three months ended  September  30,  1995.  Software  license
revenues increased for both domestic and international  businesses for the first
quarter of fiscal  1997  compared to the same  period in fiscal  1996.  Domestic
software  license revenues were $3,022,000 for the first quarter of fiscal 1997,
a 40% increase from domestic license revenues of $2,160,000 in the first quarter
of fiscal 1996. Domestic sales continue to increase as a result of the year 2000
date  change  problem  and the demand for the  Company's  tools to assist in the
solution  to  this  problem.  International  software  license  revenue  grew to
$1,692,000  for the first  quarter of fiscal  1997,  an increase of 17% over the
$1,442,000  in  international  license  revenues for the first quarter of fiscal
1996. This increase was attributable primarily to license sales in the Company's
direct operations improving by 75% over the same period in the prior year fueled
by the  sale  of the  Company's  year  2000  solutions  in the  United  Kingdom.
Maintenance  fees were  $4,047,000  for the first  quarter  of fiscal  1997,  an
increase  of 22% from  $3,312,000  for the first  quarter of fiscal  1996,  as a
result  of new  software  licenses  and,  to a lesser  extent,  customer  system
upgrades and increases in the fees charged for annual maintenance.  Professional
services fees were  $5,177,000 for the first quarter of fiscal 1997, an increase
of 247% from  $1,491,000  in the first  quarter  of fiscal  1996 as the  Company
continued to expand its  professional  services  business to meet the increasing
demand for VIASOFT's  Enterprise  2000sm solution  offering  created by the year
2000 date change problem.  Enterprise 2000 solution  offerings  comprised 85% of
the  Company's  professional  services  fees during the first  quarter of fiscal
1997.

     In order to broaden its distribution  channels, the Company established its
Solution/Technology  Provider  Program in fiscal 1996.  Under this program,  the
Company licenses  VIASOFT's  Enterprise  2000sm solution offering to third-party
Solution/Technology  providers in exchange for license fees and/or royalties. In
conjunction  with a  services  engagement,  the  Company  will  lease or license
certain of its products to the customer or  Solution/Technology  Provider.  This
program generates both software license and royalty  revenues.  During the first
quarter of fiscal 1997,  $922,000 in license revenue was generated  through this
program. Royalty revenues were immaterial.

     Cost of Revenues.  Cost of software  license and  maintenance  fees,  which
includes  royalties,   cost  of  customer  support  and  product  packaging  and
documentation,  was $624,000 in the first  quarter of fiscal 1997, a decrease of
5% from $659,000 in the first  quarter of fiscal 1996.  Gross margins on license
and maintenance  revenues improved to 93% in the first quarter of fiscal 1997 as
compared to 90% in the same period in fiscal 1996. This margin  improvement is a
result of lower  royalties due to the ESW/PC
                                       8
<PAGE>
prepaid royalty having been fully  amortized in fiscal 1996. In addition,  lower
sales through  resellers  reduced external sales  commissions  expense in fiscal
1997 compared to fiscal 1996.

     Cost of professional services fees consists principally of personnel costs,
subcontracting  fees,  and other  costs  related  to the  professional  services
business.  The cost of  professional  services fees was $3,921,000 for the three
months  ended  September  30,  1996,  an  increase  of  approximately  168% from
$1,464,000  for the three  months  ended  September  30,  1995.  The increase in
expenses is a result of additional  personnel  hired and their related costs, as
well as additional  third party  subcontractor  fees, to support the significant
increase in year 2000 projects,  both  domestically and  internationally.  Gross
margin on  professional  services  fees  improved to 24% in the first quarter of
fiscal  1997  as  compared  to 2% for the  same  period  in  fiscal  1996.  This
improvement continues to reflect the Company's focus on improving the management
and delivery of its solution  offerings as well as the increase in  professional
services revenues.

     Sales and  Marketing.  Sales and marketing  expenses  consist  primarily of
salaries,  commissions,  bonuses, and related benefits, and administrative costs
allocated to the Company's  sales and  marketing  personnel as well as marketing
costs.  Sales and  marketing  expenses  were  $5,168,000 in the first quarter of
fiscal  1997,  an increase of  approximately  41% from  $3,664,000  in the first
quarter of fiscal 1996.  This  increase is  attributable  primarily to increased
personnel,  higher  salaries,  increased  travel expenses and bonuses  primarily
related to the increase in personnel,  increased commissions due to the increase
in license and professional services fee revenues and increased marketing costs.
Sales and marketing  expenses as a percentage of total revenues  declined to 37%
in the first  quarter of fiscal  1997  compared  to 43% in the first  quarter of
fiscal 1996 due primarily to the increase in revenues.

     Research and  Development.  Research and development  expenditures  consist
primarily of  personnel  costs of the  research  and  development  staff and the
facilities,  computing,  benefits,  facilities  and other  administrative  costs
allocated to the research and  development  staff and to a lesser extent,  third
party development costs. The Company continues to invest resources in developing
new  products,  updating  its existing  products  through  enhancements  and new
releases, and adding to its product offering through acquisition of new products
and languages.  Total  expenditures for research and development were $1,127,000
for the three months ended  September 30, 1996, an increase of 20% from $936,000
for the three months ended  September 30, 1995.  This increase was primarily due
to an increase in  development  personnel and their related costs and additional
costs for  mainframe  usage,  offset by a reduction  in third party  development
costs. As a percentage of revenues,  research and development  costs declined to
8% in the first  quarter of fiscal 1997 from 11% in the first  quarter of fiscal
1996 due to the increase in revenue.

     General and Administrative. General and administrative expenses include the
costs of finance and accounting,  human  resources,  legal  services,  corporate
information systems and other administrative  functions of the Company.  General
and administrative expenses were $1,115,000 in the first quarter of fiscal 1996,
representing  an  increase of 46%  compared to $763,000 in the first  quarter of
fiscal  1996.  This  increase  was  due to  additional  legal  fees,  as well as
additional  administrative  personnel and their 
                                       9
<PAGE>
related costs, general salary increases, increased external consulting costs and
additional   bonuses.   As  a  percentage   of  total   revenues,   general  and
administrative  expenses  decreased  to 8% for the first  quarter of fiscal 1997
from 9% for the first  quarter of fiscal 1996 due  primarily  to the increase in
revenues.

     Other Income (Expense). Interest income in the first quarter of fiscal 1997
was  $386,000,  compared to $306,000 in the first  quarter of fiscal 1996.  This
increase  was due  primarily  to an increase in funds  available  for short term
investment as a result of cash generated from operations.

     Provision for Income Taxes. The provision for income taxes was $854,000 and
$314,000,  resulting in effective tax rates of 35% and 25%, in the first quarter
of fiscal 1997 and 1996,  respectively.  The Company's  effective tax rates were
affected by the  availability of net operating loss carry  forwards,  which were
fully utilized in fiscal 1996, and certain tax credit carryforwards,  which were
mostly utilized in fiscal 1996.

Liquidity and Capital Resources

     At  September  30,  1996  the  Company  had  cash,  cash  equivalents,  and
investments  of  $30,544,000,   representing  an  increase  of  $1,740,000  from
$28,804,000  at June 30,  1996.  This overall  increase in cash and  investments
resulted primarily from cash generated from operations.

     For the first three months of fiscal 1997, the Company  generated cash from
operations of $2,185,000. Net cash provided was composed primarily of net income
plus a decrease in accounts receivable, increases in accrued income taxes and in
accounts  payable and other  accrued  expenses,  offset by decreases in deferred
revenue and accrued  compensation,  and increases in prepaid royalties and other
assets.

     The  Company's  investing  activities  for the first three months of fiscal
1997  provided  cash of  $5,367,000.  Cash was provided by investing  activities
primarily through certain  investment  maturities being rolled over into shorter
term  investments,  less than 90 days, to take  advantage of higher  yields.  In
addition to the purchase of investments,  the Company used cash for the purchase
of capital equipment primarily for computer equipment.

     The  Company's  financing  activities  for the first three months of fiscal
1997  provided  cash of $188,000.  The cash  provided was  principally  from the
issuance of common stock from the exercise of stock options.

     During  the first  quarter  of fiscal  1995,  the  Company  entered  into a
$525,000  general office and computer  equipment line of credit with a financial
institution  which  provides  for  financing  up to  90% of the  costs  of  such
equipment domestically. The amount available under the line of credit is reduced
by prior  outstanding  equipment  loans from the  financial  institution,  which
aggregated  approximately  $37,000  at  September  30,  1996.  The  term  of the
agreement  extends through  September  1997.  
                                       10
<PAGE>
Additional borrowings under this arrangement,  if any, will bear interest at the
three year US Treasury Bill rate, plus 4.4 percentage points.

     Anticipated  capital  expenditures for the remainder of the fiscal year are
approximately  $1,968,000  in addition to the $545,000 in  expenditures  to date
during the first fiscal quarter for furniture, fixtures, and equipment.

     The proposed  acquisition of R&O  summarized  above will require the use of
approximately $15 million in cash at the time the transaction closes.  Following
closing of the proposed acquisition, the Company believes that its existing cash
and investment  balances,  together with cash generated  from  operations,  will
continue  to be  sufficient  to  meet  the  Company's  liquidity  needs  for the
foreseeable future. The Company plans to review various  alternatives to finance
future anticipated growth.


                   Special Note on Forward-Looking Statements

     Certain   statements  in  this  Form  10-Q  relate  to  future  events  and
expectations  and as such  constitute  "forward-looking  statements"  within the
meaning  of  the  Private  Securities   Litigation  Reform  Act  of  1995.  Such
forward-looking statements involve known and unknown risks and uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company to be materially  different from those  described in or contemplated
by such  forward-looking  statements.  Such factors include,  in addition to any
uncertainties  specifically  identified in the text surrounding such statements,
the Company's  ability to complete and enhance existing  products and develop or
acquire new products and technology to keep pace with technological developments
and evolving industry standards and to respond to changes in customer needs; the
Company's ability to manage the growing of its professional  services  business;
changes in the potential size of the year 2000 market or the anticipated  growth
in that market;  the Company's ability to effectively  compete to sell products,
as well as services,  to customers in the year 2000 market,  the  performance of
the  Company's  distributors  and  members of its  Solution/Technology  Provider
program;  increased  competition  and the ability of the Company to  distinguish
itself  from  its  competitors;   risks  inherent  in  conducting  international
business;  the Company's ability to complete and manage  acquisitions;  charges,
costs and uncertainties  related to acquisitions;  general economic and business
conditions;  the risks  outlined in the  Company's  Form 10-K for the year ended
June 30, 1996 in the section titled "Factors that May Affect Future Results" and
"Management's  Discussion and Analysis of Consolidated  Financial  Condition and
Results  of  Operations"  and  other  risks  detailed  from  time to time in the
Company's Securities and Exchange Commission filings. 
                                       11
<PAGE>
     PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

     (a)   Exhibits
           --------

           Number        Description

           10.1(1)(2)    VIASOFT Executive Bonus Plan

           10.2(1)(2)    FY97 Incentive Plan for Senior Vice President, Americas

           10.3(1)(2)    FY97 Incentive Plan for Vice  President,  International
                         Operations

           10.4(1)(2)    Consulting and Employment Agreement Between The Company
                         and Mark R. Schonau

           11            Computation  of Earnings  Per Share for the three month
                         periods ended September 30, 1996 and 1995.

           27            Financial Data Schedule


     (b)   Reports on Form 8-K
           -------------------

           None

           (1)  Management contract or compensation plan or arrangement

           (2)  Portions  omitted  and  filed  separately  with  the  Commission
                pursuant to a Request for Confidential Treatment dated November,
                13, 1996.
                                       12
<PAGE>
                                   SIGNATURES


   Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the
Company  has  duly  caused  this  report  to be  signed  on  its  behalf  by the
undersigned, thereunto duly authorized.



                                        VIASOFT, INC.



Date: November 13, 1996                 By /s/ Steven D. Whiteman
                                           ----------------------
                                                Steven D. Whiteman
                                                President


Date: November 13, 1996                 By /s/ Mark R. Schonau
                                           -------------------
                                                Mark R. Schonau
                                                Chief Financial Officer

                                              Pages where confidential treatment
                                 has been requested have the words "Confidential
                                     Treatment Requested" typed at the bottom of
                                       the page, and the appropriate information
                                                 has been marked with asterisks.


                                  EXHIBIT 10.1

                          VIASOFT EXECUTIVE BONUS PLAN
                                      FY97

The VIASOFT Executive Bonus Plan is made up of two parts and works as follows:

1.       Quarterly Income Before Taxes Bonus:

         A fixed  quarterly  bonus will be paid if VIASOFT  meets or exceeds its
         Income Before Taxes (IBT)  objective  for the quarter.  If IBT is below
         plan for the  quarter  there will be no bonus  paid.  Missed  quarterly
         bonuses cannot be recovered in future quarters.

                                                      Bonus Amounts
         Titles                       Quarterly Target             Yearly Total
         ------                       ----------------             ------------

         CEO                                $* * *                    $* * *

         EVP                                 * * *                     * * *

         CFO                                 * * *                     * * *

         VP Mktng                            * * *                     * * *

         Corp. Counsel                       * * *                     * * *

         Dir. Human Resources                * * *                     * * *
                                            ------                    ------
                  Totals                    $* * *                    $* * *

2.       Annual Income Before Taxes Bonus:
         --------------------------------

         A bonus will be paid based on taking  VIASOFT's  annual IBT  attainment
         and   applying  it  against  the   budgeted   IBT  (Profit   Attainment
         Percentage).  The Profit Attainment Percentage will be plugged into the
         following formula to determine the bonus:

         If Profit Attainment Percentage is less than 85%, the bonus is zero.


                              VIASOFT CONFIDENTIAL

                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
VIASOFT EXECUTIVE BONUS PLAN FY97


         If Profit  Attainment  Percentage  is greater  than or equal to 85% and
         less than 90%, the bonus is the Profit Attainment Percentage multiplied
         by (Target Bonus X 0.5).

         If Profit  Attainment  Percentage  is greater  than or equal to 90% and
         less  than  105%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by the Target Bonus.

         If Profit  Attainment  Percentage  is greater than or equal to 105% and
         less  than  130%,  the  bonus  is  the  Profit  Attainment   percentage
         multiplied by (Target Bonus X 1.25).

         If Profit  Attainment  Percentage is greater than or equal to 130%, the
         bonus is the Profit Attainment Percentage multiplied by (Target Bonus X
         1.5).



                  POSITION                                      TARGET BONUS
                  --------                                      ------------

                  CEO                                              $   * * *

                  EVP                                                  * * *

                  CFO                                                  * * *

                  VP Marketing                                         * * *

                  Sr. VP Americas' Operations                          * * *

                  VP International Operations                          * * *

                  Corporate Counsel                                    * * *

                  Director Human Resources                             * * *
                                                                ------------
                           Total                                   $   * * *





                              VIASOFT CONFIDENTIAL

                       "CONFIDENTIAL TREATMENT REQUESTED"
                                                                               2
<PAGE>
VIASOFT EXECUTIVE BONUS PLAN FY97

Examples of Annual Income Before Taxes Bonus
- --------------------------------------------

<TABLE>
<CAPTION>
Profit % =        Less Than 85%             85%               100%              115%             135%
<S>                        <C>             <C>               <C>               <C>              <C>
CEO                        $0              $* * *            $* * *            $* * *           $* * *
EVP                        $0              $* * *            $* * *            $* * *           $* * *
CFO                        $0              $* * *            $* * *            $* * *           $* * *
VP Marketing               $0              $* * *            $* * *            $* * *           $* * *
Corp. Counsel              $0              $* * *            $* * *            $* * *           $* * *
Sr. VP Am Oper             $0              $* * *            $* * *            $* * *           $* * *
VP International           $0              $* * *            $* * *            $* * *           $* * *
Dir. Human Res             $0              $* * *            $* * *            $* * *           $* * *
                           --              ------            ------            ------           ------
         Totals            $0              $* * *            $* * *            $* * *           $* * *
</TABLE>

All bonus  payments will be accrued in the  financial  statements in the quarter
earned  and will be  included  as an expense in  determining  whether  the bonus
criteria has been met.  Payment of bonuses will be made only if the criteria for
bonus payments are met with the accrued bonuses in the calculations.






                              VIASOFT CONFIDENTIAL

                       "CONFIDENTIAL TREATMENT REQUESTED"
                                                                               3

                                          Pages where confidential treatment has
                                     been requested have the words "Confidential
                                     Treatment Requested" typed at the bottom of
                                       the page, and the appropriate information
                                                 has been marked with asterisks.

                                  EXHIBIT 10.2

[VIASOFT LOGO]             FY97 INCENTIVE PLAN


Employee:                  Kevin Hickey
- --------
Position:                  Senior Vice President, Americas
- --------
Region:                    Corporate
- ------
Effective Date:            July 1, 1996
- --------------

Quota:                     $* * * *  Americas Annual License Revenue
- -----                      $* * * *  Americas Annual Service Revenue

Territory Description or Geographic Scope:
- ------------------------------------------

Accounts in the Americas.

Revenue Qualification:
- ----------------------

Qualified revenue includes only those fees for the initial term of the licensing
agreement for products, monthly rentals,  training/consulting  services, and any
initial   fees  due  upon   execution   of  a   service   licensing   agreement.
Training/consulting  services revenue will be net of any extraordinary  expenses
(e.g.,  non-reimbursable  travel and computer services,  subcontractors;  unless
they are used in place of employees) which VIASOFT is required to incur. Revenue
for all other items such as maintenance, interest, royalties, and documentation,
etc., are excluded.

Commissions  are earned on  product  revenue in the month  sold,  providing  all
contractual  matters are  resolved,  and the contract is signed by an authorized
representative  of  VIASOFT.  Commissions  are earned on service  revenue in the
month  performed,  providing  all  contractual  matters  are  resolved,  and the
contract  is signed by an  authorized  representative  of  VIASOFT.  Bonuses are
earned  on the last  day of the  fiscal  quarter,  or  year,  to which  they are
applicable. The employee must be actively employed as the SVP, Americas when the
commission  or bonus is earned to receive any  commissions  or bonuses.  VIASOFT
reserves sole  discretion,  without  notice or  limitation,  to deduct  revenues
considered questionable or uncollectible from any compensation  calculation,  or
to accept,  reject,  or cancel an order to a customer  and to deny sales  credit
accordingly. In the event of termination, VIASOFT reserves the right to withhold
any commission or bonus payments if VIASOFT has not yet received  payment by the
customer(s).

All of the  following  conditions  must be satisfied  for  qualified  revenue to
constitute commissionable revenue:

1.  License Revenue
(a) There  must be a fully  executed  and  accepted  product  license  agreement
(signed by an  authorized  customer  representative  and an officer of  VIASOFT)
listing the  qualified  revenues.  The license  must be dated in the month being
considered,  or earlier,  to be included for the month. (b) The licensed product
must have been  either  shipped  or  installed  at the  customer  site.  (c) The
customer must have accepted the licensed  product.  (d) All of the above must be
satisfied by the close of business on the last working day of the month, for the
revenue to be included for the month.


                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
FY97 Senior Vice President, Americas Incentive Plan for Kevin Hickey

2.  Service Revenue
(a) There must be a fully executed  agreement (signed by an authorized  customer
representative  and an officer of VIASOFT) listing the services to be performed.
(b) Revenues will be credited for commission purposes in the month performed.


Incentive Compensation:
- -----------------------

1.  Commission Rates on Revenue

Commissions  will be paid monthly by multiplying  the  commission  factor by the
monthly commissionable revenue as follows:

                                                           Commission Factors
                                                           ------------------
                                                          License      Service

           Up to 100% of the assigned  license  quota      * * *        * * * 

           100% - 110% of the  assigned  license  quota    * * *        * * * 

           Above 110% of the  assigned license quota       * * *        * * *

The commissions will be paid on the basis of a fiscal-year running total and are
not  retroactive.  To determine the actual  commissions  payable each month, the
monthly commissionable revenue is multiplied by the appropriate percent based on
fiscal  year-to-date  performance.  License revenue must be at 100% or better of
the target in order to increase the commission on service revenue.


2.  Quarterly Americas Performance Bonus                      Target:  $* * * *

A quarterly  bonus will be paid based on taking the Americas  Operations  profit
attainment  and  applying  it against  the actual P&L  statement  profit  figure
(license revenue + services revenue less the sales/marketing/services  expenses)
to obtain the profit attainment  percentage.  This percentage will be multiplied
against the target amount using the following formula:

         If Profit Attainment Percentage is less than 75%, the bonus is zero.

         If Profit  Attainment  Percentage  is greater  than or equal to 75% and
         less than 90%, the bonus is the Profit Attainment Percentage multiplied
         by (Target Bonus X 0.5).

         If Profit  Attainment  Percentage  is greater  than or equal to 90% and
         less  than  110%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by the Target Bonus.

         If Profit  Attainment  Percentage is greater than or equal to 110%, the
         bonus is the Profit Attainment Percentage multiplied by (Target Bonus X
         1.25).

There  will be no bonus paid if profit  attainment  is below 75% of plan for the
quarter.  Missed quarterly  bonuses cannot be recovered in future quarters.  The
maximum bonus paid each quarter will be $* * .


VIASOFT CONFIDENTIAL                                                           2
                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
FY97 Senior Vice President, Americas Incentive Plan for Kevin Hickey

3.  Annual Company Performance Bonus                           Target:  $* * * *

A bonus will be paid based on taking  VIASOFT's annual IBT (Income Before Taxes)
attainment  and  applying  it  against  the  budgeted  IBT  (Profit   Attainment
Percentage).  Bonuses will be paid according to the following  table.  If IBT is
85% below  plan for the  year,  there  will be no bonus  paid.  Bonuses  will be
prorated if participation begins within the fiscal year.

         If Profit Attainment Percentage is less than 85%, the bonus is zero.

         If Profit  Attainment  Percentage  is greater  than or equal to 85% and
         less than 90%, the bonus is the Profit Attainment Percentage multiplied
         by (Target Bonus X 0.5).

         If Profit  Attainment  Percentage  is greater  than or equal to 90% and
         less  than  105%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by the Target Bonus.

         If Profit  Attainment  Percentage  is greater than or equal to 105% and
         less  than  130%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by (Target Bonus X 1.25).

         If Profit  Attainment  Percentage is greater than or equal to 130%, the
         bonus is the Profit Attainment Percentage multiplied by (Target Bonus X
         1.5).

Example:  IBT  performance  at  110% will result in a  bonus of $* * * * (110% X
$ * * * X 1.25).

President's Club:
- -----------------

The Senior Vice President, Americas and his/her spouse (or boyfriend/girlfriend)
will  participate in the President's Club provided the individual is employed in
this capacity at the time of the President's Club.

President's  Club  attendance  is NOT part of the  SVP's  regular  compensation.
Should the SVP transfer to another department,  be unable to attend for personal
reasons (i.e.,  illness,  death in the family,  etc.), or leave VIASOFT, the SVP
forfeits the  opportunity to attend and will receive no  compensation in lieu of
attending.

Chargeback:
- -----------

Any revenue that was included in  commissionable  revenues for which the invoice
has not been paid by the  customer  within 90 days  after  inclusion  or that is
refunded the customer,  will be charged back against any commissionable revenues
or applicable  bonuses at the expiration of such 90-day period.  In the event of
charged back sales,  commission  credit will be reinstated only upon the receipt
of payment.  In the event of either  termination or voluntary  resignation,  any
commissions  which are  charged  back will be offset  against  salary,  vacation
payments,  commissions,  or any  other  compensation  available.  If  additional
amounts  remain  due,  the  employee  agrees to  promptly  reimburse  VIASOFT in
accordance  with company  policy.  Any amounts not recovered  will be subject to
collection  action at  employee's  expense,  including  reimbursing  VIASOFT for
attorney fees and costs.

Resolution:
- -----------

Any  questions,   disputes,   or  ambiguities   that  arise  hereunder  will  be
conclusively resolved by the President/CEO at his sole discretion.  Any required
interpretations  of this  plan  will be made by the  President/CEO  at his  sole
discretion.


VIASOFT CONFIDENTIAL                                                           3
                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
FY97 Senior Vice President, Americas Incentive Plan for Kevin Hickey

Payment of Commissions and Bonuses:
- -----------------------------------

Commissions  are paid monthly in the last pay period of the month  following the
month earned.  For example,  commissions earned in July are paid in the last pay
period of August.

Quarterly bonuses are paid on the last pay period of the month following the end
of the fiscal quarter in which the bonus is earned.  For example, a bonus earned
at the completion of the first quarter  (September 30) would be paid in the last
pay period in October. The annual company performance bonus is paid on the first
pay period following the completed annual audit.

Not an Employment Agreement:
- ----------------------------

Nothing in this incentive plan is intended to or does create terms of a contract
of  employment  between any  employee and  VIASOFT,  nor shall  anything in this
incentive  plan  restrict  the  right of  VIASOFT  to  terminate  an  employee's
employment  at any time.  Employees  to whom this  incentive  plan  applies  are
employed by VIASOFT on an  "at-will"  basis,  and have no guarantee of continued
employment  for any period of time.  VIASOFT may terminate such employees at any
time without cause, without reason, and without prior notice.

The terms of this  incentive  plan  only  apply  during  VIASOFT's  fiscal  year
commencing  July 1, 1996,  and ending  June 30,  1997,  and shall have no effect
whatsoever in any other  period.  This plan replaces any and all plans in effect
prior to July 1, 1996.

In the event of employment  termination  (voluntary or  involuntary)  during the
stated plan period, the employee will be paid any earned commissions and bonuses
in accordance  with this plan and  applicable  state and federal  laws.  VIASOFT
reserves the right to withhold any  commission or bonus  payments if VIASOFT has
not yet received payment by the customer for that sale.

VIASOFT reserves the right to change,  amend, or separate any employee from this
plan at any time and for any reason,  including (without  limitation) changes in
business conditions,  corporate objectives, or an individual's performance. This
can be done without prior notice.

No participant  will have any right to money accrued through the plan unless and
until all terms, provisions, or conditions, as set forth in this plan, have been
met.

Employee Acknowledgment and Agreement:
- --------------------------------------

I acknowledge that I have received,  read, understand and agree to the terms and
conditions of this plan.


/s/ Kevin Hickey                                              September 24, 1996
- -----------------------------                                 ------------------
Kevin Hickey                                                  DATE
VIASOFT CONFIDENTIAL                                                           4

                                          Pages where confidential treatment has
                                     been requested have the words "Confidential
                                     Treatment Requested" typed at the bottom of
                                       the page, and the appropriate information
                                                 has been marked with asterisks.

                                  EXHIBIT 10.3

[VIASOFT LOGO]             FY97 INCENTIVE PLAN


Employee:                  Colin Reardon
- --------
Position:                  Vice President, International Operations
- --------
Region:                    International
- ------
Effective Date:            July 1, 1996
- --------------

Quota:                     $* * * * International    Annual   License    revenue
- ------                     (U.S. dollars)
                           $* * * * International   Annual    Service    revenue
                           (U.S. dollars)

Territory Description or Geographic Scope:
- ------------------------------------------

Accounts outside of the Americas.

Revenue Qualification:
- ----------------------

Qualified revenue includes only those fees for the initial term of the licensing
agreement for products, monthly rentals,  training/consulting  services, and any
initial  fees  due  upon  execution  of  a  service  licensing  agreement,   and
maintenance    sold   in   the   UK   beyond   the   90-day   warranty   period.
Training/consulting  services revenue will be net of any extraordinary  expenses
(e.g.,  non-reimbursable  travel and computer services,  subcontractors;  unless
they are used in place of employees) which VIASOFT is required to incur. Revenue
for all other items such as maintenance, interest, royalties, and documentation,
etc., are excluded.

Commissions  are earned on  product  revenue in the month  sold,  providing  all
contractual  matters are  resolved,  and the contract is signed by an authorized
representative  of  VIASOFT.  Commissions  are earned on service  revenue in the
month  performed,  providing  all  contractual  matters  are  resolved,  and the
contract  is signed by an  authorized  representative  of  VIASOFT.  Bonuses are
earned  on the last  day of the  fiscal  quarter,  or  year,  to which  they are
applicable.  The  employee  must  be  actively  employed  as a  VP-International
Operations  when the commission or bonus is earned to receive any commissions or
bonuses.  VIASOFT  reserves sole  discretion,  without notice or limitation,  to
deduct revenues  considered  questionable or uncollectible from any compensation
calculation,  or to accept, reject, or cancel an order to a customer and to deny
sales credit  accordingly.  In the event of  termination,  VIASOFT  reserves the
right to  withhold  any  commission  or bonus  payments  if VIASOFT  has not yet
received payment by the customer(s).

All of the  following  conditions  must be satisfied  for  qualified  revenue to
constitute commissionable revenue:

1.  License Revenue
(a) There  must be a fully  executed  and  accepted  product  license  agreement
(signed by an  authorized  customer  representative  and an officer of  VIASOFT)
listing the  qualified  revenues.  The license  must be dated in the month being
considered,  or earlier,  to be included for the month. (b) The licensed product
must have been  either  shipped  or  installed  at the  customer  site.  (c) The
customer must have accepted the licensed  product.  (d) All of the above must be
satisfied by the close of business on the last working day of the month, for the
revenue to be included for the month.

                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
FY97 Vice President, International Operations Incentive Plan for Colin Reardon

2.  Service Revenue
(a) There must be a fully executed  agreement (signed by an authorized  customer
representative  and an officer of VIASOFT) listing the services to be performed.
(b) Revenues will be credited for commission purposes in the month performed.

Incentive Compensation:
- -----------------------

1.  Commission Rates on Revenue

Commissions  will be paid monthly by multiplying  the  commission  factor by the
monthly commissionable revenue as follows.  Commission calculation will be in UK
dollars.

                                                           Commission Factors
                                                           ------------------
                                                          License      Service

           Up to 100% of the assigned  license  quota      * * *        * * * 

           100% - 110% of the  assigned  license  quota    * * *        * * * 

           Above 110% of the  assigned license quota       * * *        * * *

The commissions will be paid on the basis of a fiscal-year running total and are
not  retroactive.  To determine the actual  commissions  payable each month, the
monthly commissionable revenue is multiplied by the appropriate percent based on
fiscal  year-to-date  performance.  License revenue must be at 100% or better of
the target in order to increase the commission on service revenue.


2.    Quarterly International Performance Bonus   Target: pound sterling * * * *

A  quarterly  bonus will be paid based on taking  the  International  Operations
profit  attainment  (after  royalties)  and  applying  it against the actual P&L
statement  profit  figure to  obtain  the  profit  attainment  percentage.  This
percentage  will be  multiplied  against the target  amount using the  following
formula:

         If Profit Attainment Percentage is less than 75%, the bonus is zero.

         If Profit  Attainment  Percentage  is greater  than or equal to 75% and
         less than 90%, the bonus is the Profit Attainment Percentage multiplied
         by (Target Bonus X 0.5).

         If Profit  Attainment  Percentage  is greater  than or equal to 90% and
         less  than  110%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by the Target Bonus.

         If Profit  Attainment  Percentage is greater than or equal to 110%, the
         bonus is the Profit Attainment Percentage multiplied by (Target Bonus X
         1.25).

Missed quarterly bonuses cannot be recovered in future quarters.



VIASOFT CONFIDENTIAL                                                           2
                       "CONFIDENTIAL TREATEMENT REQUESTED"
<PAGE>
FY97 Vice President, International Operations Incentive Plan for Colin Reardon

3.  Annual Company Performance Bonus          Target: pound sterling * * * *

A bonus will be paid based on taking  VIASOFT's annual IBT (Income Before Taxes)
attainment  and  applying  it  against  the  budgeted  IBT  (Profit   Attainment
Percentage).  Bonuses will be paid according to the following  table.  If IBT is
85% below  plan for the  year,  there  will be no bonus  paid.  Bonuses  will be
prorated if participation begins within the fiscal year.

         If Profit Attainment Percentage is less than 85%, the bonus is zero.

         If Profit  Attainment  Percentage  is greater  than or equal to 85% and
         less than 90%, the bonus is the Profit Attainment Percentage multiplied
         by (Target Bonus X 0.5).

         If Profit  Attainment  Percentage  is greater  than or equal to 90% and
         less  than  105%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by the Target Bonus.

         If Profit  Attainment  Percentage  is greater than or equal to 105% and
         less  than  130%,  the  bonus  is  the  Profit  Attainment   Percentage
         multiplied by (Target Bonus X 1.25).

         If Profit  Attainment  Percentage is greater than or equal to 130%, the
         bonus is the Profit Attainment Percentage multiplied by (Target Bonus X
         1.5).

Example:  IBT performance at 110% will result in a bonus of pound sterling * * *
(110% X pound sterling * * * X 1.25).


President's Club:
- -----------------

The  Vice   President,   International   Operations   and  his/her   spouse  (or
boyfriend/girlfriend)  will  participate  in the  President's  Club provided the
individual is employed in this capacity at the time of the President's Club.

President's Club attendance is NOT part of the VP's regular compensation. Should
the VP transfer to another department,  be unable to attend for personal reasons
(i.e.,  illness,  death in the family,  etc.), or leave VIASOFT, the VP forfeits
the opportunity to attend and will receive no compensation in lieu of attending.


Chargeback:
- -----------

Any revenue that was included in  commissionable  revenues for which the invoice
has not been  paid by the  customer  within  90 days (or 150 days in the case of
distributors) after inclusion or that is refunded the customer,  will be charged
back against any commissionable revenues or applicable bonuses at the expiration
of such 90-day  period.  In the event of charged back sales,  commission  credit
will be  reinstated  only upon the  receipt of  payment.  In the event of either
termination or voluntary  resignation,  any  commissions  which are charged back
will be offset against  salary,  vacation  payments,  commissions,  or any other
compensation available. If additional amounts remain due, the employee agrees to
promptly  reimburse  VIASOFT in accordance with company policy.  Any amounts not
recovered will be subject to collection action at employee's expense,  including
reimbursing VIASOFT for attorney fees and costs.

VIASOFT CONFIDENTIAL                                                           3
                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
FY97 Vice President, International Operations Incentive Plan for Colin Reardon

Resolution:
- -----------

Any  questions,   disputes,   or  ambiguities   that  arise  hereunder  will  be
conclusively resolved by the President/CEO at his sole discretion.  Any required
interpretations  of this  plan  will be made by the  President/CEO  at his  sole
discretion.


Payment of Commissions and Bonuses:
- -----------------------------------

Commissions  are paid monthly on the last day of the month  following  the month
earned. For example, commissions earned in July are paid August 31.

Quarterly bonuses are paid on the last day of the month following the end of the
fiscal quarter in which the bonus is earned.  For example, a bonus earned at the
completion of the first quarter  (September 30) would be paid on October 31. The
annual company  performance  bonus is paid on the first pay period following the
completed annual audit.


Other:
- ------

The terms of this  incentive  plan  only  apply  during  VIASOFT's  fiscal  year
commencing  July 1, 1996,  and ending  June 30,  1997,  and shall have no effect
whatsoever in any other  period.  This plan replaces any and all plans in effect
prior to July 1, 1996.

In the event of employment  termination  (voluntary or  involuntary)  during the
stated plan period, the employee will be paid any earned commissions and bonuses
in accordance with this plan and applicable  country laws.  VIASOFT reserves the
right to  withhold  any  commission  or bonus  payments  if VIASOFT  has not yet
received payment by the customer for that sale.

VIASOFT reserves the right to change,  amend, or separate any employee from this
plan at any time and for any reason,  including (without  limitation) changes in
business conditions,  corporate objectives, or an individual's performance. This
can be done without prior notice.

No participant  will have any right to money accrued through the plan unless and
until all terms, provisions, or conditions, as set forth in this plan, have been
met.


Employee Acknowledgment and Agreement:
- --------------------------------------

I acknowledge that I have received,  read, understand and agree to the terms and
conditions of this plan.


/s/ CJ Reardon                                                    21 August 1996
- ----------------------------------                                --------------
Colin Reardon                                                     DATE
VIASOFT CONFIDENTIAL                                                           4


                                     Pages where confidential treatment has been
                                requested have the words "Confidential Treatment
                             Requested" typed at the bottom of the page, and the
                         appropriate information has been marked with asterisks.


                                  EXHIBIT 10.4

                       CONSULTING AND EMPLOYMENT AGREEMENT

         THIS CONSULTING AND EMPLOYMENT  AGREEMENT (the "Agreement") is made and
entered into as of the 23rd day of July, 1996, by and between  VIASOFT,  Inc., a
Delaware  corporation (the "Company"),  and Mark Randall Schonau,  an individual
("Executive").

                                   WITNESSETH:

         WHEREAS,  the Company desires to retain the services of Executive,  and
Executive  desires to be  employed  by the  Company,  following  fulfillment  of
certain commitments to his present employer, on the terms and conditions of this
Agreement;

         WHEREAS,  the Company  desires to receive certain  consulting  services
from Executive prior to the commencement of his employment and Executive and his
current employer are willing for Executive to provide such consulting services;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants and agreements set forth herein, the Company and Executive,  intending
to be legally bound, hereby agree as follows:

         1.  Consulting  Services.  For a period  commencing on the date of this
Agreement  through the Employment  Date defined below (the  "Consulting  Term"),
Executive  shall  provide to the Company upon  request at mutually  agreed times
consulting services related to finance,  accounting,  shareholder  relations and
such other  matters as  consultant  and the Company's  Chief  Executive  Officer
("CEO")  shall  agree  from time to time.  Company  shall pay  Executive  a Five
Thousand  Dollar  ($5,000)  lump  sum  payment  on the  Employment  Date for the
services to be performed during the Consulting Term.

         2. Employment.  Effective on the last to occur of September 15, 1996 or
one (1) business day after the effective  date of the  currently-pending  merger
between Cycare Systems,  Inc. and HBOC of Georgia (the "Employment  Date"),  the
Company shall employ Executive as Vice President of Finance and  Administration,
Treasurer and Chief Financial Officer of the Company, and Executive accepts such
employment  and agrees to perform  services for the Company,  subject  always to
such  resolutions as are established from time to time by the Board of Directors
of the Company, for the period and upon the other terms and conditions set forth
in this Agreement.
<PAGE>
         3. Term of  Employment.  The term of Executive's  employment  hereunder
shall commence on the  Employment  Date, and shall continue until this Agreement
is  terminated  by either party,  for any reason  whatsoever,  this being an "at
will"  employment  agreement,  provided that Sections 6 and 10 of this Agreement
shall  govern  the  amount  of any  compensation  to be paid to  Executive  upon
termination of this Agreement.

         4. Position and Duties.

                  4.1 Service with the  Company.  Commencing  on the  Employment
Date and  thereafter  during  the term of this  Agreement,  Executive  agrees to
perform such  executive  employment  duties as the Company's CEO shall assign to
him from  time to time,  provided  such  duties  are not  inconsistent  with his
position with the Company as described in Section 2 hereof.

                  4.2 No Conflicting Duties.  During the term hereof,  Executive
shall not serve as an officer, director, employee,  consultant or advisor to any
other business  (other than to Executive's  current  employer,  Cycare  Systems,
Inc.,  during the  Consulting  Term)  without the prior  written  consent of the
Company's  Board of Directors.  Executive  hereby confirms that he has disclosed
this Agreement to his current employer,  he is under no contractual  commitments
inconsistent  with his obligations set forth in this Agreement,  and that during
the term of this  Agreement,  he will not render or perform  services,  or enter
into any contract to do so, for any other  corporation,  firm,  entity or person
which are inconsistent with the provisions of this Agreement.

         5. Compensation.

                  5.1  Base  Salary.  As  compensation  for all  services  to be
rendered by Executive under this Agreement,  the Company shall pay to Executive,
commencing  on the  Employment  Date,  a base  annual  salary at the rate of One
Hundred Sixty Thousand  Dollars  ($160,000) per year (the "Base Salary"),  which
shall be paid on a regular basis in accordance with the Company's normal payroll
procedures  and  policies.  The  amount of the Base  Salary  shall be subject to
periodic review by the Board of Directors or a committee thereof.

         5.2 Bonuses.  Executive  shall be eligible for an initial bonus for the
current  fiscal year in  accordance  with the terms and  conditions of the bonus
plan  attached  hereto as Exhibit  A;  *****************************************
************.  If the Company  adopts bonus plans for future  periods for senior
vice-presidential  level  management of the Company,  Executive  shall be in the
class of employees eligible to participate therein;  provided, that all specific
bonus awards remain subject to approval of the Board of Directors or a committee
thereof.

                  5.3 Stock Options.  The Board of Directors of the Company will
grant to
                                       2
                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
Executive  "nonqualified  stock  options"  to  purchase  up to seventy  thousand
(70,000) shares of the Company's common stock at an exercise price of Thirty-one
and 75/100 Dollars ($31.75) per share. Such options shall be granted pursuant to
the Company's 1994 Equity  Incentive  Plan (the "Plan") and award  agreements in
the form attached hereto as Exhibit B setting forth such terms and conditions as
the Board deems appropriate, including without limitation vesting conditions and
restrictions  on  transfer of such stock.  The  vesting  conditions  shall be as
follows: Provided that Executive is an employee of the Company on the applicable
vesting date, (i)  twenty-five  percent (25%) of the option shares shall vest on
the first  anniversary  date of this  Agreement and the  remaining  seventy-five
percent (75%) of the option shares shall vest ratably on a quarterly  basis over
the three (3) years  following the first  anniversary  date of this Agreement so
that  all  shares  will  have  vested  on the  fourth  anniversary  date of this
Agreement.

                  5.4  Participation  in  Benefit  Plans.   Executive  shall  be
included to the extent  eligible  thereunder in any and all plans of the Company
providing  general  benefits  for the  Company's  employees,  including  but not
limited to insurance,  employee stock purchase plan, 401(k) plan, sick days, and
holidays. Executive's participation in any such plan or program shall be subject
to the provisions,  rules and regulations  applicable  thereto.  Executive shall
also be entitled to three (3) weeks paid  vacation  per year for his first (1st)
thirty-six  (36) months of employment  with the Company and  thereafter,  if any
member of the senior  vice-presidential level management of the Company receives
four (4) weeks'  paid  vacation  per year upon  attaining  a  specified  tenure,
Executive  will  receive four (4) weeks of paid  vacation  upon  attaining  such
tenure.

                  5.5  Business  Expenses.  In  accordance  with  the  Company's
policies  established  from  time to time,  the  Company  will pay or  reimburse
Executive for all reasonable and necessary  out-of-pocket  expenses  incurred by
him in the  performance  of his  duties  under  this  Agreement,  subject to the
presentment of appropriate  documentation  in accordance  with standard  Company
policies.

                  5.6 Change of Control.  In the event the Board of Directors or
a committee thereof approves a severance benefit for senior vice-president level
management of the Company (other than the Executive Vice-President) that becomes
effective  in the event of a Change of Control of the Company (as defined in the
Plan),  Executive  shall  receive  a benefit  which is no less than the  largest
benefit given to any member of such class of management.

         6. Compensation  Upon the Termination of Executive's  Employment by the
Company.

                  6.1 In the event that  Executive's  employment  is  terminated
pursuant to Section 10.1 (Disability), 10.3 (Cause), or 10.4 (Resignation), then
Executive  shall be entitled to receive  Executive's  then current  monthly Base
Salary through the date his employment is terminated,  but no other compensation
of any kind or amount.
                                       3
<PAGE>
                  6.2 In the event Executive's employment is terminated pursuant
to Section 10.2 (Death),  Executive's beneficiary or a beneficiary designated by
Executive  in writing to the  Company,  or in the  absence of such  beneficiary,
Executive's  estate,  shall be  entitled  to receive  Executive's  then  current
monthly Base Salary through the end of the month in which his death occurs,  but
no other compensation of any kind or amount.

                  6.3  In the  event  Executive  is  terminated  by the  Company
pursuant to Section  10.5  (Without  Cause) or 10.6 (Good  Reason),  the Company
shall (i) pay to Executive,  as a severance allowance,  his then current monthly
Base Salary for the six (6) month period following the date of termination, (ii)
maintain in full force and effect health  insurance for the Executive  until the
first to occur of his  attainment  of  alternative  employment or six (6) months
following the  termination  date of his employment  hereunder,  and (iii) pay no
other  compensation  of any kind or amount.  Further,  in the event the Board of
Directors or a committee  thereof  approves a severance  benefit longer than six
(6) months  (other than in the event of a Change of  Control)  for any member of
the senior  vice-president  level  management  of the  Company  (other  than the
Executive  Vice-President),  Executive's  foregoing  severance  benefit  will be
extended to such longer term.

         All payments  required to be made by the Company to Executive  pursuant
to this  Section 5 shall be paid in the  manner  and at the times  specified  in
Section 4.1 hereof.

         7. Confidentiality and Proprietary Information. Executive shall execute
and deliver a Confidentiality and Proprietary  Information Agreement in the form
of  Exhibit  C  attached   hereto  on  or  before  the   Employment   Date  (the
"Confidentiality  Agreement") and agrees that he shall be bound by the terms and
conditions set forth in the Confidentiality Agreement during the Consulting Term
to the same extent as if he were an employee of the  Company.  In the event that
the Employment  Date does not occur,  Executive's  obligations  set forth in the
Consulting  Agreement shall survive  termination of this Agreement in the manner
and to the extent set forth therein regarding termination of employment.

         8.  Ventures.  If,  during  the term of this  Agreement,  Executive  is
engaged in or  associated  with the  planning or  implementing  of any  project,
program or venture  involving  the Company  and a third  party or  parties,  all
rights in the project,  program or venture shall belong to the Company and shall
constitute a corporate opportunity belonging exclusively to the Company.  Except
as approved by the Company's Board of Directors, Executive shall not be entitled
to any  interest  in such  project,  program or  venture  or to any  commission,
finder's fee or other compensation in connection therewith other than the salary
to be paid to Executive as provided in this Agreement.
                                       4
<PAGE>
         9.  Non-Competition;  Solicitation  of Customers  and  Solicitation  of
Employees.

                  9.1 Non-Competition.

                  (a) Executive agrees that, during the period of his employment
hereunder and for a period of six (6) months  following the  termination  of his
employment  with  the  Company  for  any  reason,  he  shall  not,  directly  or
indirectly,  engage in  competition  with the  Company  within  any state in the
United  States,  or any  country,  in which the Company is then  conducting  its
business  (the  "Territory")  in any manner or capacity  (e.g.,  as a management
consultant,  principal,  partner, officer,  director,  stockholder or management
employee) in any phase of the Company's business as then being conducted.

                  (b) Ownership by Executive,  as a passive investment,  of less
than 1% of the outstanding  shares of capital stock of any corporation listed on
a national securities exchange or publicly traded in the over-the-counter market
shall not constitute a breach of this Section 9.

                  (c)  Executive  further  agrees that,  during the term of this
Agreement and for six (6) months after its termination, he will not, directly or
indirectly,  assist or encourage any other person in carrying  out,  directly or
indirectly,  any activity that would be  prohibited  by the above  provisions of
this Section 9 if such activity were carried out by Executive,  either  directly
or indirectly,  and in particular Executive agrees that he will not, directly or
indirectly,  induce  any  employee  of the  Company to carry  out,  directly  or
indirectly, any such activity.

                  9.2 Agreement Not to Solicit Customers.  Executive agrees that
during his  employment  by the Company  hereunder  and for the period in which a
covenant  not to compete is in effect  hereunder as to  Executive,  he will not,
either directly or indirectly,  on his own behalf or in the service or on behalf
of others,  solicit,  divert or  appropriate,  or attempt to solicit,  divert or
appropriate,  to any  competing  business (i) any person or entity whose account
with the Company was sold or serviced by the Company  during the year  preceding
the termination of such  employment,  or (ii) any person or entity whose account
with the  Company  has been  directly  solicited  at least  twice by the Company
within  the  eighteen  (18) month  period  prior to the date of  termination  of
employment.

                  9.3 Agreement Not to Solicit Employees.  Executive agrees that
during his employment by the Company hereunder and for the three (3) year period
following the  termination of such  employment  for any reason or no reason,  he
will not, either directly or indirectly,  on his own behalf or in the service or
on behalf of others solicit,  divert or hire away, or attempt to solicit, divert
or hire away any person then  employed by the Company or then serving as a sales
representative or distributor of the Company.
                                       5
<PAGE>
         10. Termination.

                  10.1 Disability.  Executive's  employment shall terminate upon
Executive's  becoming totally or permanently  disabled for a period of three (3)
months or more. For purposes of this Agreement, the term "totally or permanently
disabled"  or "total or permanent  disability"  means  Executive's  inability on
account  of  sickness  or  accident,  whether or not  job-related,  to engage in
regularly or to perform  adequately his assigned duties under this Agreement.  A
reasonable  determination  by the  Board  of  Directors  of the  existence  of a
disability  shall be  conclusive  for all  purposes  hereunder.  In making  such
determination of disability,  the Board of Directors may utilize such advice and
consultation  as the  Board of  Directors  deems  appropriate,  but  there is no
requirement  of  procedure  or  formality   associated  with  the  making  of  a
determination of disability.

                  10.2  Death  of  Executive.   Executive's   employment   shall
terminate immediately upon the death of Executive.

                  10.3   Termination  for  Cause.   The  Company  may  terminate
Executive's  employment  at  any  time  for  "Cause"  (as  hereinafter  defined)
immediately  upon written  notice to  Executive.  Such written  notice shall set
forth with reasonable  specificity the Company's basis for such termination.  As
used herein, the term "Cause" shall mean the occurrence of any of the following:

                           (i) Executive's gross and willful misconduct which is
injurious to the Company;

                           (ii) Executive's  engaging in fraudulent or dishonest
conduct  with  respect  to the  Company's  business  or in conduct of a criminal
nature or acts of serious moral turpitude that may have an adverse impact on the
Company's standing and reputation;

                           (iii)  the  continued  and  unjustified   failure  or
refusal by Executive to perform the duties  required of him by this Agreement or
to adhere to written Company policy, which failure or refusal shall not be cured
within fifteen (15) days  following  receipt by Executive of written notice from
the  Company  specifying  the  factors or events  constituting  such  failure or
refusal;

                           (iv)  Executive's  use of  drugs  and/or  alcohol  in
violation of then current Company policy; or

                           (v)  Executive's   breach  of  his  obligation  under
Section 4.2 hereof or under the  Confidentiality  Agreement which, if capable of
cure,  shall not be cured within  fifteen (15) days after written notice thereof
to Executive.
                                       6
<PAGE>
                  10.4 Resignation.  Executive's  employment shall be terminated
on the  earlier  of the date  that is three (3)  months  following  the  written
submission  of  Executive's  resignation  to the Board or the earlier  date such
resignation is accepted by the Company.

                  10.5  Termination  Without  Cause.  The Company may  terminate
Executive's   employment   without  cause  upon  written  notice  to  Executive.
Termination  "without  cause" shall mean  termination of employment on any basis
other than termination of Executive's  employment hereunder pursuant to Sections
10.1, 10.2, 10.3, 10.4 or 10.6.

                  10.6 Resignation for Good Reason. Executive's employment shall
be  terminated  on the  date he  submits  written  notice  to the  Board  of his
resignation for Good Reason.  For purposes of this Agreement,  Good Reason shall
mean the occurrence of any of the following:

                           (i) The  Company's  failure to elect or reelect or to
appoint  or  reappoint  Executive  to  offices,  titles  or  positions  carrying
comparable  authority,  responsibilities,  dignity,  and  importance  to that of
Executive's offices and positions as of the Employment Date;

                           (ii)  Material  change by the Company in  Executive's
function,  duties or  responsibilities  (including  reporting  responsibilities)
which  would  cause  Executive's  position  with the  Company  to become of less
dignity, responsibility and importance than those associated with his functions,
duties or responsibilities as of the Employment Date;

                           (iii)  Executive's  Base  Salary  is  reduced  by the
Company or there is a material  reduction in the benefits that are in effect for
the Executive on the Employment  Date, and comparable  reductions  have not been
made in salary or  benefits  of the other  members  of senior  vice-presidential
level management of the Company;

                           (iv) Except with  Executive's  prior written consent,
relocation of Executive's principal place of employment to a location outside of
Maricopa County, Arizona;

                           (v)  The   failure  by  the  Company  to  obtain  the
assumption  by operation  of law or  otherwise  of this  Agreement by any entity
which  is the  surviving  entity  in any  merger  or  other  form  of  corporate
reorganization  involving  the Company or by any entity  which  acquires  all or
substantially all of the Company's assets; or

                           (vi) Other  material  breach of this Agreement by the
Company, which breach is not cured within fifteen (15) days after written notice
thereof is received by the Company.

                  10.7 Termination prior to Employment Date. Either Executive or
the Company may terminate this Agreement upon written notice to the other if the
Employment  Date  shall not have  occurred  on or  before  September  30,  1996.
Executive may terminate  this Agreement upon 
                                       7
<PAGE>
written  notice to the Company prior to the Employment  Date if Executive  shall
determine  in good faith  that such  termination  is  required  to  fulfill  his
fiduciary  duties to Cycare Systems,  Inc. No compensation of any kind or amount
shall be payable by the Company to Executive in the event of termination of this
Agreement  by either  party  under this  Section  10.7,  including  the lump sum
payment to Executive described under Section 1 above.

                  10.8  Surrender of Records and Property.  Upon  termination of
his employment with the Company, Executive shall deliver promptly to the Company
all records, manuals, books, blank forms, documents,  letters, memoranda, notes,
notebooks,  reports, data, tables, calculations or copies thereof, which are the
property of the Company and which relate in any way to the  business,  products,
practices or techniques of the Company,  and all other  property,  trade secrets
and confidential information of the Company,  including, but not limited to, all
documents  which in whole or in part contain any trade  secrets or  confidential
information of the Company, which in any of these cases are in his possession or
under his control.

         11. Assignment.  This Agreement shall not be assignable, in whole or in
part,  by either party  without the written  consent of the other party,  except
that the Company may,  without the consent of  Executive,  assign its rights and
obligations  under this  Agreement to any  corporation,  firm or other  business
entity  (i) with or into which the  Company  may merge or  consolidate,  (ii) to
which the Company may sell or transfer all or substantially all of its assets or
(iii) which  controls,  is  controlled by or is under common  control with,  the
Company,  where  control  means  the  ownership  of 50% or  more  of the  equity
investment  and of the voting power of an entity.  Upon such  assignment  by the
Company,  the Company shall obtain the assignees' written agreement  enforceable
by Executive to assume and perform,  from and after the date of such assignment,
the  terms,  conditions,  and  provisions  imposed  by this  Agreement  upon the
Company.  After any such assignment by the Company and such written agreement by
the  Assignee,  the  Company  shall be  discharged  from all  further  liability
hereunder and such assignee shall thereafter be deemed to be the Company for the
purposes of all provisions of this Agreement including this Section 11.

         12. Injunctive  Relief.  Executive agrees that it would be difficult to
compensate  the Company fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 7, 9 and
10.8.  Accordingly,  Executive  specifically  agrees that the  Company  shall be
entitled to temporary and permanent  injunctive relief to enforce the provisions
of this Agreement.  This provision with respect to injunctive  relief shall not,
however,  diminish  the right of the  Company  to claim and  recover  damages in
addition to injunctive relief.

         13.  Dispute  Resolution.  If there  shall be any  dispute  between the
Company  and  Executive  (i) in the  event  of any  termination  of  Executive's
employment by the Company,  whether such  termination  was for Cause, or (ii) in
the event of any  termination  of employment  by Executive,  whether Good Reason
existed,  or (iii) otherwise under any agreement  between Company and Executive,
the  dispute  shall  be  resolved  in  accordance  with the  dispute  resolution
                                       8
<PAGE>
procedures  set  forth  in  Exhibit  D  hereto,  the  provisions  of  which  are
incorporated  as a part hereof,  and the parties  hereto  hereby agree that such
dispute  resolution  procedures  shall be the exclusive method for resolution of
disputes under this Agreement.  Notwithstanding anything herein to the contrary,
nothing in this  Section 13 or Exhibit D shall  preclude  any party from seeking
interim or provisional  relief,  in the form of a temporary  restraining  order,
preliminary  injunction or other interim  equitable relief concerning a dispute,
either prior to or during any of the  negotiations  or proceedings  provided for
herein,  if deemed  necessary  by a party,  in its  discretion,  to protect  the
interests  of such  party.  Further,  this  Section  13  shall  be  specifically
enforceable.  IT IS EXPRESSLY  UNDERSTOOD THAT BY SIGNING THIS AGREEMENT,  WHICH
INCORPORATES BINDING ARBITRATION, THE COMPANY AND EXECUTIVE AGREE TO WAIVE COURT
OR JURY TRIAL AND TO WAIVE PUNITIVE,  STATUTORY,  CONSEQUENTIAL AND ANY DAMAGES,
OTHER THAN COMPENSATORY DAMAGES.

         14. Miscellaneous.

                  14.1  Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Arizona.

                  14.2 Prior  Agreements.  This  Agreement  contains  the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior agreements and understanding  with respect to such subject matter, and
the parties  hereto have made no  agreements,  inducements,  representations  or
warranties  relating to the subject matter of this  Agreement  which are not set
forth herein or in other contemporaneous written agreements.

                  14.3  Withholding  Taxes.  The Company may  withhold  from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.

                  14.4 Amendments.  No amendment,  modification or rescission of
this Agreement  shall be deemed  effective  unless made in writing signed by the
parties hereto.

                  14.5 No Waiver.  No term or condition of this Agreement  shall
be deemed to have been  waived nor shall  there be any  estoppel  to enforce any
provisions  of this  Agreement,  except by a statement in writing  signed by the
party against whom enforcement of the waiver or estoppel is sought.  Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate  only  as to the  specific  term  or  condition  waived  and  shall  not
constitute  a waiver of such term or  condition  for the future or as to any act
other than that specifically waived.

                  14.6  Severability.  To  the  extent  any  provision  of  this
Agreement shall be invalid or unenforceable, it shall be considered deleted here
from  and  the  remainder  of such  provision  and
                                       9
<PAGE>
of this  Agreement  shall be  unaffected  and shall  continue  in full force and
effect.  In  furtherance  and not in  limitation  of the  foregoing,  should the
duration  or  geographical  extent  of, or  business  activities  covered by any
provision of this Agreement be in excess of that which is valid and  enforceable
under  applicable law, then such provision shall be construed to cover only that
duration,  extent or activities  which may validly and  enforceably  be covered.
Executive  acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement shall be given the construction which renders its
provisions  valid and  enforceable  to the  maximum  extent (not  exceeding  its
express terms) possible under applicable law.

                  14.7   Survival.   Sections  8,  9  and  10.8  shall   survive
termination of this Agreement.



         IN WITNESS  WHEREOF,  the parties  have  executed  and  delivered  this
Agreement as of the day and year first set forth above.

                                         VIASOFT, Inc.


                                         By /s/ Steven D. Whiteman
                                            ------------------------------------
                                         Its President
                                             -----------------------------------

                                         "THE COMPANY"


                                         /s/ Mark R. Schonau
                                         ---------------------------------------
                                         Mark Randall Schonau

                                         "EXECUTIVE"
                                       10
<PAGE>
[VIASOFT LOGO]             FY97 INCENTIVE PLAN

Employee:                  Mark Schonau
- --------
Position:                  Vice President, Finance & Administration/CFO
- --------
Region:                    Corporate
- ------
Effective Date:            Date    of  Employment  per Consulting and Employment
- --------------             Agreement

Territory or Geographic Scope:
- ------------------------------

All territories that encompass VIASOFT consolidated.

Incentive Compensation:
- -----------------------

1.  Quarterly Company Performance Bonus                          Target:  $*****

A quarterly  bonus will be paid if VIASOFT  meets or exceeds  its Income  Before
Taxes (IBT)  objective  for the  quarter.  If IBT is below plan for the quarter,
there will be no bonus paid.  Missed  quarterly  bonuses  cannot be recovered in
future  quarters.  Bonuses  will be prorated if  participation  begins  within a
quarter.

2.  Annual Company Performance Bonus                             Target:  $*****

A bonus will be paid based on taking  VIASOFT's annual IBT (Income Before Taxes)
attainment  and  applying  it  against  the  budgeted  IBT  (Profit   Attainment
Percentage).  Bonuses will be paid according to the following  table.  If IBT is
85% below  plan for the  year,  there  will be no bonus  paid.  Bonuses  will be
prorated if participation begins within the fiscal year.

         If Profit Attainment Percentage is less than 85%, the bonus is zero.

         If Profit Attainment  Percentage is greater than 85% and less than 90%,
         the bonus is the Profit  Attainment  Percentage  multiplied  by (Target
         Bonus X 0.5).

         If Profit Attainment Percentage is greater than 90% and less than 105%,
         the bonus is the Profit Attainment  Percentage multiplied by the Target
         Bonus.

         If Profit  Attainment  Percentage  is  greater  than 105% and less than
         130%,  the bonus is the  Profit  Attainment  Percentage  multiplied  by
         (Target Bonus X 1.25).

         If Profit Attainment  Percentage is greater than 130%, the bonus is the
         Profit Attainment Percentage multiplied by (Target Bonus X 1.5).

Example:  IBT performance at 110% will result in a bonus of $ **** (110% X $****
X 1.25).

Resolution:
- -----------

Any  questions,   disputes,   or  ambiguities   that  arise  hereunder  will  be
conclusively resolved by the President/CEO at his sole discretion.  Any required
interpretations  of this  plan  will be made by the  President/CEO  at his  sole
discretion.

                                    EXHIBIT A
                       "CONFIDENTIAL TREATMENT REQUESTED"
<PAGE>
FY97  Vice  President,  Finance  &  Administration/CFO  Incentive  Plan for Mark
Schonau                                                                   Page 2


Payment of Bonuses:
- -------------------

Bonuses are earned on the last day of the fiscal quarter, or year, to which they
are  applicable.  The  employee  must be actively  employed  as Vice  President,
Finance & Administration/CFO when the bonus is earned to receive any bonuses.

Quarterly bonuses are paid on the last pay period of the month following the end
of the fiscal quarter in which the bonus is earned.  For example, a bonus earned
at the completion of the first quarter  (September 30) would be paid in the last
pay period in October. The annual company performance bonus is paid on the first
pay period following the completed annual audit.

Not an Employment Agreement:
- ----------------------------

Nothing in this incentive plan is intended to or does create terms of a contract
of  employment  between any  employee and  VIASOFT,  nor shall  anything in this
incentive  plan  restrict  the  right of  VIASOFT  to  terminate  an  employee's
employment  at any time.  Employees  to whom this  incentive  plan  applies  are
employed by VIASOFT on an  "at-will"  basis,  and have no guarantee of continued
employment  for any period of time.  VIASOFT may terminate such employees at any
time without cause, without reason, and without prior notice.

The terms of this  incentive  plan  only  apply  during  VIASOFT's  fiscal  year
commencing  July 1, 1996,  and ending  June 30,  1997,  and shall have no effect
whatsoever in any other  period.  This plan replaces any and all plans in effect
prior to July 1, 1996.

In the event of employment  termination  (voluntary or  involuntary)  during the
stated plan period, the employee will be paid any earned commissions and bonuses
in accordance  with this plan and  applicable  state and federal  laws.  VIASOFT
reserves the right to withhold any  commission or bonus  payments if VIASOFT has
not yet received payment by the customer for that sale.

VIASOFT reserves the right to change,  amend, or separate any employee from this
plan at any time and for any reason,  including (without  limitation) changes in
business conditions,  corporate objectives, or an individual's performance. This
can be done without prior notice.

No participant  will have any right to money accrued through the plan unless and
until all terms, provisions, or conditions, as set forth in this plan, have been
met.

Employee Acknowledgment and Agreement:
- --------------------------------------

I acknowledge that I have received,  read, understand and agree to the terms and
conditions of this plan.

- -------------------------------------------              -----------------------
Mark Schonau                                             DATE

<PAGE>
                      NON-QUALIFIED STOCK OPTION AGREEMENT


         VIASOFT, Inc., a Delaware corporation (the "Company"), hereby grants to
Mark Randall  Schonau (the  "Optionee") an Option to purchase a total of seventy
thousand  (70,000) shares of Common Stock,  at the price  determined as provided
herein, and in all respects subject to the terms,  definitions and provisions of
the 1994 Equity Incentive Plan (the "Plan") of the Company.

The Plan  and each of its  terms  and  conditions  are  incorporated  herein  by
reference.  The terms  defined in the Plan shall have the same defined  meanings
herein.

         1. Nature of the Option.  This Option is a  Non-Qualified  Stock Option
within the meaning of the Plan and is not  intended  to qualify as an  Incentive
Stock Option as defined in Section 422 of the Code.

         2.  Exercise  Price.  The  exercise  price is $31.75  for each share of
Common Stock.

         3. Exercise of Option. This Option shall be exercisable during its term
in accordance with the provisions of the Plan as follows:

             (i) Term of  Option.  Notwithstanding  any other  provision  to the
contrary, this Option may not be exercised more than six (6) years from the date
of grant of this Option,  shall expire automatically at the close of business of
the Company on the sixth  anniversary of such date of grant and may be exercised
during such term only in accordance with the Plan and the terms of this Option.

             (ii) Vesting Schedule.  Subject to the terms and conditions of this
Agreement and the Plan,  twenty-five percent (25%) of the total number of shares
subject to this Option shall become  exercisable on the first (1st)  anniversary
of the Effective Date, and cumulatively thereafter,  6.25% of the shares subject
to this Option shall become  exercisable at the end of each  three-month  period
during the term of this  Agreement  until all shares subject to this Option have
become exercisable on the fourth (4th) anniversary of the Effective Date.

             (iii)  Termination.  Notwithstanding  any other  provision  of this
Agreement  to the  contrary,  this  Option  shall be  subject  to the  following
provisions:

                  (a)  If  Optionee's   employment  is  terminated  due  to  (i)
Disability,  (ii)  Retirement,  or (iii)  for any  other  reason  or no  reason,
Optionee  may exercise  this  Option,  only to the extent that this Option would
have been exercisable on the Termination Date;  provided,  that such exercise is
made prior to the  earlier of (i) the  expiration  of three (3) months  (six (6)
months  in the  case of  Disability)  after  the  Termination  Date or (ii)  the
expiration date of the Option set forth in this Agreement.  The exercise of this
Option after termination of Optionee's employment pursuant to this paragraph (a)
shall be subject to the  satisfaction  of the conditions  precedent that (A) the
Optionee  shall not have breached any agreement  with the Company  providing for
noncompetition or nonsolicitation of employees or customers and (B) the Optionee
shall not have conducted himself in a manner adversely  affecting the Company in
the determination of its Board of Directors.

                  (b) If Optionee  dies before this Option  expires  pursuant to
this Agreement,  then this Option may be exercised, only to the extent that this
Option would have been exercisable on the date of the Optionee's death; provided
that such exercise is made prior to the earlier of (i) the first  anniversary of
Optionee's  death or (ii) the  expiration  date of the  Option set forth in this
Agreement.   Upon  Optionee's  death,  this  Option  may  be  exercised  by  the
Participant's  legal  representative  or  representatives,   to  the  extent  so
exercisable.

                  (c) This Option shall terminate to the extent not exercised in
accordance with (a) and (b) of this Section 3(iii), if applicable.

                                    EXHIBIT B
<PAGE>
             (iv) This Option may not be exercised for a fraction of a share.

             (v) Method of Exercise. This Option shall be exercisable by written
notice  which shall state the  election to exercise the Option and the number of
Shares in respect of which the Option is being  exercised.  Such written  notice
shall be made  together  with payment of the full  exercise  price in the manner
provided  herein and in  accordance  with the terms  hereof,  shall be signed by
Optionee and shall be delivered in person or by certified mail to the President,
Secretary or Chief  Financial  Officer of the Company.  No shares will be issued
pursuant to the exercise of any Option  unless such  issuance and such  exercise
shall comply with all relevant  provisions  of law and the  requirements  of any
stock market or exchange upon which the Shares may then be listed.

         4. Method of Payment.  Payment of the exercise  price shall be made (i)
by cash or  check  or (ii) at the  discretion  of the  Committee,  by any of the
methods set forth in Article 11 of the Plan.

         5.  Restrictions  on Exercise.  This Option may not be exercised if the
issuance  of such  Shares  upon  such  exercise  or the  method  of  payment  of
consideration  for such shares would  constitute  a violation of any  applicable
federal or state securities or other law or regulation, including any rule under
Part  207 of  Title  12 of the Code of  Federal  Regulations  (Regulation  G) as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

         6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Optionee only by Optionee.  The terms of
this  Option  shall  be  binding  upon  the  executors,  administrators,  heirs,
successors and assigns of Optionee.  Optionee may not assign any interest in the
Option to any person or pledge or hypothecate the Option in any way.

         7. Taxation Upon Exercise of Option.  Optionee  understands  that, upon
exercise of this Option,  Optionee will recognize  income for tax purposes in an
amount  equal to the excess of the then fair market  value of the Stock over the
exercise  price.  The Company will be required to withhold  tax from  Optionee's
current  compensation with respect to such income; to the extent that Optionee's
current  compensation  is insufficient to satisfy the withholding tax liability,
Optionee  shall be required to remit the amount of such liability to the Company
as a condition of exercise of this Option.

         8. Not an Employment Agreement.  Optionee is an employee at will of the
Company and may be terminated at any time with or without cause. Nothing in this
or any other agreement with the Company shall imply or be construed as a promise
or  guarantee  of  continued  employment  for  any  period,   including  without
limitation,  any period of time  required for full vesting or exercise of rights
under this Agreement.

         9.  Governing  Law.  The Plan and this Option  granted  thereunder  are
governed  by, and shall be  interpreted  according  to, the laws of the State of
Delaware.

         10.  Acceptance  of Option.  By  acceptance of this Option (i) Optionee
acknowledges  receipt of a copy of the Plan, a copy of which is annexed  hereto,
and represents that Optionee is familiar with the terms and provisions  thereof,
(ii) agrees that this Option represents a binding agreement between Optionee and
the Company and accepts this Option  subject to all of the terms and  provisions
of the Plan and this Option,  and (iii) agrees to accept as binding,  conclusive
and final all decisions or  interpretations  of the Committee upon any questions
arising under the Plan.

         DATE OF GRANT:  July 23, 1996

VIASOFT, INC.                                           ACCEPTED:

_____________________________                           ____________________
Steven D. Whiteman, President                           Mark Randall Schonau
         "Company"                                            "Optionee"
<PAGE>
                                CONSENT OF SPOUSE


         I, the  undersigned,  spouse  of Mark  Randall  Schonau,  have read and
approve the foregoing  Non-Qualified Stock Option agreement. In consideration of
the  granting of the right to my spouse to purchase  shares of Viasoft,  Inc. as
set forth in the Agreement,  I hereby  appoint my spouse as my  attorney-in-fact
with respect to the exercise of any rights under the  Agreement  and agree to be
bound by the  provisions  of the  Agreement  insofar as I may have any rights in
said  Agreement  or any  shares  issued  pursuant  thereto  under the  community
property  laws of the State of  Arizona  or  similar  laws  relating  to marital
property in effect in the state of our  residence  as of the date of the signing
of the foregoing Agreement or otherwise.

         Dated as of July 23, 1996.




                              ______________________________________
<PAGE>
                                  VIASOFT, INC.
                      NON-QUALIFIED STOCK OPTION AGREEMENT
                                  EXERCISE FORM


         I desire to exercise  my vested  Options to  purchase  _____  shares of
Common  Stock at _______  per share,  for a total  purchase  price of  $_______,
pursuant to my Non-Qualified Stock Option Agreement dated ____________________.

         Enclosed  is payment in full by [ ] cash [ ]  cashier's  check [ ] bank
draft [ ] money order [ ] other (describe) _______________.

         I have, or have been given access to, all information  necessary for me
to  make  an  informed  decision  as to the  advisability  of  investing  in the
Company's  stock,  and I have the skill and  experience  necessary  to make such
decision.

         Dated:  _______________.



                  Signature:            _____________________________


                  Print full name:      _____________________________


                  Social Security No.:  _____________________________
<PAGE>
                           EMPLOYMENT CONFIDENTIALITY
                           --------------------------
                                       AND
                                       ---
                        PROPRIETARY INFORMATION AGREEMENT
                        ---------------------------------


         This  Agreement  is entered into  today,________________,  1996 between
VIASOFT,  Inc., a Delaware corporation (together with any subsidiaries,  jointly
and severally the "Company"), and Mark Randall Schonau ("you") as employee.

         Definitions  of  many  of  the  capitalized  terms  contained  in  this
Agreement are provided in section 4 (a) below,  and you should refer to them for
a full understanding of the provision.

                               General Principles
                               ------------------

         The Company is involved in a highly competitive  industry.  The success
of the Company's business depends upon safeguarding its Proprietary Information.
Unless conscientiously  safeguarded,  the Company's Proprietary Information will
lose its unique competitive value to the Company.

         You are about to be employed by the Company.  You are about to occupy a
position of trust and confidence due to your employment with the Company.

         During your  employment  with the Company,  you will have access to the
Company's Proprietary Information, or may develop or may work on the development
of Proprietary Information.

         ACCORDINGLY,  in consideration  of your employment by the Company,  the
general principles and covenants contained in this Agreement, and other good and
valuable  consideration  the  receipt and  sufficiency  of which you and Company
acknowledge, and in recognition of the position of trust and confidence that you
will  occupy due to your  employment  with the  Company,  the  parties  agree as
follows:

         1. Safeguarding Proprietary Information and Other Company Documents and
Materials.

                  (a) Ownership;  Nondisclosure.  All Proprietary Information of
the Company  received by you is the  exclusive  property of the Company.  During
your  employment  or at any later time,  you may not use for your own or other's
benefit or  purposes,  or disclose  or  communicate  to any Person,  directly or
indirectly,  any  Proprietary  Information  of any kind  concerning  any matters
affecting  or  relating  to the  Company  or its  business,  EXCEPT as  strictly
required to carry out the internal business of the Company consistently with its
policies,  or as  expressly  authorized  in  writing in advance on behalf of the
Company.

                  (b) Third Parties' Rights. You agree not to use or disclose to
the Company, or induce or cause the Company to use, any Proprietary  Information
belonging to any Person without the prior written consent of that Person. If you
use your own Inventions,  Trade Secrets or other  Proprietary  Information,  you
will  automatically  confer on the Company the unrestricted  right to use freely
all of those matters used.

                  (c) Use and Return of Information,  Documents and Things.  You
agree that all information, documents and things (including, but not limited to,
printouts,  disks, tapes,  programs,  documentation,  reports,  records,  notes,
supplies, equipment, drawings, designs, and all business, product, marketing and
sales  information) which you make or which come into your possession or control
by reason of your  employment are the property of the Company.  You will not use
them in any way except in the regular course of the Company's  internal business
and  consistent  with its  policies  and you  will  return  them to the  Company
promptly  upon  any  termination  of your  employment.  You  will  not  deliver,
reproduce,  or in any way  allow  any  information  documents  or  things  to be
delivered  or used by any Person  without  specific  direction or consent of the
Company.  You will not take or retain  originals  or copies of any  information,
documents or things of the Company.
                                    EXHBIIT C
<PAGE>
                  (d) Other  Obligations.  You acknowledge that the Company from
time to  time  may  have  agreements  with  other  Persons  including  the  U.S.
Government, or agencies thereof, which impose obligations or restrictions on the
Company regarding  Proprietary  Information or regarding the confidential nature
of their work. You agree to be bound by all such  obligations  and  restrictions
and to take all action  necessary to discharge  the  obligations  of the Company
thereunder, including signing such confidentiality agreements as may be required
by other  Persons as a condition to the Company  obtaining or using  Proprietary
Information.

         2. Best Efforts, Company Policies, Unfair Competition.

                  (a) Best Efforts and Unfair  Competition.  You agree to devote
your full time and best efforts to the  interests of the Company.  Without prior
written consent of the Company,  during the period of your employment,  you will
not engage in other  employment or business  activity  adverse to or competitive
with the Company,  or which so occupies your  attention  that it will  interfere
with the proper performance of your work for the Company.  You further agree not
to use any  Proprietary  Information or other property of the Company to compete
with the Company during or after employment.

                  (b)  Company  Policies.  You  agree to  abide  by all  Company
policies,  guidelines, rules and regulations,  including but not limited to, any
policies on Proprietary Information,  confidentiality and conflicts of interest,
as they are issued and updated from time to time.

                  (c) Customers and Employees.  You agree that you shall not for
a  period  of six (6)  months  immediately  following  the  termination  of your
employment  with the  Company  for any reason,  whether  with or without  cause,
either  directly or indirectly;  (1) call on,  solicit,  or take away any of the
Customers  of the Company  either for yourself or for any other  Person,  or (2)
solicit or take away any employees of the Company either for yourself or for any
other Person.

         3. Intellectual Property Rights.

                  (a) Assignment. You agree that any Intellectual Property which
you conceive, create or reduce to practice while employed by the Company, either
alone or with the help of others,  belongs  to the  Company if it (i) is made by
use of the Company's property,  staff, facilities, or Proprietary Information or
on Company time, (ii) relates to the Company's  actual or anticipated  business,
research or  development,  or (iii)  results  from, or is suggested by, any work
which you perform for the Company,  and you hereby  assign all right,  title and
interest in this Intellectual  Property to the Company or its nominee.  You also
agree  that the  Company  has the  right  (but not the  obligation)  to  patent,
copyright,  keep as a trade  secret or  otherwise  deal  with this  Intellectual
Property  as the  Company  chooses.  You agree to assign to the  Company  or its
nominee all rights which you may possess in any Intellectual Property regardless
of where or how created  where the Company is required to grant those  rights to
the United States Government or any of its agencies.

         If any  Intellectual  Property  relating in any manner to the actual or
anticipated business, research or development of the Company is disclosed by you
to any  Person  within six (6) months  after the end of your  employment  by the
Company, it shall be conclusively  presumed that such Intellectual  Property was
conceived  or  resulted  from  developments  made  during  the  period  of  your
employment by the Company and you agree that any such Intellectual Property will
belong to the Company.  You agree that any patent  application  filed within six
(6) months after  termination of your employment shall be conclusively  presumed
to relate to an Invention made during the term of your employment.  All works of
authorship  which you create under this section 3(a) are intended to be and will
be deemed "works for hire" within the copyright  laws,  meaning that the Company
will be the owner of the copyrights.

                  (b) Disclosure. To permit the Company to claim rights to which
it may be entitled under this Agreement,  you agree to disclose  promptly and in
writing to the Company,  in  confidence,  all  Intellectual  Property  which you
(alone or with  others)  conceive,  make or  create  during  the  course of your
employment,  whether or not you consider it patentable or otherwise protectable.
You agree that this  Intellectual  Property will be deemed  Company  Proprietary
Information  subject  to this  Agreement  for  purposes  of  your  nondisclosure
obligations  under  Section  1(a)  beginning  on the date of its  conception  or
creation.  You  agree  to keep  current  and  complete  records  concerning  all
Intellectual  Property  which you  develop  (which  records  shall be  Company's
property) and to deliver the records to the Company on request.
<PAGE>
                  (c)  Assistance.  You agree,  at any time during or after your
employment,  on request of the Company and at the Company's expense,  to execute
specific  assignments  in  favor of the  Company  or its  nominee  of any of the
Intellectual  Property  covered by this Section 3, and to execute all papers and
perform all lawful acts the Company  considers  necessary  for the  procurement,
protection  from  infringement,  and  enforcement of patent or copyrights of the
United  States and foreign  countries or other forms of  protection  and for the
transfer of any interest you may have in such patents, copyrights or other forms
of protection to the Company or its nominee.  You agree, at any time during your
employment  or  afterwards,  on the  request  of the  Company,  to  execute  all
documents and assist at the Company's expense in the preservation or exercise of
all of the Company's interests arising under this Agreement.

                  (d) Your Rights;  Rights of First Refusal. You will retain all
rights to any  Intellectual  Property  not  belonging  to or  assignable  to the
Company  under this  Section 3;  provided,  however,  that you will offer to the
Company a right of first  refusal  to  purchase,  license or  otherwise  acquire
rights in your  Intellectual  Property  on the same  basis as you offer the bona
fide  opportunity  to any other  Person.  The Company will have ninety (90) days
following  receipt  (the  "Exercise  Period")  of written  notice from you of an
opportunity  to  purchase,  license or otherwise  acquire  rights in any of your
Intellectual  Property  setting forth the terms and  conditions of the bona fide
offer ("Notice of Offer") in which to give written notice to you of its election
to acquire those rights.

                  If the Company  fails to exercise  this right of first refusal
within the  Exercise  Period,  you will be free to sell,  license,  or otherwise
transfer rights to your Intellectual  Property to the other Person,  but only on
the same terms and  conditions  as set forth in the  Notice of Offer;  provided,
however,  if the  transfer  is not  consummated  within  ninety  (90)  days from
expiration  the  Exercise  Period,  then all the  terms and  conditions  of this
paragraph will be deemed to apply again to any proposed transfer.

                  (e) Previous  Obligations.  You hereby  represent  and warrant
that (i) you have no  continuing  obligations  to any  Person  with  respect  to
assignment  of  Intellectual  Property  rights,  or  not to  compete,  or not to
disclose Intellectual Property or Proprietary  Information,  and (ii) you do not
claim as your own any previous  Intellectual Property rights within the scope of
this Agreement, except the following:

(If there are any  obligations,  indicate the nature of the  obligations and the
other Person's name. If any prior Intellectual  Property is claimed as your own,
indicate by title or suitable identification. If neither, write "None".)

         You hereby  further  represent  and warrant that you have not disclosed
and will not  disclose to Company or use in Company's  business any  Proprietary
Information or Intellectual Property belonging to any other Person.

         4. General Provisions.

                  (a) Definitions. For purposes of this Agreement, the following
terms have the meanings ascribed to them below.

                           (i)   "Invention"    means   any   new   discoveries,
innovations,   programs,  machines,   manufacturing  methods,  processes,  uses,
apparatuses,   compositions  of  matter,   data  or  designs,  or  improvements,
modifications  or  additions  to any  of the  same,  and is not  limited  to the
definition of an invention contained in the United States patent laws.

                           (ii)  "Trade  Secrets"  means  all  concepts,  ideas,
formulae,  patterns,  devices or compilations of information used in a company's
business which may relate to the development,  production, licensing, or sale of
the company's  goods or services,  to the  management or  administration  of the
company,  or which  otherwise  give it a  competitive  advantage,  which are not
publicly known without  restriction  and without breach of this  Agreement.  You
will have the burden of proving public knowledge.

                           (iii)  "Intellectual  Property"  means all Inventions
(whether or not patentable),  Trade Secrets, works of authorship (whether or not
copyrightable),  patents, copyrights, trademarks, trade names, ideas or concept,
or improvements, modifications or additions to any of the above.
<PAGE>
                           (iv) "Proprietary  Information" means all information
treated by a Person as proprietary,  whether in tangible or intangible form, and
whether  or  not it is  marked  as  proprietary,  including  without  limitation
Intellectual  Property  and  other  property  rights,  as  well as  business  or
technical information such as, for example, methods of doing business,  business
plans,  development plans, product  information,  profit and loss statements and
other financial information and lists of customers, suppliers and employees.

                           (v)  "Person"  means  any  individual,   corporation,
partnership, trust or other association or entity.

                  (b) Not an Employment Agreement. You understand and agree that
this is not an employment agreement and does not require the Company to continue
to employ you for any period of time.  The  provisions  of this  Agreement  will
survive any termination of your employment for any reason.

                  (c)  Remedies.  You  understand  and agree that, if you breach
this  Agreement,  irreparable  harm would  result to the  Company and that money
damages  would  be  inadequate  to  compensate   the  Company  for  the  breach.
Accordingly, you agree that the equitable remedy of injunction will be available
to the Company to enforce this  Agreement.  You will also agree that if you fail
to perform any of your agreements in this Agreement, you will indemnify and hold
the  Company  harmless  on demand from any  claims,  damages,  losses,  or costs
(including attorneys' fees) incurred by the Company as a result.

                  (d) Governing Law; Severability and Waiver. You understand and
agree that this Agreement  will be construed  under and governed by the internal
laws of the State of Arizona as if you and the  Company  were  residents  of the
State and the Agreement were entered into and fully  performed  within  Arizona.
Where  consistent with Arizona law, you understand and agree that this Agreement
will be construed so as to avoid and prevent the invalidity or  unenforceability
of any of its provisions.

         If any  provision of this  Agreement is held invalid or  unenforceable,
the  remainder  of this  Agreement  will  nevertheless  remain in full force and
effect.  If any  provision  is held  invalid or  unenforceable  with  respect to
particular  circumstances,  it will nevertheless remain in full force and effect
in all other circumstances.  The remedies provided in this Agreement will not be
deemed exclusive,  but will be in addition to all other remedies provided by law
or equity.  No waiver of any  provision  of this  Agreement  or of any rights or
obligations  of either  party under it will be  effective  unless in writing and
signed  by the party or  parties  waiving  compliance,  and any  waiver  will be
effective only in the specific  instance and for the specific  purpose stated in
the writing.

                  (e)  Attorneys'  Fees  and  Costs.  If  suit  is  brought  (or
arbitration  instituted)  or an  attorney  is  retained by you or Company in any
matter arising under or to enforce the terms of this Agreement or to collect any
money due  hereunder,  or to  collect  money  damages  for  breach  hereof,  the
prevailing party shall be entitled to recover,  in addition to any other remedy,
reimbursement   for  reasonable   attorney's   fees,   court  costs,   costs  of
investigation and other related expenses incurred in connection therewith.

                  (f) Caption and Gender. The captions in this Agreement are for
ease of reference  only and have no  substantive  effect.  All references to the
masculine gender also include the female gender.

                  (g) Succession.  The provisions of this Agreement inure to the
benefit  of, and are  binding  on, you,  your  representatives,  successors  and
assigns and the Company and its successors and assignees.

                  (h)   Integration.   This  Agreement   represents  the  entire
agreement between you and Company on its subject matter.  All agreements entered
into  prior  hereto  are  revoked  and   superseded   by  this   Agreement.   No
representations,  warranties,  inducements or oral  agreements have been made by
you or Company except as expressly set forth herein or in other  contemporaneous
written  agreements.  This  Agreement may not be changed,  modified or rescinded
except  in  writing,  signed  by you  and  Company,  and  any  attempt  at  oral
modification of this Agreement shall be void and of no effect.
<PAGE>
         IN WITNESS  WHEREOF,  you and  Company  have  executed  this  Agreement
effective on the date at the top of the first page.

Employee:                                            VIASOFT, Inc.

/s/ Mark R. Schonau                                  By:
- --------------------------------------------            ------------------------
                                                     Authorized Officer


July 23, 1996
- --------------------------------------               ---------------------------
Date                                                 Date
<PAGE>
                                    EXHIBIT D

                          DISPUTE RESOLUTION PROCEDURES
                          -----------------------------

         A. If a  controversy  should arise which is covered by Section 13, then
not later than three (3) months  from the date of the event which is the subject
of dispute either party may serve on the other a written  notice  specifying the
existence of such  controversy  and setting forth in reasonably  specific detail
the grounds thereof ("Notice of Controversy");  provided that, in any event, the
other party shall have at least  thirty (30) days from and after the date of the
Notice of Controversy to serve a written notice of any counterclaim  ("Notice of
Counterclaim").  The Notice of Counterclaim shall specify the claim or claims in
reasonably  specific  detail.  If the  Notice of  Controversy  or the  Notice of
Counterclaim,  as the case may be, is not served within the  applicable  period,
the claim set forth  therein will be deemed to have been waived,  abandoned  and
rendered unenforceable.

         B.  Following  receipt of the Notice of  Controversy  (or the Notice of
Counterclaim,  as the case may be),  there shall be a three week  period  during
which the parties will make a good faith  effort to resolve the dispute  through
negotiation  ("Period  of  Negotiation").  Neither  party  shall take any action
during the Period of Negotiation to initiate arbitration proceedings.

         C. If the parties  should  agree  during the Period of  Negotiation  to
mediate  the  dispute,  then the period of  Negotiation  shall be extended by an
amount of time to be agreed upon by the parties to permit such mediation.  In no
event,  however,  may the Period of  Negotiation  be  extended by more than five
weeks or,  stated  differently,  in no event may the  Period of  Negotiation  be
extended to encompass more than a total of eight weeks.

         D. If the  parties  agree to mediate  the  dispute  but are  thereafter
unable to agree within a week on the format and  procedures  for the  mediation,
then the effort to mediate  shall  cease,  and the Period of  Negotiation  shall
terminate  four  weeks  from  the  Notice  of  Controversy  (or  the  Notice  of
Counterclaim, as the case may be).

         E. Following the termination of the Period of Negotiation,  the dispute
(including  the  main  claim  and  counterclaim,  if any)  shall be  settled  by
arbitration, governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq.
("FAA")  and  judgment  upon  the  award  may be  entered  in any  court  having
jurisdiction thereof. The format and procedures of the arbitration are set forth
below (referred to below as the "Arbitration Agreement").

         F. A notice of intention to arbitrate  ("Notice of Arbitration")  shall
be served within 45 days of the termination of the Period of Negotiation. If the
Notice of Arbitration  is not served within this period,  the claim set forth in
the Notice of Controversy  (or the Notice of  Counterclaim,  as the case may be)
will be deemed to have been waived, abandoned and rendered unenforceable.

         G. The  arbitration,  including  the  Notice  of  Arbitration,  will be
governed by the Commercial Rules of the American Arbitration Association ("AAA")
in effect on the date of the  Notice of  Arbitration,  except  that the terms of
this  Arbitration  Agreement  shall  control in the event of any  difference  or
conflict between such Rules and the terms of this Arbitration Agreement.

         H. The arbitrator  shall reach a decision on the merits on the basis of
applicable legal principals as embodied in the law of the State of Arizona.  The
arbitration hearing shall take place in Phoenix, Arizona.

         I.  There  shall  be  one  arbitrator,  regardless  of  the  amount  in
controversy. The arbitrator selected, in order to be eligible to serve, shall be
a lawyer in Phoenix,  Arizona (i) who has at least twenty (20) years  experience
specializing in either general  commercial  litigation or general  corporate and
commercial  matters,  and (ii) who has had both  training and  experience  as an
arbitrator.  In the event the  parties  cannot  agree on a  mutually  acceptable
single  arbitrator from the list submitted by the AAA, the AAA shall appoint the
arbitrator who shall meet the foregoing criteria.
<PAGE>
         J.  At  the  time  of  appointment  and  as a  condition  thereto,  the
arbitrator will be apprised of the time limitations and other provisions of this
Arbitration  Agreement and shall indicate such  arbitrators  agreement to comply
with such provisions and time limitations.

         K.  During  the  thirty-day   period   following   appointment  of  the
arbitrator, either party may serve on the other a request for limited numbers of
documents  directly  related to the  dispute.  Such  documents  will be produced
within seven days of the request.

         L. Following the thirty-day period of document  production,  there will
be a forty-five day period during which limited depositions will be permissible.
Neither  party  will take more than five  depositions,  and no  deposition  will
exceed three hours of direct testimony.

         M.  Disputes as to  discovery  or  prehearing  matters of a  procedural
nature  shall be promptly  submitted  to the  arbitrator  pursuant to  telephone
conference call or otherwise. The arbitrator shall make every effort to render a
ruling on such interim  matters at the time of the hearing (or conference  call)
or within five business days thereafter.

         N. Following the period of depositions,  the arbitration  hearing shall
promptly commence. The arbitrator will make every effort to commence the hearing
within thirty days of the conclusion of the deposition  period and, in addition,
will make every effort to conduct the hearing on  consecutive  business  days to
conclusion.

         O. An award will be rendered,  at the latest,  within six (6) months of
the date of the Notice of Arbitration and within thirty days of the close of the
arbitration  hearing.  The award shall set forth the  grounds  for the  decision
(findings of fact and  conclusions of law) in reasonably  specific  detail.  The
award shall be final and nonappealable  except as provided in the FAA and except
that a court of competent  jurisdiction  shall have the power to review whether,
as a matter of law, based upon the findings of fact by the arbitrator, the award
should be  confirmed  or should be  modified  or vacated in order to correct any
errors of law made by the  arbitrator.  Such judicial review shall be limited to
issues of law,  and the  parties  agree  that the  findings  of fact made by the
arbitrator  shall be final and  binding on the  parties  and shall  serve as the
facts to be relied  upon by the  court in  determining  the  extent to which the
award should be confirmed, modified or vacated.

         The award may only be made for compensatory  damages,  and if any other
damages (whether  exemplary,  punitive,  consequential,  statutory or other) are
included, the award shall be vacated and remanded, or modified or corrected,  as
appropriate to promote this damage limitation.

         P. All  negotiations  and  proceedings  pursuant to this  Exhibit D and
information disclosed therein shall constitute confidential  information of each
party, and shall be subject to the protections  afforded in the  Confidentiality
Agreement.  All arbitrators  and mediators shall agree in writing,  prior to the
start of any mediation or arbitration, to keep any such confidential information
confidential under terms  substantially  similar to the obligations set forth in
the Confidentiality Agreement.

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