10-K

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                       ----------------------------------
                                    FORM 10-K

[X]     Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
        Act of 1934

        For the fiscal year ended  JULY 31, 1998   or

[ ]     Transition report pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934

                         Commission File Number 0-21180

                                   INTUIT INC.
                                   -----------
             (Exact name of registrant as specified in its charter)

              DELAWARE                                  77-0034661
              --------                                  ----------
       (State of Incorporation)                (IRS Employer Identification No.)

                   2535 GARCIA AVENUE, MOUNTAIN VIEW, CA 94043
          (Address of Principal Executive Offices, including zip code)

                                 (650) 944-6000
                                 --------------
              (Registrant's Telephone Number, including area code)

                                                           
Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   Common Stock, $0.01 par value
                                                              Preferred Stock Purchase Rights



Indicate by a 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of September 30, 1998, there were 59,480,974 shares of the Registrant's
common stock, $0.01 par value, outstanding, which is the only outstanding class
of common stock of the Registrant. As of that date, the aggregate market value
of the shares of common stock held by non-affiliates of the Registrant (based on
the closing price of $46.5625 for the common stock as quoted by the Nasdaq
National Market on such date), was approximately $2,439,952,387.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement for its Annual Meeting
of Stockholders to be held in January 1999 are incorporated by reference into
Part III of this report on Form 10-K.



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                              FISCAL 1998 FORM 10-K
                                   INTUIT INC.

                                      INDEX



ITEM                                                                                                           Page

                                                                                                            
PART I

ITEM 1:           Business.......................................................................                 3
ITEM 2:           Properties.....................................................................                19
ITEM 3:           Legal Proceedings..............................................................                20
ITEM 4:           Submission of Matters to a Vote of Security Holders............................                20
ITEM 4A:          Executive Officers of the Registrant...........................................                20

PART II

ITEM 5:           Market for Registrant's Common Equity
                      and Related Stockholder Matters............................................                24
ITEM 6:           Selected Financial Data........................................................                25
ITEM 7:           Management's Discussion and Analysis of Financial
                      Condition and Results of Operations........................................                26
ITEM 7A:          Quantitative and Qualitative Disclosures About Market Risk.....................                36
ITEM 8:           Financial Statements and Supplementary Data....................................                37
ITEM 9:           Changes in and Disagreements with Accountants on Accounting
                      and Financial Disclosure...................................................                60
PART III

ITEM 10:          Directors and Executive Officers of the Registrant.............................                60
ITEM 11:          Executive Compensation.........................................................                60
ITEM 12:          Security Ownership of Certain Beneficial Owners
                      and Management.............................................................                60
ITEM 13:          Certain Relationships and Related Transactions.................................                60

PART IV

ITEM 14:          Exhibits, Financial Statement Schedules
                      and Reports on Form 8-K....................................................                60

Signatures            ...........................................................................                66




Intuit, the Intuit logo, Quicken, QuickBooks, QuickBooks Pro, TurboTax,
MacInTax, ProSeries and InsureMarket, among others, are registered trademarks
and/or registered service marks of Intuit Inc. or one of its subsidiaries.
Quicken.com, QuickenMortgage, Quicken Business CashFinder, Lacerte, QuickTax and
QuickSteuer, Kobanto and Yayoi, among others, are trademarks and/or service
marks of Intuit Inc. or one of its subsidiaries.



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PART I
ITEM 1
BUSINESS


CAUTIONS ABOUT FORWARD-LOOKING STATEMENTS

This Form 10-K includes "forward-looking" statements about future financial
results, future products and other events that have not yet occurred. For
example, statements like we "expect," we "anticipate" or we "believe" are
forward-looking statements. Investors should be aware that actual results may
differ materially from our expressed expectations because of risks and
uncertainties about the future. We will not necessarily update the information
in this Form 10-K if any forward-looking statement later turns out to be
inaccurate. Details about risks affecting various aspects of our business are
discussed throughout this Form 10-K. Investors should read all of these risks
carefully, and should pay particular attention to risks affecting the following
areas: competition (page 15); our strategy and implementation with respect to
the Internet and our Internet-based businesses, including but not limited to our
ability to operationally support and manage these new businesses (page 8); the
timing of availability for future products and services, including availability
of our online payroll service (pages 9 and 13); market growth, sales of new
products and customer upgrade rates, including but not limited to sales and
upgrade rates for our new QuickBooks(R) multi-user product (pages 9 and 13); the
value and size of our equity investments in other companies, including Checkfree
Corporation and Excite, Inc. (Notes 1 and 17 of the financial statement notes on
pages 43 and 58); our ability to achieve Year 2000 readiness in our business
operations, our products and our dealings with significant third parties (page
34); the expected impact of our recent acquisition of Lacerte Software
Corporation and Lacerte Educational Services Corporation (now called Lacerte
Educational Services, Inc.) (page 4); our relationships with retailers and other
issues with respect to our distribution channels (pages 14 and 15);
international operations (page 12); our regulated businesses (page 18); customer
service and technical support (page 17); regulatory changes (page 18); and the
impact of acquisitions generally (pages 26 and 33).


                                BUSINESS OVERVIEW

BUSINESS STRATEGY AND FISCAL 1998 HIGHLIGHTS

Intuit's mission is to revolutionize the way individuals, small businesses and
financial professionals manage their finances. We provide a range of small
business accounting, tax preparation and consumer finance desktop software,
financial supplies (such as computer checks, envelopes and invoices), and
Internet products for individuals and small businesses. Our products and
services include QuickBooks(R), the leading small business accounting software;
TurboTax(R), the leading personal tax preparation software; our popular
ProSeries(R) and Lacerte(TM) professional tax products; Quicken(R), the leading
personal finance software; and the Quicken.com(SM) website, one of the fastest
growing online financial sites on the Internet. Our revenues come primarily from
the United States, Japan, Germany, Canada and the United Kingdom. We sell
products through retail distribution channels and direct sales to customers, as
well as through electronic distribution channels such as our Quicken Store
website.

The Internet is a pervasive force that has reshaped our business and is
providing new opportunities and challenges. We recently made some major changes
to our business strategy to capitalize on these opportunities. While desktop
software and related products and services still provide most of our revenue,
our Internet-based businesses are growing rapidly, and the Internet has become
an integral part of our business strategy in all of our business divisions. In
addition, we intend to provide a broader range of products and services targeted
at the small business community, a market that we believe has significant growth
potential.

We are currently focusing our strategic efforts in three directions. First, we
have added Internet connectivity to our tax, small business and personal finance
desktop software. Second, we have created, and are substantially expanding, new
Internet-based resources and businesses in order to establish Intuit as a
premier provider of personal and business financial information and services on
the Internet. Third, we are expanding our small business offerings.



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Our primary business objective during fiscal 1998 was to make progress on the
three strategic efforts described above, while still delivering solid financial
performance to our stockholders. These are some of our major events for fiscal
1998:

- -       Increased traffic, service offerings and aggregated content on our
        Quicken.com personal finance website, through strategically important
        distribution relationships, continuing product and service development
        and the launch of marketspaces for mortgages and auto insurance
- -       Launched the first multi-user version of our QuickBooks Pro(R) small
        business accounting software
- -       Expanded one of our most profitable business areas through the
        acquisition of Lacerte and its professional tax software product line
        (financed by a public offering of 10 million shares of Common Stock)
- -       Initiated a new focus on employer services for small businesses, with
        the development of our online payroll service that we introduced on a
        limited basis in September 1998
- -       Returned to profitability in our Quicken desktop business
- -       Improved our focus in strategically important areas by selling our
        Parsons subsidiary

Although fiscal 1998 was a successful year for Intuit in many respects, we
continue to face significant challenges and risks. For example, our
international operations had a disappointing year relative to our expectations,
our Internet businesses are requiring significant levels of investment, and
competition is intensifying, particularly for TurboTax and our Internet
products. We encourage you to read the entire Form 10-K carefully to better
understand our business and our financial results, and the risks and
uncertainties we face.

SIGNIFICANT TRANSACTIONS

Strategic Internet Distribution Relationships with Excite, America Online and
CNNfn. In June 1997, we entered into an agreement with Excite Inc. to jointly
develop, promote and distribute a new online financial channel now called Excite
Money and Investing by Quicken.com. The channel debuted in early fiscal 1998. We
are the exclusive provider and aggregator of personal financial content for all
of Excite's Internet services, and we share revenue from the channel with
Excite. See Note 5 of the financial statement notes (page 50) for more details.

In February 1998, we announced a three-year agreement with AOL under which
Intuit is the exclusive provider, subject to certain limited exceptions, of
online tax preparation and filing, multi-carrier life and auto insurance and
multi-lender mortgage services on both the AOL service and AOL.com, which is
AOL's default site for Internet access by AOL members. In addition, on AOL.com,
Intuit is the primary source of financial content for the Personal Finance Web
Channel. We have guaranteed payments to AOL totaling $30 million over three
years, and AOL may also be eligible for additional revenue-sharing after we have
recovered certain advances and other amounts. See Note 5 of the financial
statement notes (page 50) for more details.

In October 1997, we entered into a five-year agreement with CNNfn, a financial
news website, to create a co-branded personal finance channel. The channel,
which launched in December 1997, includes business news and financial
information. In exchange for marketing fees paid to CNNfn, we receive a share of
certain revenues from the site.

Our relationships with Excite, AOL and CNNfn have helped us increase the
customer base for our Internet-based products, and we expect this benefit to
continue. This should help us attract more financial institutions to participate
in the online financial products that we offer and eventually generate
increasing revenue for us from a combination of advertising and transaction
fees. During fiscal 1998, page views per month on our Quicken.com website
increased from 16 million to 90 million. Advertising sales also increased
significantly during fiscal 1998, although they are still not material. While we
are encouraged by these results, we can't be certain that these growth levels
can be sustained. See "Risks of Internet Commerce," on page 8.

Acquisition of Lacerte. On June 22, 1998, we acquired substantially all of the
assets and liabilities of Lacerte Software Corporation and Lacerte Educational
Services Corporation (now called Lacerte Educational Services, Inc.), for a
price of $400 million in cash. We financed the acquisition with a public
offering of Common Stock in 



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the fourth quarter of fiscal 1998. See MD&A (page 26) and Notes 3 and 8 of the
financial statement notes (pages 49 and 54) for details about the acquisition
and the offering. Lacerte is a leading provider of tax preparation software and
services for tax professionals. We believe that the acquisition may give us
several strategic benefits. First, we believe it will contribute to our
recurring revenue base, since users of Lacerte's products (like users of our
ProSeries tax products), must purchase annual updates that reflect changes in
tax law and tax forms. Currently a very high percentage of Lacerte's customers
renew their licenses each year. Second, Lacerte has been a highly profitable
company, and to the extent that we can sustain its profitability, it could make
a significant contribution to our earnings. Third, we believe that the
acquisition will enable us to compete more effectively with other large
providers of professional tax preparation software. As the complexity of
professional tax products increases, our annual cost of producing and supporting
these products also increases. We believe it is important to expand our customer
base and sales volume in order to improve our competitive position, and Lacerte
had approximately 30,000 customers as of March 31, 1998. Fourth, we expect the
acquisition to strengthen our presence in the professional income tax compliance
market. Although the Intuit ProSeries product line and Lacerte's product line
are both designed for tax professionals, they function differently and can
provide complementary solutions for different practitioner preferences.

Our acquisition of Lacerte poses a number of risks that could adversely affect
our ability to achieve the anticipated benefits. We currently intend to have
Lacerte operate as a separate entity, with separate sales and marketing,
research and development, customer support and administrative organizations.
This may create operating inefficiencies and communication difficulties. These
challenges may be exacerbated by the fact that Lacerte is located in Texas,
where we have not had any material operations. The resources required to
establish relationships with, and procedures for communicating with, Lacerte may
affect our ability to successfully pursue other opportunities for a period of
time. The departure of key Lacerte employees or significant numbers of Lacerte
employees, which is a risk with any acquisition, would negatively affect us.
Lacerte customers may be uncertain about our plans and ability to support both
Lacerte's products and our existing ProSeries software, and this could hinder
our ability to retain these customers, which would negatively affect us. Lacerte
is in the process of a major product line transition that will require
significant development efforts. The departure of engineers, or other
difficulties caused by the acquisition, could hinder Lacerte's ability to
successfully complete this development. If, in the future, Intuit and Lacerte
decide to integrate their operations, the integration could present a number of
risks and divert management's attention from other matters.

We assumed substantially all of the liabilities related to Lacerte's business
with the exception of certain tax liabilities. If unanticipated liabilities are
discovered later, we will likely have to satisfy those liabilities, which could
have a material adverse effect on our operating results. The acquisition
resulted in a one-time charge for in-process research and development of $53.8
million in fiscal 1998 and will result in $358.2 million of amortization
expenses over the next three to five years. See MD&A, page 33, and Note 3 of the
financial statement notes (page 49), for a more detailed discussion of the
financial impact of the Lacerte acquisition.

Other Recent Acquisitions and Divestitures. During the past few years we made
several other acquisitions to expand our business more rapidly in selected
areas, and we have sold businesses that no longer support our corporate
strategy. We acquired two Japanese companies that make small business accounting
software, and two companies that have been important to the growth of our
Quicken.com website. We sold our banking and bill payment processing subsidiary
(Intuit Services Corporation) and our direct marketing consumer software
subsidiary (Parsons) to allow us to increase our focus in strategically
important areas. These transactions have had, and will continue to have, a
significant impact on our financial results, and they may make period-to-period
comparisons of our financial results less meaningful. For more details about
these transactions and their impact, see Notes 3 and 4 of the financial
statement notes, beginning on page 48.

While we believe our recent acquisitions were in the best interests of Intuit
and its stockholders, there are significant risks associated with these
transactions. The acquisitions have expanded our size, product lines, personnel
and geographic locations. Our ability to integrate and organize these new
businesses has required improvements in our operational, financial and
management information systems, and further improvements will be necessary to
address issues presented by growth through acquisitions. Our acquisitions have
also resulted in significant amortization expenses, including amortization of
purchased software (reflected in cost of goods sold) and amortization of



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 goodwill and purchased intangibles (reflected in operating expenses), as well
as charges for purchased research and development. These expenses have had a
negative impact on our operating results, resulting in a reduction in net income
of $46.5 million in fiscal 1996, $34.6 million in fiscal 1997 and $44.3 million
in fiscal 1998. Based on acquisitions completed as of July 31, 1998, future
amortization will reduce net income (after tax) by approximately $78.5 million,
$72.8 million and $61.6 million for the years ending July 31, 1999 through 2001,
respectively. If we complete additional acquisitions in the future, there could
be an incremental negative impact on operating results. See MD&A, pages 32-33.

Web-based Finance Joint Venture. In May 1998, we participated in the formation
of a joint venture company, Venture Finance Software Corp. ("VFSC") that is
developing certain Web-oriented finance products. In exchange for our equity
interest in VFSC, we granted VFSC licenses to certain technology and
intellectual property rights. VFSC is receiving cash funding from other
investors. Affiliates of Morgan Stanley & Co Incorporated are the principal
investors in the joint venture company. In addition, of the $46 million
potential funding for VFSC, venture capital funds managed by Kleiner Perkins
Caufield & Byers, of which L. John Doerr, a director of Intuit, is a general
partner, have agreed to invest up to $1 million. We have agreed with VFSC not to
compete in certain areas of server-based personal finance for a period of ten
years. Intuit is managing the development and commercialization efforts of the
joint venture. We have an option to purchase the equity interests of the other
investors in VFSC between two and four years after the formation of VFSC. The
price to exercise this option would be substantial, and we will also have
ongoing amortization expenses if we exercise the option. There are many
technological risks involved in the development of Web-oriented finance
products, and we can't be certain that the development will be successful or
that we will exercise the purchase option. See MD&A (page 33) and Note 5 of the
financial statement notes (page 50) for more details about this transaction.

CORPORATE BACKGROUND

Intuit began operations in March 1983 and was incorporated in California in
March 1984. In March 1993, we reincorporated in Delaware and completed our
initial public offering. Our principal executive offices are located at 2535
Garcia Avenue, Mountain View, California, 94043, and our telephone number is
(650) 944-6000. When we refer to "we" or "Intuit" in this Form 10-K, we mean the
current Delaware corporation (Intuit Inc.) and its California predecessor, as
well as all of our consolidated subsidiaries.


                              PRODUCTS AND SERVICES

OVERVIEW

Intuit offers products and services through four principal business divisions:

- -       SMALL BUSINESS DIVISION: Accounting software, financial supplies,
        employer services and other related services
- -       TAX DIVISION: Personal, professional and small business tax preparation
        software, electronic tax return filing, web-based tax preparation and
        related services
- -       CONSUMER FINANCE DIVISION: Personal finance software, websites and
        marketspaces and related services
- -       INTERNATIONAL DIVISION: Small business, tax and consumer finance
        products in selected foreign markets

Desktop software and related products and services delivered through traditional
retail and direct sales channels currently provide most of our revenue, and we
expect this to continue for the foreseeable future. (See MD&A, beginning on page
26, for information about revenues for our principal products.) However, we're
beginning this description of our products and services with a separate
discussion of our Internet-based activities for two reasons. First, the Internet
has become an integral part of our business strategy in all of our business
divisions, and consequently, understanding our Internet strategy is necessary
for understanding each of the business divisions we have described on pages
9-12. Second, we are providing separate information about our Internet
businesses because investors have requested this type of analysis. However, we
do not have a separate "Internet" division within the company. We manage our
company, and review our internal financial results, based on the four business
divisions identified above.



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INTERNET COMMERCE

Overview. The Internet is a pervasive force that has fundamentally changed the
way we do business. It is becoming increasingly important to all of our business
divisions, both as the foundation for new products and services, and as an
incremental, cost-effective distribution channel. For example, the Internet is
the foundation for our insurance and mortgage marketspaces, the online payroll
service for small businesses that we recently introduced, our Quicken Store
website where customers can purchase and download desktop software products and
obtain customer service, and our technical support website where we can quickly
and cost-effectively provide patches for product bugs and provide customers with
answers to frequently asked questions.

We use the term Internet commerce to refer to all of our Internet-based business
activities. Internet commerce has two components: Internet products and
electronic distribution. Internet products include activities where the customer
realizes the value of the goods or services directly on the Internet or an
Intuit server. Internet product revenues include, for example, advertising
revenues generated on our Quicken.com website, online tax preparation and
electronic filing revenues, and transaction and processing fees from our online
insurance and online mortgage services. Electronic distribution includes
revenues generated by electronic ordering and/or delivery of traditional desktop
software products and financial supplies.

Business Opportunities. The Internet enables consumers to have greater
confidence in making financial decisions by providing them up-to-date,
personalized financial information quickly and inexpensively. In addition, the
Internet enables financial service firms offering complex financial products to
reach new customers in a cost-effective manner. These trends create some
compelling business opportunities, and we believe Intuit is in a position to
take advantage of these opportunities for several reasons. First, we have
expertise in building technical systems that simplify complex financial matters
for consumers and small businesses. Second, we have a large base of financially
sophisticated customers. Third, we have strong brand name recognition and
loyalty. Our objective is to use these strengths to establish Intuit as a
premier provider of personal and business financial information and services on
the Internet.

Strategy and Implementation. There are four main components to our Internet
strategy:

- -       Invest in new, entirely Web-based businesses
- -       Integrate online, Web-based resources into our desktop software products
- -       Put desktop software functionality onto the Internet
- -       Increase our presence on the Internet by establishing strategic
        distribution relationships and improving brand awareness for our
        Internet offerings

During fiscal 1998, we made significant progress in implementing our Internet
strategy. We launched QuickenMortgage(SM), our consumer mortgage service, in
November 1997, and expanded the scope and depth of our InsureMarket(R) site.
Many of our desktop products released during fiscal 1998 have direct links to
Quicken.com and have embedded Web "browser" software to simplify Web access. We
expanded the software tools and financial information available on our
Quicken.com website. We launched our Web TurboTax online tax preparation service
(formerly TurboTax Online) in February 1998, and our Web-based electronic filing
for our desktop and online tax products. We established important relationships
with leading Internet media companies (such as Excite), online services
providers (such as America Online) and Internet-based financial networks (such
as CNNfn).

We currently measure the success of our Internet activities in a variety of
ways, including the following four measures:

- -       Revenues. Revenues from Internet commerce more than doubled during the
        past fiscal year.
- -       Page views. Monthly page views for our Quicken.com site (measured
        internally by Intuit) increased from 16 million at the end of fiscal
        1997 to 90 million at the end of fiscal 1998.
- -       Reach. Household reach, as measured by Media Metrix, increased from 2.4%
        of Internet households in July 1997 to 4.2% in July 1998.



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- -       Financial institution participation. Participation increased 35% during
        fiscal 1998, to more than 50 mutual fund companies, brokerage firms,
        lenders and insurance companies that provide products and services
        through our Quicken.com site.

Although we have made significant progress in each of these areas during the
past year, investors should be aware that initial success achieved in these
areas will not necessarily result in improved financial results. We believe that
the dramatic growth of the Internet and the Web will give us significant
opportunities to grow our revenue over the next several years. However, revenue
from Internet commerce was only 8% of our total revenue during fiscal 1998 (6%
for Internet products and 2% for electronic distribution). Our Internet-related
expenses have been, and will continue to be, significant. We can't predict if or
when Internet commerce will generate meaningful revenue or profits.

Risks of Internet Commerce. We face many risks in pursuing our Internet
strategy, particularly for our Internet products. The Internet represents a new
business model for Intuit, where revenues come from advertising, marketing,
transaction and processing fees, instead of software product sales. Website
traffic is an important foundation for this business model. We have made
significant progress in increasing traffic to Quicken.com through our
relationships with Excite, AOL and others. However, we may need to establish
additional relationships to help us to increase advertising revenue as well as
to continue increasing traffic. This may be difficult, especially given the
relatively limited number of leading Internet companies. If our competitors
establish relationships with these companies (particularly exclusive
relationships), our ability to expand our Internet businesses could be hindered.
Even if we establish these relationships, we can't be certain that they will
result in significant increases in revenue.

We need to quickly and successfully build new skills as a website developer and
publisher, which are complementary but different skills from desktop software
development skills. In particular, development cycles for Web-based products are
extremely short and irregular, while desktop software products generally have
much longer and more predictable development and release cycles. We must
continue to develop new and continually evolving operational infrastructures to
support and manage our Internet-based businesses and the complex operational
requirements of our strategic Internet relationships. The rapid pace of change
in this area creates unique risks, and we may be unable to manage costs
effectively and/or to meet customer expectations.

We face intense competition for our Internet products. In several businesses,
there are very low barriers to entry, and the market is extremely fragmented,
making it difficult for any one company to acquire the scale that is necessary
(although not, by itself, sufficient) to begin generating any meaningful revenue
or profits. Many of our competitors are either large companies that can afford
major investments in these businesses, or small privately held companies that
can benefit from a much narrower product focus than Intuit, and whose
shareholders will tolerate significant and extended operating losses.

Customers may refuse to transact business over the Internet due to privacy or
security concerns. We can't be certain that consumers' use of the Internet,
particularly for commercial transactions, will continue to increase as rapidly
as it has during the past few years. If Internet use does not grow as a result
of privacy or security concerns, or for other reasons, our Internet-based
businesses would be seriously adversely affected.

In September 1996, we decided to move from a proprietary electronic
communications link between our software and financial institutions, to an
Internet-based link based on a standard called Open Financial Exchange (referred
to as "OFX"). To some degree, expansion of our desktop product connectivity
initiatives depends on industry adoption of OFX as a connectivity standard.
While we believe that OFX is the right strategic approach for Intuit, we face
risks and challenges in implementing it. Financial institutions may not accept
and implement OFX as rapidly as we would like, or they may adopt alternative
connectivity standards that may not support interoperability with OFX. If OFX is
not adopted by many financial institutions, we may need to incur significant
expenses to alter our products to conform to other evolving standards.

Because our Internet-based products are available in many states and foreign
countries, we may be subject to regulation and taxation in many additional
jurisdictions. Also, to the extent that states or foreign countries are



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generally successful in their efforts to impose taxes on Internet commerce, the
growth of the use of the Internet could slow substantially, which could have an
adverse effect on the growth of our Internet-based businesses. If Internet
activity becomes heavily regulated in other respects, that could have major
negative consequences for our Internet-based businesses.

SMALL BUSINESS DIVISION

We believe that the small business market provides excellent opportunities for
growing our business, both through increasing our customer base and through
increasing the range of offerings we provide to small business customers.
Expanding our small business offerings is one of our primary strategic
objectives. These are the major products and services offered by our Small
Business Division:

QuickBooks and QuickBooks Pro Software. Our QuickBooks product line brings
extensive bookkeeping capabilities to small business users in an easy-to-use
design that does not require customers to be familiar with debit/credit
accounting. QuickBooks Pro is an enhanced version of QuickBooks that addresses
the needs of small businesses in the U.S. that are project, job or time based,
and/or that are looking for a multi-user product.

In June 1998, we launched version 6.0 of our QuickBooks and QuickBooks Pro
products. QuickBooks Pro 6.0 is our first multi-user accounting software
product. We think it represents a good business opportunity because the
multi-user feature has been the most frequent customer request over the past few
years. However, there are a number of risks we face in capitalizing on this
opportunity. For example, the relatively high price we charge for the multi-user
product (approximately $219 per user, with 5-user packs for $600), may make it
more difficult to persuade retailers to devote generous shelf space to the
product and maintain a significant inventory. The product upgrade rate among
existing customers may be lower than upgrade rates we have experienced with
prior QuickBooks launches because users that don't require a multi-user product
may choose not to upgrade at this point. In addition, we may have increased
technical support costs if users need additional support because of the more
complex multi-user features.

Financial Supplies. We offer a range of financial supplies designed for use with
our small business and consumer finance desktop software products. Supplies
include professional-quality paper checks, envelopes, invoices, business forms,
deposit slips and rubber stamps. In September 1997, we launched a supplies
website to enable customers to order supplies online, which has reduced order
fulfillment costs and increased customer satisfaction. By the end of fiscal
1998, approximately 10% of supplies orders were generated by the website.
See MD&A, beginning on page 26, for more details.

In September 1995, we entered into an exclusive five-year contract with John H.
Harland Co. to print all of our check products, which accounted for about 75% of
our supplies revenue in fiscal 1998. We believe our relationship with Harland is
strong, and the financial terms of the contract are favorable for Intuit.
However, if we experience any problems with Harland's performance, it could have
a material negative impact on sales of supplies and on Intuit as a whole.

Online Payroll Service. As part of our focus on expanding our small business
offerings by providing employer services that complement our desktop software,
in September 1998 we introduced a new online payroll service. The service is
currently available to a limited number of customers, with broader availability
expected in December 1998. The service handles all aspects of payroll
processing, including calculation and electronic depositing of federal and state
payroll tax withholdings, electronic direct deposit of paychecks, preparation
and filing of quarterly and annual payroll tax returns and creation of employee
W-2s. The service uses payroll data entered by customers into their QuickBooks
6.0 files and transmitted to Intuit electronically, so customer effort is
minimized. While entering this business gives us a significant opportunity to
increase revenues, there are also risks. It's possible that the expanded
availability of the service may be delayed. In addition, all of the processing
for these payroll services is performed for Intuit by Computing Resources Inc.
("CRI"), a third party service provider, so our relationship with CRI is crucial
to the success of the service. While CRI has performed payroll processing for
over 20 years, it has historically handled a significantly lower volume than we
may experience if the subscriptions to the payroll service meet our
expectations. Since CRI is the sole provider of these processing services, any
failure of CRI to perform 



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these services would prevent us from providing payroll services to our customers
until a substitute provider could take over CRI's functions, and finding an
alternate provider could be a lengthy process. We expect that customers will
have very little tolerance for untimely or inaccurately processed payroll
information. Failure to provide uninterrupted, accurate services to our
customers, whether due to CRI's failure to perform, or any other problem with
the payroll service, would have a serious impact on our ability to retain
customers or attract new customers, could require us to make significant
payments to customers under our service guarantee, and could also give rise to
other customer claims against us. We are also incurring significant start-up
costs to initiate this service, including costs to establish the operational
infrastructure to manage and support a service business, which is different from
our traditional desktop software infrastructure. See MD&A, page 26, for more
details.

QuickBooks Support Network ("QBSN"). QBSN is our fee-for-support program for
QuickBooks users. The program reflects our belief that high-quality customer
support tailored to the specific requirements of small businesses can be a
profitable and strategically important business, rather than simply an operating
expense. During fiscal 1998, we expanded and refined QBSN to improve the quality
of the services provided.

Small Business Website. In March 1998, we launched Small Business by
Quicken.com, a website that addresses the specific needs of small businesses.
Our current goal is to build relationships with current and potential small
business customers by providing information, tools and community discussion
opportunities. The site currently offers Quicken Business CashFinder(SM), a tool
to help small businesses obtain loans and to assist financial institutions in
reaching small business customers. The site is a top level channel on Excite,
and is also accessible directly from QuickBooks 6.0 products and our Quicken.com
site. Small business website revenues come from advertising, sponsorship and
transaction fees, but they are not expected to be material, or to offset
expenses of the site, for the foreseeable future.

TAX DIVISION

We offer a broad range of federal and state tax preparation software for
individuals, tax professionals and small businesses. Our tax business has been a
fairly predictable source of recurring revenue (with customers buying new
products every year), as well as a very seasonal business. These are the major
products and services offered by our Tax Division:

Personal Tax Software. Our TurboTax products (for Windows) and MacInTax(R)
products (for the Macintosh) are designed for individual consumers who prepare
their own tax returns. Our tax products are designed to be easy to use, but
sophisticated enough for complicated tax returns.

Professional Tax Software. Our ProSeries and Lacerte tax products are designed
for tax professionals who prepare individual, business, estate, trust and gift
tax returns for their individual and business clients. We acquired the Lacerte
professional tax product line in June 1998. We believe the two product lines
provide complementary solutions for differing practitioner preferences, with our
ProSeries products emphasizing ease-of-use and data entry on government form
facsimiles, and the Lacerte products emphasizing efficiency and
customer-tailored data sheet entry. See "Acquisition of Lacerte," on page 4, for
more details about the acquisition. Customers can elect to license professional
tax products for a single fee for unlimited annual use or to use them on a
"pay-per-return" basis.

Small Business Tax Software. For small business owners that prepare their own
business tax returns, we offer TurboTax for Business and MacInTax for Business.
TurboTax for Business can import data directly from QuickBooks accounting 
software.

Electronic Filing Service. Users of our desktop tax software can file their
federal (and many state) tax returns electronically through our proprietary
electronic filing center. The total number of electronically filed returns for
all of our tax products rose significantly from fiscal 1997 to fiscal 1998.

Web-Based Tax Preparation Service. In February 1998, we launched Web TurboTax
(formerly called TurboTax Online), a Web-based interactive tax preparation
solution that allowed individual taxpayers to prepare and electronically file
their Form 1040A and Form 1040EZ federal income tax returns entirely online. We
have not 



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experienced any significant technical problems with our Web-based electronic
filing or online tax preparation products. However, the dramatic increase in
demand for tax preparation and electronic filing during the last week of the tax
season increases the risk of possible problems. Because of the time sensitivity
for filing tax returns, any future problems could cause serious financial and
public relations consequences.

In August 1998, we announced the Quicken Tax Freedom Project, a philanthropic
public service initiative under which we plan to provide online tax preparation
and electronic filing at no charge to lower income federal and state tax filers,
specifically those with adjusted gross incomes of $20,000 or less. Intuit will
provide the service through our Web TurboTax product beginning in January 1999.
We don't expect that this service will have a material impact on our revenues
from our desktop or online tax products, as the average income of our current
customers and their clients is well above the $20,000 income threshold.

CONSUMER FINANCE DIVISION

As indicated below, the Internet had a profound effect in the Consumer Finance
Division, which was responsible for most of our Internet products during fiscal
1998. These are the major products and services offered by our Consumer Finance
Division:

Quicken Software. Our Quicken desktop software products help users organize,
understand and manage their personal finances by providing easy methods for
recording and categorizing various types of financial transactions. For example,
Quicken enables customers to reconcile checking and savings accounts, record
credit card purchases and payments, and track cash, investments, mortgages and
other assets and liabilities. Our latest Quicken products incorporate a number
of Web integration features, such as direct links to relevant portions of
Quicken.com, an embedded Web browser, online banking and bill payment functions,
and a feature that allows customers of participating brokerage firms to download
brokerage account data and execute securities trades through their broker's
website. We just launched our Quicken '99 product line in September 1998, five
weeks ahead of our traditional late October release date. The product line
includes a new bundled product called Quicken Financial Center, which includes
both Quicken Deluxe and TurboTax Deluxe.

Online Transactions. Quicken includes an online banking feature that allows
users to download transaction and account information from participating
financial institutions directly into their Quicken accounts. We also offer
online bill payment through Quicken, with services provided by Checkfree or
participating financial institutions. Online revenues come primarily from
advertising and marketing fees paid by participating financial institutions.

Quicken.com. Quicken.com is our personal finance website. It's designed to
enable people to make better financial decisions and perform financial tasks
more easily by giving them useful tools, software applications, resources and
objective information about a variety of personal finance topics, in one
location. (Quicken.com also has offerings designed for small businesses - see
"Small Business Website" on page 10.) Quicken.com includes "channels" for
Investments, Tax, Insurance, Home/Mortgage and other financial areas.
Quicken.com content is created by Intuit and by third party publishers and
financial experts. We do not currently charge customers a fee to access
Quicken.com, but we receive revenue from financial institutions and other
companies that advertise and/or sell their products or services on Quicken.com.

Quicken.com includes our Quicken InsureMarket and QuickenMortgage marketspaces.
Marketspaces help buyers find the financial products and services they are
seeking, and help providers of financial products and services find new
customers. Our Quicken InsureMarket site enables customers to shop for insurance
products online. Users can currently apply for and purchase term life insurance
from ten national carriers. Auto insurance is currently available from one
carrier in eleven states, and we expect to expand the number of carriers and
states during fiscal 1999. Our QuickenMortgage site allows consumers to shop for
home mortgages online. Users can currently pre-qualify for, and apply for,
mortgages from eleven lenders nationwide. We receive initial implementation
fees, ongoing annual participation fees and transaction-based fees from
insurance carriers and lenders who participate in these marketspaces, and some
participating institutions also pay us fees for data processing and other
administrative services. We rely on a single third party to perform the back-end
processing services for our QuickenMortgage site. Failure of that party to
perform these services would require us to discontinue certain aspects of our
mortgage 



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service until an alternative service provider could be located. This would have
a serious negative impact on the performance of the QuickenMortgage marketspace.

We believe the long-term success of Quicken.com will depend on our ability to
build scale rapidly, which will require us to increase our customer base as
quickly as possible, get greater participation by financial institutions and
expand the depth and breadth of offerings on the site. We believe that the
investments channel is the most important site for increasing advertising and
sponsorship participation by financial institutions, since it tends to attract
relatively more affluent, financially savvy consumers that financial
institutions are seeking for their products and services. Accordingly, expansion
of the investments channel content, both through internal development and the
acquisition of third party content, has been and will continue to be a high
priority. For our marketspaces, participation by financial institutions involves
a greater commitment than purchasing advertising, but the marketspaces allow
participants to focus on a very specific group of consumers who are already
actively seeking the products and services they offer. Although we have devoted
significant internal resources to marketspace development efforts, our progress
in certain areas has been hampered by technological and other challenges
involved in working with large financial institutions. To supplement our
internal development efforts, we will also consider acquisitions of, and
strategic relationships with, third parties that have technology to enable us to
expand our marketspaces more rapidly.

INTERNATIONAL DIVISION

Our International Division is divided into three regions: Japan, Europe and
Asia/Pacific. The recent performance of our international operations has been
disappointing relative to our expectations. In response, we have restructured
certain operations to make them more efficient, and we have narrowed our
strategic focus to fewer products (primarily small business products) in fewer
markets. We are also investing resources to create personal finance websites in
Canada, the United Kingdom and Germany. We do not expect significant growth in
our International Division during fiscal 1999.

Japan Region. Our Intuit KK subsidiary in Japan currently offers small business
products developed by Milkyway KK (acquired in January 1996) and Nihom Micom
(acquired in March 1997) that address the upper and middle segments of the small
business market in Japan. Fiscal 1998 results were negatively affected by
increasing competition in the high end of the small business accounting market
and our late entry into the market for high-end Windows products, as well as
adverse economic conditions in Japan and in Asia generally. We are refocusing
our efforts on the lower end of the small business market, which we are
addressing with a localized version of QuickBooks launched in September 1998.
However, the economic conditions and currency exchange rates may continue to
have an impact.

Europe Region. We serve selected European markets and South Africa with
localized versions of our products through our offices in Germany, France and
the United Kingdom. During fiscal 1998, we restructured our European region to
centralize management operations in Munich. We also outsourced all European
customer service, technical support, manufacturing and order fulfillment
functions to third party vendors. With our new focus on small business products
in selected larger markets, we are devoting fewer resources to consumer finance
and tax products, and to smaller geographic markets.

Asia/Pacific Region. Our Asia/Pacific region includes Canada, Australia, Latin
America, Hong Kong and other parts of Southeast Asia. We offer Quicken in
Canada, Australia, Hong Kong, the Philippines and Singapore, as well as several
Latin American countries. We offer QuickBooks in Canada, Australia and Hong
Kong. We also offer our QuickTax(TM) personal and professional tax products in
Canada and Australia. Our Canadian operations enjoyed more success in fiscal
1998 than our other international operations, in terms of both growth and
profitability.

Special Risks for International Operations. Developing and localizing products
for foreign markets is more time-consuming and costly than developing products
for the U.S. market. Recruiting and retaining talented software engineers and
managers can be more difficult in our international offices as well. Delays or
other problems in product launches may be more likely because of these factors,
and we experienced significant product launch delays in fiscal 1996 and fiscal
1998. Economic conditions in international markets can also negatively affect
our 



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business, as they did in Japan in fiscal 1998 and in Europe in fiscal 1996.
Our international revenue and expenses are currently denominated in a variety of
foreign currencies and are subject to fluctuations in currency exchange rates.
We don't currently engage in any hedging activities. Although currency
fluctuations have not had a significant negative impact in the past, this could
change in the future if our international operations grow. Other risks that
could have a negative impact on our international operations include unexpected
changes in regulatory requirements, tariffs and other trade barriers; longer
accounts receivable payment cycles and collection difficulties; the burden of
complying with a wide variety of foreign laws; possible adverse tax consequences
including repatriation of earnings; and potentially less protection for our
intellectual property rights under foreign laws.


                               PRODUCT DEVELOPMENT

A primary goal of our development efforts is to design products and services
that will appeal to our large existing customer base as well as to new
customers. For existing customers we focus on both upgrades of products they
already own, and new, complementary products and services. We also focus on
products that generate recurring revenue, such as our tax preparation products,
financial supplies and our online payroll service. While much of our product
development is done internally, we supplement our internal development efforts
by acquiring strategically important products and technology from third parties,
or establishing other relationships that enable us to expand our business more
rapidly.

During the past few years, we have devoted significant resources to developing
and expanding new products and services, including our multi-user QuickBooks Pro
product, and Internet products such as QuickenMortgage and our online payroll
service. Our total research and development expenses as a percentage of revenue
were 14% in fiscal 1996, 16% in fiscal 1997 and 18% in fiscal 1998. Hiring and
retaining highly qualified technical employees is critical to the success of our
development efforts, particularly in new product areas, and we face intense
competition for these employees.

The expansion of our Internet-based products has had a significant impact on our
development process. Our desktop software products tend to have a fairly
predictable, structured development cycle of about 12-24 months. Once new
products are released, they generally are not modified (except to fix "bugs")
until the next scheduled product upgrade. The development process for
Internet-based products is much more rapid, much less predictable, and has much
shorter development cycles . Getting products and services launched quickly is
crucial to competitive success, but this time pressure may result in lower
product quality. Once launched, Internet-based offerings must be continuously
and rapidly updated to incorporate changing technology and customer demands, as
well as to fix bugs. In addition, Internet-based products must address customer
concerns about privacy and security. We currently incorporate a variety of
security measures into our products and services, and we are developing a
customer information privacy policy. However, a major breach of customer privacy
or security could have serious consequences for us.

The development process for our products and services is complex and involves
some risks. Product and service launches can be delayed for a variety of
reasons. Products may have "bugs" that hinder product performance, give
customers incorrect results and/or damage customer data. These problems can be
expensive to fix, particularly if we need to do a major maintenance release or
pay refunds to customers. They can also result in higher technical support costs
and lost customers.

The development of tax preparation software presents a unique challenge because
of the demanding annual development cycle required to incorporate tax law
changes each year. Tax law change issues also affect our tax table service and
our payroll service. We can't predict how complex the tax law changes will be
each year, when the changes will be made, or when tax forms included in the
products will be available from the IRS and state tax agencies. The rigid
development timetable increases the risk of errors in the products. Although
fiscal 1998 and 1997 tax product quality was high, in fiscal 1996 we had product
defects that led to negative publicity, customer dissatisfaction and incremental
operating expenses. We guarantee the accuracy of the tax calculations performed
by our federal personal tax products and we have agreed to reimburse any
penalties paid by a consumer customer to the Internal Revenue Service solely as
a result of miscalculation on a form prepared using our personal tax products.
If 



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these products contain a calculation error affecting a significant number of
consumer customers' returns, we could be subject to liability claims and be
required to make substantial payments, and our operating results and financial
condition could be materially adversely affected.

The rigid development timetable for tax products also increases the risk of a
product launch delay. Since the tax return preparation season is brief, it is
imperative that we release tax products as early as possible. A late release in
any year could cause our current and prospective customers to choose a
competitive product for that year's tax season, making it more difficult for us
to sell our products to those customers in future tax seasons.


                        MARKETING, SALES AND DISTRIBUTION

MARKETS

The markets that we compete in, particularly in the Internet area, are
characterized by rapidly changing customer demands, continuous technological
changes and improvements, shifting industry standards and frequent new product
introductions by other companies. Changes in any of these areas can quickly
render existing products obsolete, so our marketing success depends on our
ability to respond rapidly to these changes with new products and services, as
well as improvements to existing products and services.

RETAIL DISTRIBUTION

We market our desktop software in North America through traditional retail
software outlets, computer superstores, office and warehouse clubs and general
mass merchandisers. We also have OEM, or "original equipment manufacturer,"
relationships with hardware and software manufacturers who combine our products
with their products and sell them to retailers and consumers. Although OEM sales
generate little revenue (due to low pricing for OEMs) and reduce operating
margins in the short term, they are strategically important because they are a
good source of new customers.

In Japan, Europe and other international markets, we rely on distributors, VARs
and OEMs, who sell products into the retail channel. In Japan, we expect that
our shift in focus to the lower end of the small business accounting market will
require us to strengthen our direct relationships with retailers, which will
present challenges.

Retail sales revenue represented about 30% of total revenues during fiscal 1996,
27% in fiscal 1997 and 32% in fiscal 1998. The only retailer or distributor that
accounted for more than 10% of our net revenue during the past three fiscal
years was Ingram Micro Inc. (13% in fiscal 1996, 12% in fiscal 1997 and 15% in
fiscal 1998).

There are increasing numbers of companies competing for access to the
distribution channels we use. Our arrangements with our distributors and
retailers may be terminated by either party at any time without cause. Retailers
typically have a limited amount of shelf space and promotional resources, for
which there is intense competition. Any termination or significant disruption of
our relationship with any of our major distributors or retailers, or a
significant reduction in sales volume attributable to any of our principal
resellers, could materially adversely affect our results of operations and
financial condition. Also, the bankruptcy, deterioration in financial condition
or other business difficulties of a distributor or retailer could impact our
ability to collect our accounts receivable from the affected party, which could
have an adverse effect on our operating results and financial condition.

During fiscal 1998, our personal tax business benefited from particularly strong
relationships with several major retailers. However, during the past few years,
there has been increasing consolidation among retailers, and we expect this
consolidation trend to continue. Consolidation has resulted in a number of large
retailers with significant bargaining power. This factor, combined with intense
competition for access to retail shelf space and promotional support, has made
it challenging for us to negotiate financially favorable terms with retailers.
We expect to face even greater challenges in negotiating retail relationships in
fiscal 1999 and beyond, particularly given Microsoft's possible entrance into
the personal tax market. This could have a negative impact on our future
results.



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DIRECT DISTRIBUTION

We believe that mail and telephone direct sales campaigns are an effective way
to generate orders and provide opportunities for cross-selling, as well as to
stimulate retail demand and increase consumer awareness of our products. Direct
sales frequently generate significantly higher revenue per unit than retail
sales, but this also means that aggressive retail pricing (such as we have seen
in the personal tax area) can harm direct sales efforts. We use targeted
direct-mail and telephone solicitations, direct-response newspaper and magazine
advertising, and television and radio advertising to encourage direct sales.

ELECTRONIC DISTRIBUTION

Customers can order and receive software products electronically through the
Quicken Store, which is accessible through Quicken.com and other Intuit
websites. Electronic delivery has been a particularly effective method of
distribution for our TurboTax state tax preparation products. Customers can also
order financial supplies through our supplies website. Electronic ordering and
delivery are convenient for customers and less expensive for Intuit. During
fiscal 1998, about 2% of our total desktop software and supplies revenues were
generated by products ordered and/or delivered electronically, but we expect
this percentage to increase in fiscal 1999.

PRODUCT RETURNS

Like most other software companies, we have a generous return policy for our
distributors and retailers, although we encourage them to make returns promptly.
We have an unconditional return policy for direct customers. We establish
reserves for product returns in our financial statements, based on estimated
future returns of products, taking into account promotional activities, the
timing of new product introductions, distributor and retailer inventories of our
products and other factors. In the past, returns have not generally exceeded the
reserves we have established for them. However, if in the future retail
sell-through of a major product falls significantly below expectations, or if
competitors' promotional or other activities result in increased product
returns, returns could exceed the reserves established for them and could have a
negative effect on our financial performance. In addition, the rate of product
returns could increase as other changes in our distribution channels occur or
existing products become obsolete.

During the tax return preparation season, we generally ship significantly more
tax products to our distributors and retailers than we expect them to sell
during the tax season, in order to reduce the risk that distributors or
retailers will run out of products during the short tax season. As a result, we
have historically accepted significant returns of tax products each year,
principally from April to September, and we expect to continue to do so in the
future.


                                   COMPETITION

OVERVIEW

We face intense competition from many companies in almost all of our business
areas, both domestically and internationally. Many of our competitors have
significantly greater financial, technical and marketing resources than we do.
The most important competitive factors for our desktop software are product
features, ease of use, quality and reliability, brand name recognition, timing
of product launches compared to competitors (particularly for tax products),
price, access to distribution channels and quality of technical support
services. For our Internet products, the most important competitive factors are
speed in getting new products to market, the ability to distribute them
effectively (i.e., generate significant website traffic), brand name
recognition, product features and ease of use. We believe we compete effectively
on most of these factors, as our three principal desktop software products
(Quicken, QuickBooks and TurboTax) are the leading products in their respective
markets, and our Quicken.com site is one of the top personal finance sites as
measured by household reach statistics published by Media Metrix. However, we
always face the risk that competitors will introduce better products and
services, reduce prices, gain better access to distribution channels, increase
advertising (including advertising targeted at 



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Intuit customers), and release new products before we do. Any of these events
(particularly any prolonged price competition) could have a material negative
impact on our financial performance. They could also affect our ability to keep
existing customers and acquire new customers, which is particularly important
for our Internet products.

SMALL BUSINESS DIVISION

The major domestic competitor for our small business accounting software is
currently Peachtree Software (a division of ADP). A trial version of Peachtree's
multi-user product is being "bundled" with Microsoft Office Small Business
Edition. Peachtree also has a new product that integrates with Microsoft Office,
a feature that QuickBooks does not yet offer. These factors may affect our
competitive position. Despite competitive pressures, according to statistics
published by PC Data, QuickBooks accounted for an average of about 80% of
monthly retail dollar sales of small business accounting software from August
1997 through July 1998.

Our financial supplies business competes with a number of business forms
companies, such as Deluxe Business Systems, New England Business Services and
Moore Business Forms, as well as with direct mail check printers and banks. In
addition, our QuickBooks products have certain features (such as customizable
invoicing) that compete with our supplies products. Also, online bill payment
services and online payroll services with direct deposit capabilities (including
services offered by or through Intuit) offer a competitive alternative to
printed checks. Significant competitive factors for the supplies business
include ordering convenience, distribution channels, product quality, speed of
delivery and price. We believe we compete effectively in most of these areas,
but we have experienced increased pricing pressures from many of our
competitors. While we have been able to offset some of the impact of price
competition by improving operational efficiencies and customer service, at some
point continuing price pressures could negatively affect revenue and
profitability for our supplies business.

TAX DIVISION

In the personal tax area, our major domestic competitor is currently Block
Financial Corporation, the makers of TaxCut software. During fiscal 1997, TaxCut
was priced very aggressively, and reached the market earlier than our TurboTax
products, which adversely impacted sales of TurboTax. During fiscal 1998, we
released TurboTax several weeks earlier than in fiscal 1997, which enabled us to
compete more successfully with TaxCut. According to statistics published by PC
Data, TurboTax accounted for over 80% of retail dollar sales of PC-based
personal tax preparation software during the recent tax season. We expect
competition to remain fierce during fiscal 1999. Competition could become
particularly intense if Microsoft enters this market with a personal tax
product. Microsoft is a formidable competitor, and its presence in the personal
tax market would lead to additional pricing pressures, and could adversely
impact our ability to negotiate advantageous terms with major retailers.

The professional tax preparation software marketplace is very competitive. Our
largest competitors in the U.S. are Commerce Clearing House (CCH), with its
Computax product line, and RIA, with its Fast Tax and Creative Solutions
offerings. In the past, professional tax software providers have been highly
fragmented, but recent years have seen substantial consolidation. We believe our
recent acquisition of Lacerte improves our competitive position in professional
tax. See "Acquisition of Lacerte," on page 4, for more details about the
acquisition.

Intuit attempts to monitor regulatory and public policy developments that could
affect the current business climate. During calendar year 1998, for example, the
federal government considered extending current services provided by the IRS -
specifically, the free provision of certain tax forms using the Internet. The
IRS also sought greater authority in the future to permit taxpayers to fill out
government provided tax forms and return them directly to the government,
although this would require a significant expansion of the current IRS
infrastructure. In the future, federal or state authorities may take actions
that lead to greater government competition with the private sector, and
legislative simplification of federal or state income tax laws could reduce
demand for tax preparation software generally. On the other hand, certain policy
changes considered and made during the 1998 Congressional legislative cycle
actually removed barriers to electronic filing that had previously hampered
taxpayers, and this may benefit Intuit. Future regulatory and legislative
activity can enhance or harm Intuit's competitive position, and impact others in
the tax preparation industry.



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CONSUMER FINANCE DIVISION

In desktop consumer finance software, Microsoft is currently our primary
domestic competitor. Quicken competes directly with Microsoft Money, which is
aggressively promoted with free product offers through various distribution
channels, and with advertising targeted at Quicken users. These competitive
pressures, as well as other factors, have negatively affected Quicken revenue
and profitability, particularly during fiscal 1997, when Quicken revenue
declined by over 20%. During fiscal 1998, Quicken revenue and profitability
improved significantly from fiscal 1997 levels with only a slight decline in our
competitive position as measured by retail market share (see MD&A, page 29).
According to statistics published by PC Data, Quicken accounted for an average
of over 80% of monthly retail dollar sales for personal finance software from
August 1997 through July 1998, but we expect competitive pressures to continue.

There are many competitors for our other consumer finance products and services,
particularly for our Internet products. We expect that competition will increase
as we expand our offerings, and as more companies expand their businesses onto
the Internet. Our Quicken.com site competes for traffic with online financial
publishers and the financial areas on numerous online services such as Yahoo!,
as well as financially-oriented websites such as MSN Investor. We also face
competition from financial institutions that are developing their own financial
software and websites. Our insurance and mortgage marketspaces compete primarily
with smaller companies with a very narrow product focus, but Microsoft is also a
competitor in the mortgage area. In addition, in connection with a product
development joint venture established by Intuit and certain private investors,
we have agreed with the joint venture not to compete in certain areas of
Web-based personal finance for a period of ten years. See "Web-based Finance
Joint Venture" on page 6. See "Risks for Internet Commerce," on page 8, for a
discussion of additional competitive risks for our Internet offerings.

INTERNATIONAL DIVISION

In the small business accounting software market in Japan, our primary
competitors are OBC, PCA and Sorimachi. In Europe, we face competition from The
Sage Group PLC (based in the United Kingdom) and Microsoft in the small business
market. Strong competition in this market may have a more significant impact on
our international business in the future, as the focus of our business in Europe
is shifting more towards the small business market. We have a number of
competitors in international tax, including CCH in Canada and TaxCalc in the
United Kingdom. Microsoft is also a competitor in the consumer finance area.


                     CUSTOMER SERVICE AND TECHNICAL SUPPORT

We provide customer service and technical support by telephone (including
automated voice response systems), fax, electronic mail and the Web. We have a
full-time customer service and technical support staff that is supplemented by
seasonal employees and outsourcing during periods of peak call volumes (such as
during the tax return filing season, or shortly after a major product launch).
Despite our efforts to adequately staff and equip our customer service and
support operations, during peak periods we occasionally can't respond promptly
to all customer requests for assistance. We may also have an unusually high
volume of requests, and be unable to respond promptly, if large numbers of
customer order shipments are delayed or if we have product bugs.

During the past few years, we have focused on developing support capabilities
that can supplement, or in some situations replace, telephone service and
support. For example, customers who are connected to the Internet can use our
website to get answers to commonly asked questions, check on the status of a
product order and receive bug fixes electronically. Alternative service and
support methods are less expensive for us and are often more efficient and
effective for customers as well. These programs, combined with a recent
consolidation and restructuring of our technical support facilities, have
allowed us to make significant improvement in the efficiency of our service and
support operations. See MD&A, page 31.

Beginning in fiscal 1996, we started to institute fee-for-support programs for
QuickBooks and for older versions of Quicken. We expanded these programs during
fiscal 1997 and 1998, and we have also begun to eliminate support 



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for older versions of some products. Revenues from our fee-for-support programs
have not been material to date. However, the programs have helped to control
technical support costs, and as we expand the QuickBooks Support Network to
provide higher-quality support tailored to the specific requirements of small
businesses, we believe our customer support operations can become a
strategically important revenue source.


                           MANUFACTURING AND SHIPPING

The major steps involved in manufacturing desktop software are duplicating disks
and CDs, printing manuals and boxes, and assembling and shipping the final
products. We outsource most of these tasks to vendors who are required to follow
our strict quality guidelines. We have a small in-house manufacturing and
shipping facility to handle low-volume products, and to handle shipments for
direct sales. We have multiple sources for all of our raw materials and
availability has not been a problem for us. Prior to major product releases, we
tend to have significant levels of backlog, but at other times backlog is
minimal and we normally ship products within a week of receiving an order.
Because of this fluctuation in backlog, we don't think backlog is necessarily an
important measure of future sales.


                              GOVERNMENT REGULATION

Some of our products and services are regulated businesses under federal or
state laws. We offer these regulated products and services through separate
subsidiary corporations. These subsidiaries must comply with a variety of
regulations that don't apply to most software companies. Establishing and
maintaining regulated subsidiaries requires significant financial, legal and
management resources. If the subsidiaries fail to comply with applicable
regulations, they could face liability to customers and/or penalties and
sanctions by government regulators.

Our Quicken Investment Services, Inc. subsidiary (or "QISI") is registered as an
investment adviser with the Securities and Exchange Commission and is subject to
certain state regulatory laws as well. QISI is responsible for certain of the
investment-related features in our products and services. Investment adviser
regulations restrict QISI's business practices in several areas, including
advertising and distribution arrangements. The business activities of IIS, which
operates the Quicken InsureMarket website, are subject to state insurance
regulations. IIS (or one of its officers) currently has an insurance license in
each state where we believe licensing is necessary. State insurance laws
regulate various aspects of the business operations of IIS and participating
insurance carriers, including advertising, record-keeping and compensation. Our
QuickenMortgage and Quicken Business CashFinder services are offered by a
subsidiary called Intuit Lender Services, Inc. (or "ILSI"). ILSI (or one of its
officers) currently has a mortgage or loan broker license in each state where we
believe licensing is necessary. State laws regulate various aspects of the
business operations of ILSI and participating lenders, including advertising,
record-keeping and compensation.

Our Quicken products allow customers of participating brokerages to trade
securities through their broker's website. Quicken InsureMarket may expand its
site to include other insurance products, such as variable annuities, that are
considered "securities" under federal and state laws. We believe we have
structured these services in a way that avoids direct government regulation.
However, it's possible that these services, or other services we may offer in
the future, may be regulated under federal and/or state securities broker-dealer
laws or other regulations. We continually analyze new business opportunities,
and any new businesses that we pursue may require additional costs for
regulatory compliance.

Various Intuit products contain powerful encryption technology. Government
regulations currently prohibit this technology from being exported outside of
the United States and Canada. Some agencies of the federal government are
seeking to relax export laws, but others are seeking to tighten export
restrictions on software containing encryption technology. These regulations may
affect international sales of our desktop software as well as our ability to
provide the level of security customers are seeking in Internet-based products
and services on a worldwide basis.



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                              INTELLECTUAL PROPERTY

We rely on a combination of copyright, patent, trademark and trade secret laws,
and employee and third-party nondisclosure agreements to protect our software
products and other proprietary technology. While our proprietary technology is
important, we believe our success depends more heavily on the innovative skills
and technical competency of our employees. We don't have any copy-protection
mechanisms in our software because we don't believe they are practical or
effective. Current U.S. laws that prohibit copying give us only limited
practical protection from software "pirates," and the laws of many other
countries provide almost no protection for our intellectual property. Policing
unauthorized use of our products is difficult, expensive and time-consuming and
we expect that software piracy will be a persistent problem for our desktop
software products. In addition, the unique technology of the Internet may tend
to increase, and provide new methods for, illegal copying of the technology used
in our Internet-based products. We consider our principal trademarks (including
Intuit, Quicken, QuickBooks and TurboTax) to be important assets and have
registered these and other trademarks and service marks in the U.S. and many
foreign countries. The initial duration of trademark registrations varies from
country to country and is 10 years in the U.S. Most registrations can be renewed
repeatedly.

We don't necessarily own all of the software and other technologies used in our
products and services, but we have all licenses that we believe are necessary
for using that technology. We don't believe that our products, trademarks and
other proprietary rights infringe anyone else's proprietary rights. However,
other parties occasionally claim that features or content of certain of our
products, or our use of certain trademarks, may infringe their property rights.
Past claims have not resulted in any significant litigation, settlement or
licensing expenses, but future claims could.


                                    EMPLOYEES

As of September 30, 1998, Intuit and its domestic subsidiaries had about 2,500
full-time employees, and our international subsidiaries had about 360 full-time
employees. We believe our future success and growth will depend on our ability
to attract and retain qualified employees in all areas of our business. We don't
have any collective bargaining agreements with our employees, and we believe
employee relations are generally good. We do not have any key person life
insurance, and we do not have employment agreements with any employees that can
insure continued service. Although we believe we offer competitive compensation
and a good working environment, we face intense competition for qualified
employees. Like many of our competitors, we have had difficulties during the
past few years hiring and retaining employees.


ITEM 2
PROPERTIES

Our principal offices are located in Mountain View, California. We also lease
office and manufacturing space in Palo Alto and San Diego, California. We lease
our Mountain View facilities (currently about 260,000 square feet) under leases
with staggered eight-year terms that we entered into in November 1994. Since
December 1995, we have been in the process of moving our Palo Alto operations to
Mountain View in stages. The move will be completed over the next several years.
In June 1996, we relocated our San Diego operations to new offices
(approximately 140,000 square feet) under a "build-to-suit" lease. The San Diego
build-to-suit lease was amended this past fiscal year to provide for the
construction and lease of a 71,000 square foot building (including a computer
center), and to extend and revise the terms of the existing lease. See Note 7 of
the financial statements (page 51) for information about our lease commitments.

We also lease facilities in Tucson, Arizona and Fredericksburg, Virginia (for
customer service call centers), in Alexandria, Virginia (where our IIS
subsidiary is located), in Dallas, Texas (where our Lacerte subsidiaries are
located), and in Canada, England, France, Germany and Japan. During fiscal 1998,
we entered into a "build-to-suit" lease to provide for the construction of two
buildings totaling approximately 135,000 square feet on property located in
Tucson, Arizona. In fiscal 1998 we also entered into a construction agreement to
build a 45,000 square 



                                       19
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foot customer service and technical support facility on property owned by Intuit
and located in Fredericksburg, Virginia.

We believe our facilities are adequate for our current and near-term needs and
that we will be able to locate additional space to accommodate anticipated
growth.


ITEM 3
LEGAL PROCEEDINGS

Intuit is currently a defendant in the following six class action lawsuits
alleging that certain of our Quicken products have on-line banking functions
that are not Year 2000 compliant: Alan Issokson v. Intuit Inc. (filed April 29,
1998 in the Santa Clara County, California Superior Court); Rocco Chilelli v.
Intuit Inc. (filed May 13, 1998 in the New York Supreme Court, New York County,
New York); Glenn Faegenburg v. Intuit Inc. (filed May 27, 1998 in the New York
Supreme Court, New York County, New York); Joseph Rubin v. Intuit Inc. (filed
May 27, 1998 in the Santa Clara County, California Superior Court); Donald
Colbourn v. Intuit Inc. (filed June 4, 1998 in the San Mateo County, California
Superior Court); and Jerald M. Stein v. Intuit Inc. (filed June 23, 1998 in the
New York Supreme Court, New York County, New York). All of the lawsuits are
substantively very similar. The lawsuits assert breach of implied warranty
claims, violations of federal and/or state consumer protection laws, violations
of various state business practices laws, and the plaintiffs seek compensatory
damages, disgorgement of profits, and (in certain cases) attorneys' fees. See
MD&A, page 34, for a discussion of Intuit's status and plans with respect to
Year 2000 compliance.

On June 23, 1998, Intuit moved to dismiss the Issokson complaint. In August
1998, our motion was granted but the plaintiff still has an opportunity to amend
the complaint to allege injury. We believe this will be difficult in light of
the remedies that we are providing to our Quicken customers. However, if the
complaint is amended in a manner that is satisfactory to overcome another motion
to dismiss, we believe we have good and valid defenses to the claims asserted,
and we intend to vigorously defend against the lawsuit.

We have filed motions to dismiss the complaints in every other case except the
Colburn action. We plan on filing a demurrer in the Colburn action in the
future. Discovery is stayed in the New York actions pending hearings on the
motions. Discovery is ongoing in the Issokson and Stein actions. Given the
outcome of the motion to dismiss in the Issokson case, we believe we may prevail
on these motions as well. However, the ultimate outcome of any litigation is
uncertain, and regardless of outcome, litigation can have an adverse impact on
Intuit because of defense costs, diversion of management resources and other
factors.

We are subject to other legal proceedings and claims that arise in the course of
our business. We currently believe that the ultimate amount of liability, if
any, for any pending actions (either alone or combined) will not materially
affect our financial position, results of operations or liquidity. However, as
noted above, the ultimate outcome of any litigation is uncertain, and either
unfavorable or favorable outcomes could have a material negative impact.

ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.


ITEM 4A
EXECUTIVE OFFICERS OF THE REGISTRANT

Effective August 1, 1998, our Board of Directors elected William V. Campbell as
Chairman of the Board and William H. Harris, Jr. as President and Chief
Executive Officer of Intuit. Intuit founder Scott D. Cook became chairman of the
Executive Committee of the Board and continues to work full-time with Intuit. In
addition, the Board elected Mr. Harris as a director of Intuit, effective May
12, 1998. Prior to these changes, Mr. Cook served as 



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Chairman of the Board, Mr. Campbell served as President and Chief Executive
Officer and Mr. Harris served as Executive Vice President.

The following table shows our current officers and their areas of
responsibility. Biographies of our executive officers are included after the
table.




NAME                            AGE     POSITION
- ----                            ---     --------
                                  
William V. Campbell              58     Chairman of the Board of Directors
Scott D. Cook                    46     Chairman of the Executive Committee of the Board of Directors
William H. Harris, Jr.           42     President and Chief Executive Officer; Director
Mari J. Baker                    33     Senior Vice President, Human Resources and Corporate Communications
Eric C.W. Dunn                   40     Senior Vice President and Chief Technology Officer
Alan A. Gleicher                 46     Senior Vice President, Sales
Mark R. Goines                   45     Senior Vice President, Consumer Finance Division
James J. Heeger                  42     Senior Vice President, Small Business Division
David A. Kinser                  47     Senior Vice President, Operations
Raymond G. Stern                 37     Senior Vice President, Strategy, Finance and Administration
Larry J. Wolfe                   47     Senior Vice President, Tax Products Division
Greg J. Santora                  47     Vice President, Finance and Corporate Services; Chief Financial Officer
Linda Fellows                    50     Treasurer and Director of Investor Relations
Catherine L. Valentine           46     Vice President, General Counsel and Corporate Secretary
Joel T. Brown                    37     Vice President and General Manager, Employer Services Group
Kristen Brown                    34     Vice President, Corporate Business Development
Craig B. Carlson                 35     Vice President, Product Development, Small Business Division
John Dick                        49     Vice President and General Manager, Technology Operations
Caroline F. Donahue              37     Vice President, Retail Sales
Brooks Fisher                    41     Vice President and General Manager, Community and Marketspaces
Brian D. Fitzgerald              49     Vice President, Worldwide Operations
Larry King, Jr.                  37     Vice President and General Manager, Financial Supplies Group
Elisabeth Lang                   41     Vice President, Corporate Communications
Cary Masatsugu                   42     Vice President and General Manager, Small Business Internet
Bernard F. McKay                 46     Vice President, Government Programs and Policy
Robert J. Meighan                40     Vice President and General Manager, Personal Tax Group
Daniel T. Nye                    32     Vice President, International
Carl Reese                       41     Vice President, QuickenMortgage
Tanya L. Roberts                 37     Vice President, Direct Marketing and Sales
William C. Shepard               56     Vice President and General Manager, Professional Products Group
Melanie Singer                   34     Vice President, Tax Software Engineering
Eric B. Torres                   34     Vice President, Consumer Product Development
Paul Vaillancourt                42     Vice President, U.S. Customer Support



Mr. Campbell was elected to Intuit's Board of Directors in May 1994 and
currently serves as Chairman of the Board. He served as Intuit's President and
Chief Executive Officer from April 1994 through July 1998. Mr. Campbell was
President and Chief Executive Officer of GO Corporation (a pen-based computing
software company) from January 1991 to December 1993. Mr. Campbell also serves
on the board of directors of SanDisk, Inc. (a computer storage devices company),
Great Plains Software, Inc. (a software company), Apple Computer, Inc. (a
computer company) and Netscape Communications Corp. (an Internet browser
company). He is a member of SanDisk's Compensation Committee and a member of
Apple's Audit Committee. Mr. Campbell holds both a Bachelors and a Masters
degree in economics from Columbia University.

Mr. Cook, a founder of Intuit, has been a director of Intuit since March 1984
and is currently Chairman of the Executive Committee of the Board. He served as
Intuit's Chairman of the Board from March 1993 through July 1998. From March
1984 to April 1994, he also served as President and Chief Executive Officer of
Intuit. 



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Mr. Cook also serves on the board of directors of Amazon.com, Inc. (an
online bookseller) and ebay Inc. (an online electronic commerce company). Mr.
Cook holds a Bachelor of Arts degree in economics and mathematics from the
University of Southern California and a Masters in Business Administration from
Harvard University.

Mr. Harris became President and Chief Executive Officer of Intuit in August 1998
and joined Intuit's Board of Directors in May 1998. He joined Intuit as
Executive Vice President in December 1993, in connection with Intuit's
acquisition of ChipSoft, Inc. (a tax preparation software company), and served
in that capacity through July 1998. He was responsible for Intuit's tax and
consumer finance businesses from July 1996 through July 1998. From January 1992
to December 1993, Mr. Harris served as President and Chief Operating Officer of
ChipSoft. Mr. Harris earned a Bachelor of Arts degree in American Studies from
Middlebury College in Vermont and a Masters in Business Administration from
Harvard University.

Ms. Baker has served as Intuit's Senior Vice President of Human Resources and
Corporate Communications since December 1997. She served as Senior Vice
President of the Consumer Division from March 1997 to December 1997, and as Vice
President and General Manager of the Personal Finance Group from July 1996 to
March 1997. From April to July 1996, she served as Vice President of Intuit's
Financial Supplies Group, and she served as Vice President of International from
September 1994 to April 1996. From January 1994 through September 1994, Ms.
Baker was Vice President of Marketing for Now Software, Inc. (a personal and
small business software company). Ms. Baker first joined Intuit in April 1989
and served in various marketing positions until she left Intuit in December
1993. Ms. Baker holds Bachelor of Arts degrees in economics and sociology from
Stanford University. Ms. Baker also serves on the Board of Trustees for Stanford
University.

Mr. Dunn has served as a Senior Vice President of Intuit since July 1996 and as
Chief Technology Officer since March 1997. He was responsible for the
Consumer/International Division from July 1996 to March 1997. He served as Vice
President and General Manager of Intuit's Personal Finance Group from May 1994
to July 1996, and served as Intuit's Chief Financial Officer and a director from
September 1986 to December 1993. Mr. Dunn holds a Bachelor of Arts degree in
physics and a Masters in Business Administration from Harvard University.

Mr. Gleicher became Intuit's Senior Vice President of Sales in March 1997. He is
responsible for retail, direct and OEM sales. He served as Intuit's Vice
President of Sales from December 1993 to March 1997. From September 1990 until
Intuit's acquisition of ChipSoft, Inc. (a tax preparation software company) in
December 1993, Mr. Gleicher served as ChipSoft's President, Personal Tax
Division. Prior to joining ChipSoft, Mr. Gleicher was President and a co-founder
of SoftKat, which was a leading educational and consumer software distributor.
Mr. Gleicher has a Bachelors degree in economics and business finance from San
Diego State University. He also earned a certificate from the Marketing
Management Program at Stanford University.

Mr. Goines has served as a Senior Vice President of Intuit since August 1997. He
has been responsible for the Consumer Division since December 1997, and was
Senior Vice President and General Manager of the International Group from August
1997 until December 1997. He served as Intuit's Vice President and General
Manager of the International Group from April 1996 to August 1997. Mr. Goines
was formerly the Vice President of Intuit's Personal Tax Group and the Director
of Product Management of ChipSoft, Inc. (a tax preparation software company that
was acquired by Intuit in 1993). Prior to joining Intuit, Mr. Goines served in a
variety of capacities in the area of consumer financial services. Mr. Goines
holds a Bachelor of Science degree and a Masters of Business Administration from
the University of California at Berkeley.

Mr. Heeger became Senior Vice President of Intuit's Small Business Division in
July 1997. He served as Chief Financial Officer of Intuit from April 1996 to
July 1997, and was Senior Vice President in charge of the Finance, Customer
Services and Operations functions from July 1996 until July 1997. He served as
Vice President and General Manager of Intuit's Supplies Group from December 1993
to April 1996 and served as Intuit's Vice President of Operations from August
1993 to December 1993. From September 1982 to August 1993, Mr. Heeger served in
a number of marketing and operations roles at Hewlett-Packard Company. From 1987
to August 1993, he was responsible for distribution of Hewlett-Packard's
personal computer products. Mr. Heeger received a Bachelor of Science degree in 



                                       22
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management from the Massachusetts Institute of Technology and a Masters in
Business Administration from Stanford University.

Mr. Kinser joined Intuit as Senior Vice President of Operations in February
1997. Prior to that, Mr. Kinser served as a consultant to Intuit from July 1995
to February 1997. Mr. Kinser served as Chief Financial Officer and Vice
President of Operations for Collabra Software from 1994 to 1995. Mr. Kinser
served as Chief Financial Officer of EO Corp. from 1991 to 1993. He has also
held executive positions at Claris Corp. and Apple Computer, Inc. Mr. Kinser
holds a Bachelor of Arts degree from Humboldt State University.

Mr. Stern joined Intuit in January 1998 as Senior Vice President of Strategy,
Finance and Administration. Mr. Stern is responsible for all aspects of Intuit's
strategic planning and business development, as well as the finance and legal
functions. Prior to joining Intuit, Mr. Stern spent over ten years with The
Boston Consulting Group (a business consulting firm), where he was the partner
responsible for the firm's West Coast high technology practice from May 1994 to
December 1997. Mr. Stern holds a Bachelor of Science degree in mechanical
engineering from Stanford University and a Masters in Business Administration
from Harvard University.

Mr. Wolfe became Intuit's Senior Vice President of the Tax Products Group in May
1997. Prior to that, he served as Vice President and General Manager of Intuit's
Personal Tax Group from April 1996 to May 1997. He was the director of technical
support and sales for Intuit's Professional Tax Group from March 1994 to April
1996. From January 1990 to March 1994, Mr. Wolfe was Vice President of Direct
Link Software, Inc. ("DLS") and its successors. DLS was a privately held
software company from January 1990 to March 1993, when it was acquired by
ChipSoft, Inc. ChipSoft was subsequently acquired by Intuit in December 1993.
Mr. Wolfe holds a Bachelor of Science degree in business administration from the
University of Southern California and is a certified public accountant.

Mr. Santora became Intuit's Chief Financial Officer in July 1997 and has served
as Vice President of Finance since November 1996. He joined Intuit as Corporate
Controller in January 1996. From 1983 to 1995, Mr. Santora held a variety of
senior financial positions at Apple Computer, Inc., including Senior Finance
Director of Apple Americas from May 1992 to January 1996 and Director of
Internal Audit from May 1991 to May 1992. Mr. Santora, who is a certified public
accountant, holds a Bachelor of Science degree in accounting from the University
of Illinois and a Masters in Business Administration from San Jose State
University.

Ms. Fellows joined Intuit as Corporate Treasurer and Director of Investor
Relations in May 1997. Prior to that, Ms. Fellows served as Treasurer and
Director of Investor Relations of Bay Networks, Inc. from October 1990 to April
1997. Ms. Fellows holds a Bachelor of Arts degree from Stanford University and a
Masters in Business Administration from the University of Santa Clara.

Ms. Valentine joined Intuit as General Counsel in September 1994. She has served
as a Vice President of Intuit since August 1997 and as Corporate Secretary since
April 1996. From November 1993 to September 1994, she was General Counsel of
Macromedia, Inc. (a multimedia software tools company). Ms. Valentine was
General Counsel of GO Corporation (a pen-based computing software company) from
September 1991 to November 1993. Ms. Valentine holds Bachelor of Arts degrees in
finance and economics from the University of Illinois and a Juris Doctorate from
the University of Chicago.



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PART II
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION FOR COMMON STOCK

Intuit's common stock began trading over the counter in March 1993 at the time
of our initial public offering. It is quoted on the Nasdaq National Market under
the symbol "INTU." The following table shows the range of high and low closing
sale prices reported on the Nasdaq National Market for the periods indicated.
Prices reflect inter-dealer prices without retail markup, markdown or
commissions. On September 30, 1998, the closing price of Intuit's Common Stock
was $46.5625.

The market price of our Common Stock has been volatile because of many factors,
including the seasonality and quarterly fluctuations in our revenue and
operating results (see MD&A, page 25), announcements of technical innovations,
new commercial products, company or product acquisitions or the development of
strategic relationships by Intuit or its competitors, changes in earnings
estimates by analysts and changes in market conditions in the computer hardware
and computer software industries. In addition, the stock market has experienced
volatility that has particularly affected the market prices of equity securities
of many high technology companies and that often has been unrelated to the
operating performance of the companies affected. These market fluctuations may
adversely affect the market price of Intuit's Common Stock in the future.




                                                          High          Low
                                                          ----          ---
                                                                  
         FISCAL 1997

               First quarter.........................   $40.50       $26.00
               Second quarter........................    39.75        26.88
               Third quarter.........................    28.63        21.50
               Fourth quarter........................    28.50        22.13

         FISCAL 1998

               First quarter.........................   $35.75       $23.88
               Second quarter........................    41.25        27.13
               Third quarter.........................    53.38        39.13
               Fourth quarter........................    66.50        45.00



STOCKHOLDERS

As of September 30, 1998, we had approximately 800 record holders of our common
stock, and about 56,000 beneficial holders.

DIVIDENDS

We have never paid any cash dividends on our common stock. We currently
anticipate that we will retain all future earnings for use in our business, so
we don't anticipate paying any cash dividends in the foreseeable future.



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ITEM 6
SELECTED FINANCIAL DATA

The following table shows selected consolidated financial information for Intuit
for the past five fiscal years. The comparability of the information is affected
by a variety of factors, including our acquisitions and dispositions of
businesses. In addition, in August 1994, Intuit changed its fiscal year end to
July 31 from September 30. Consequently, fiscal 1994 includes only ten months of
operating results. To better understand the information in the table, investors
should also read "Management's Discussion and Analysis of Financial Condition
and Results of Operations" beginning on page 26, and the Consolidated Financial
Statements and Notes beginning on page 37.


                                FIVE-YEAR SUMMARY



                                           TEN MONTHS
                                             ENDED
                                             JULY 31,                             YEARS ENDED JULY 31,
                                           -----------      --------------------------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS DATA     1994              1995             1996            1997              1998
                                           -----------      -----------      -----------      -----------      -----------
(In thousands, except per share data)
                                                                                                        
Net revenue ..........................     $   210,376      $   419,160      $   538,608      $   598,925      $   592,736

Loss from continuing operations ......        (183,974)         (44,296)         (14,355)          (2,932)         (12,157)

Net income (loss) ....................        (183,974)         (44,296)         (20,699)          68,308          (12,157)

Basic loss per share from continuing
    operations .......................           (5.34)           (1.07)           (0.32)           (0.06)           (0.24)

Basic net income (loss) per share ....           (5.34)           (1.07)           (0.46)            1.47            (0.24)

Diluted loss per share from continuing
 operations ..........................           (5.34)           (1.07)           (0.32)           (0.06)           (0.24)

Diluted net income (loss) per share ..     $     (5.34)     $     (1.07)     $     (0.46)     $      1.44      $     (0.24)





                                                                              JULY 31,
                                           -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET DATA                1994            1995             1996             1997              1998
                                           -----------      -----------      -----------      -----------      -----------

(In thousands)
                                                                                                        
Cash, cash equivalents and
    short-term investments ...........     $    87,185      $   197,775      $   198,018      $   205,099      $   382,832

Working capital ......................          68,675          164,281          169,724          243,195          605,456

Total assets .........................         257,593          398,605          418,020          663,676        1,498,596

Long term obligations ................           3,715            8,770            5,583           36,444           35,566

Total stockholders' equity ...........     $   183,872      $   280,399      $   299,235      $   415,061      $ 1,088,361




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ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

                                  INTRODUCTION

CAUTIONS ABOUT FORWARD-LOOKING STATEMENTS

This Form 10-K includes "forward-looking" statements about future financial
results, future products and other events that have not yet occurred. For
example, statements like we "expect," we "anticipate" or we "believe" are
forward-looking statements. Investors should be aware that actual results may
differ materially from our expressed expectations because of risks and
uncertainties about the future. We will not necessarily update the information
in this Form 10-K if any forward-looking statement later turns out to be
inaccurate. Details about risks affecting various aspects of our business are
discussed throughout this Form 10-K. Investors should read all of these risks
carefully, and should pay particular attention to risks affecting the areas
identified in the first paragraph on page 3.

OVERVIEW

In the Management Discussion and Analysis section of the 10-K we are providing
more detailed information about our operating results and changes in financial
position over the past three years. This section should be read in conjunction
with the Consolidated Financial Statements and related Notes beginning on page
37.

During the fiscal year ended July 31, 1998, our overall revenue decreased by 1%
compared to fiscal 1997, due primarily to the loss of revenue as a result of the
disposition of our Parsons subsidiary in August 1997. If for comparison
purposes, Parsons revenue was excluded from fiscal 1997, then our revenue in
fiscal 1998 would have been 13% higher than in fiscal 1997.

On a generally accepted accounting principles ("GAAP") basis, we reported a net
loss of $12.2 million for fiscal 1998 compared to net income of $68.3 million in
fiscal 1997. This comparison is unfavorably impacted by a $53.8 million charge
for purchased research and development associated with the acquisition of
Lacerte in fiscal 1998 and a $71.2 million gain from the sale of Intuit Services
Corporation in fiscal 1997. After excluding one-time charges such as the fiscal
1998 AOL charge of $16.2 million, the impact of our divested Parsons subsidiary,
the gain on sale of discontinued operations, restructuring charges and
acquisition-related charges in fiscal 1998 and 1997, we would have experienced a
38% improvement in net income in fiscal 1998 over fiscal 1997. This improved
performance was primarily the result of lower cost of sales, and lower customer
service and technical support costs. Our performance improved while we were
making significant investments in our new QuickBooks multi-user technology and
our expanding Internet products, including the new online payroll service we
introduced on a limited basis in September 1998. Since we anticipate that all of
our divisions will increasingly leverage the Internet as a means of offering
products, we expect to continue incurring significant research and development
investments in fiscal 1999 through internal development, acquisitions and
strategic partnerships. The development and expansion of our Internet commerce
businesses will involve significant risks including intense competition and
difficulty in developing and implementing new business models and new
operational infrastructures. See page 8 of the business section for more
information regarding these risks.

Our business is highly seasonal. Sales of tax products are heavily concentrated
from November through March. Sales of consumer finance and small business
products are typically strongest during the year-end holiday buying season, and
therefore major product launches usually occur in the fall to take advantage of
this customer buying pattern. These seasonal patterns mean that revenue is
usually strongest during the quarter ending January 31. We experience lower
revenues for the quarters ending April 30, July 31, and October 31, while
operating expenses to develop and manage products and services continue during
these periods. This can result in significant operating losses, particularly in
the July 31 and October 31 quarters. The seasonality of our revenue patterns is
likely to be exacerbated by our acquisition of Lacerte. Operating results can
also fluctuate for other reasons such as changes in product release dates,
non-recurring events such as acquisitions and dispositions, and product price
cuts in quarters 



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with relatively high fixed expenses. Acquisitions and dispositions in particular
have a significant impact on the comparability of both our quarterly and yearly
results.


                              RESULTS OF OPERATIONS

Our sale of Parsons at the beginning of fiscal 1998 has impacted the
comparability of our operating results for fiscal 1997 and fiscal 1998.
Accordingly, the following revenue, cost of goods sold and operating expense
tables compare our fiscal 1998 results determined in accordance with GAAP to our
fiscal 1997 results, which exclude all revenues and expenses associated with our
divested Parsons subsidiary. Since Parsons was divested for our entire 1998
fiscal year, we believe this comparison provides a more meaningful analysis of
our results. Fiscal 1997 and fiscal 1996 results are being presented and
compared on a GAAP basis since both years include activity from our divested
Parsons subsidiary.


NET REVENUE




(Dollars in millions)                 1996        CHANGE      1997            1997          CHANGE        1998
                                     -------------------------------     --------------------------------------
                                     (GAAP)                    (GAAP)    (Excluding Parsons)           (GAAP)
                                                                                        
Software and related services        $463.0         11%        $512.0         $438.6         14%        $498.3
% of revenue ................            86%                       85%            83%                       84%

Supplies ....................        $ 75.6         15%        $ 86.9         $ 86.9          9%        $ 94.4
% of revenue ................            14%                       15%            17%                       16%

Total .......................        $538.6         11%        $598.9         $525.5         13%        $592.7



Since the business of selling software and related services is considerably
different from our supplies business, we break them out separately for reporting
purposes. The following revenue discussion is categorized by our business
divisions, which is how we examine our results internally. Our domestic supplies
business is considered a part of our small business division while the
international supplies business is considered part of our international
division.

Each of our business divisions reports Internet commerce revenues that are
specific to its operations and are included in its results. We use the term
Internet commerce to refer to all of our Internet-based business activities.
Internet commerce has two components: Internet products and electronic
distribution. Internet products include activities where the customer realizes
the value of the goods or services directly on the Internet or an Intuit server.
Internet product revenues include, for example, advertising revenues generated
on our Quicken.com website, online tax preparation and electronic filing
revenues, and transaction and processing fees from our online insurance and
online mortgage services. Electronic distribution includes revenues generated by
electronic ordering and/or delivery of traditional desktop software products and
financial supplies.

Although we have made significant progress in our Internet commerce activities
during the past year, investors should be aware that initial success achieved in
these areas will not necessarily result in improved financial results. We
believe that the dramatic growth of the Internet and the Web will give us
significant opportunities to grow our revenue over the next several years.
However, revenue from Internet commerce was only 8% of total revenue during
fiscal 1998 (6% for Internet products and 2% for electronic distribution).

We recognize revenue from sales of our desktop software products when products
are shipped, less reserves for expected returns and rebates from both the retail
and direct distribution channels. These reserves are difficult to estimate,
especially for seasonal products. If actual returns are significantly higher
than our estimated reserves, this could have a material negative impact on our
revenue and operating results. See Note 1 of the financial statement notes (page
43) for additional information regarding net revenue.



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Small Business Division. Small Business Division revenues come primarily from
the following sources:

- -       QuickBooks product line
- -       Supplies products (including checks, envelopes and invoices) 
- -       Tax table services
- -       Support fees charged to customers for telephone assistance

Overall, revenue for the division grew 16% in fiscal 1998 compared to fiscal
1997. Revenues for the division were largely affected by the timing of our
QuickBooks product releases in fiscal 1998 compared to fiscal 1997. In fiscal
1997, we launched QuickBooks 5.0 in the second quarter (December 1996). In
fiscal 1998 we launched our QuickBooks 6.0 products (including the QuickBooks
Pro multi-user product) in the fourth quarter (June 1998). With the QuickBooks
Pro multi-user product, we are targeting the multi-user market for the first
time. While we believe this will appeal to larger small business customers than
we have been able to reach in the past, there are also risks. The multi-user
version of QuickBooks has a higher sale price than single-user versions, which
may adversely impact the channels we use to distribute the product, and may also
adversely impact QuickBooks upgrade sales. Customer service and technical
support costs may also be higher due to the added complexity of this product. If
these or other risks occur, there could be a negative impact on our operating
results. 

Supplies revenues grew by 9% in fiscal 1998 compared to fiscal 1997.
This growth was primarily the result of our increasing customer base of small
business owners who use QuickBooks and Quicken to run their small businesses.
Our supplies business is a more consistent source of revenue than our software
business, and is derived from an existing customer base. While customers may go
long periods of time without buying a new version of software, they will often
buy supplies in between software purchases. Tax table service revenues and fees
charged for telephone support also grew substantially in fiscal 1998.

In September 1998, we introduced our new payroll processing service for our
small business customers. In fiscal 1998, we incurred considerable research and
development costs to develop this service. These expenditures will continue in
fiscal 1999. We expect this service to be unprofitable in its initial stages and
long term profitability will depend on our ability to obtain a large number of
subscribers for this service from our QuickBooks user base. If subscriptions
don't meet expectations, our future operating results could be negatively
impacted.

Small Business Division revenues increased by 25% in 1997 compared to 1996. This
was largely driven by higher QuickBooks product sales resulting from the release
of version 5.0 in December 1996. We also benefited from a favorable shift in
consumer buying patterns to higher-priced, increased functionality QuickBooks
products in fiscal 1997 compared to fiscal 1996. Supplies net revenue increased
by 17% in fiscal 1997 over fiscal 1996 as the result of higher customized check,
envelope and invoice orders from an increasing small business customer base.
Increased tax table service revenues and an expanded fee-for-support program
(which began charging users for telephone assistance with their QuickBooks
products beginning in fiscal 1997) also contributed to growth.

Tax Division.  Tax Division revenues come primarily from the following sources:

- -       TurboTax and MacInTax personal tax preparation products
- -       Professional tax preparation products (ProSeries and Lacerte product
        lines)
- -       Electronic tax return preparation and filing fees

Overall, Tax Division revenues grew 10% in fiscal 1998 compared to fiscal 1997.
This growth reflects higher sales of our TurboTax products in fiscal 1998 and a
sales mix improvement towards higher-priced deluxe products. The personal tax
market was more competitive in fiscal 1998 because our primary competitor
lowered its prices earlier in the tax software sales season this year. Despite
intense competition, we achieved sales increases largely due to positive product
reviews in the press, federal tax law changes enacted in late 1997 and an
expanded investment in retail distribution. We were also successful in getting
our TurboTax products to market more quickly in fiscal 1998. The Tax Division
also experienced growth in Internet commerce revenues during fiscal 1998 as
evidenced by significant increases in electronic filing and state tax product
downloads compared to the prior year. We believe that 



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competition will continue to be intense in fiscal 1999 and beyond. It is
possible that Microsoft Corporation will enter the personal tax preparation
software market, which could have a negative impact on our revenue,
profitability and market share. We are also at risk if federal or state
government agencies choose to offer tax preparation software products or
electronic filing services that would compete with our products.

Our professional tax product sales increased 10% in fiscal 1998 compared to
fiscal 1997. We experienced this growth primarily because we have been
successful in attaining new customers and in many cases have upgraded renewal
customers to higher-priced, increased functionality products. We expect the
acquisition of Lacerte will significantly expand our professional tax operations
during fiscal 1999. In its fiscal years ended March 31, 1997 and 1998, Lacerte
had revenue of $68.1 million and $75.6 million, respectively, and income from
operations of $23.4 million and $28.9 million, respectively. While we expect
that the acquisition will add to revenue and earnings, there are risks. See
"Acquisition of Lacerte" on page 4 of the Business section for more detail
regarding strategic benefits and risks of the Lacerte acquisition. We are also
assuming significant acquisition-related costs as a result of the transaction.
See Note 3 of the financial statement notes (page 49) for a discussion of these
costs.

Both personal and professional tax products experienced revenue growth in fiscal
1997. Personal tax product revenues for fiscal 1997 grew by approximately 13%
over fiscal 1996 as a result of increases in both the direct and retail channel
sales of Intuit's TurboTax and related products. Sales increases were
attributable both to higher unit sales and a favorable shift in buying patterns
to higher-priced products. Professional tax product revenues grew by
approximately 16% over the prior year due to strong customer acceptance of
Windows-based product offerings and an increase in pay-per-return revenues.

Consumer Finance Division. Consumer Finance Division revenues are derived
primarily from the following sources:

- -       Quicken product line
- -       Advertising and sponsorship fees from the consumer areas of our
        Quicken.com website
- -       Implementation, marketing and transaction fees from financial
        institutions (including marketspace participants) providing services
        through Quicken and Quicken.com

Overall, Consumer Finance Division revenues grew 24% in fiscal 1998 compared to
fiscal 1997. Our Quicken product sales were up slightly for the year, reflecting
a more favorable sales mix toward our higher-priced products, offset by lower
overall unit sales. While we anticipate that Quicken revenues will remain
roughly flat for fiscal year 1999, there is a risk that they will decline. In
fiscal 1997, Quicken experienced over a 20% decline in revenues. There is no
assurance that similar declines will not occur in the future. Fiscal 1998
revenue included a $10 million royalty payment from Checkfree, which we will not
receive in fiscal 1999.

Growth for the division was driven by increasing Internet product revenues,
which approximately doubled in fiscal 1998 compared to fiscal 1997. This growth
has been generated in part by collaborating with third party online service and
content providers such as Excite and AOL, which have helped to increase traffic
to our Quicken.com website. The Excite agreement calls for us to share revenue
generated from our Quicken.com site. The AOL agreement calls for us to make
significant guaranteed payments over the term of the agreement. See Note 5 (page
50) of the financial statement notes for more information regarding the Excite
and AOL agreements. While the Internet provides a significant opportunity for
revenue growth, there are also risks. Since we have made significant financial
commitments to third party providers, we must continue to increase traffic and
revenue in order to become profitable. See "Risks of Internet Commerce," on page
8, for more information regarding risks.

Consumer Finance Division revenues declined approximately 20% in fiscal 1997
compared to fiscal 1996. The combination of price reductions and lower retail
unit sales of Intuit's Quicken product line were primarily responsible for the
decline. In addition, we experienced a shift in consumer buying patterns away
from deluxe versions of products and toward lower-priced regular product
versions in fiscal 1997. In fiscal 1997, Intuit's 



                                       29
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revenues included a $10 million fee from Checkfree for connectivity to
Checkfree's bill payment service through Quicken.

International Division. International Division revenues come primarily from the
following sources:

- -       Japanese small business products
- -       German Quicken, QuickBooks and Tax products
- -       Canadian Quicken, QuickBooks and Tax products
- -       United Kingdom Quicken, QuickBooks and Tax products

In addition to the above, we also operate in smaller European, Asian and Latin
American markets. International Division revenues were down slightly in fiscal
1998 compared to fiscal 1997. This reflects lower revenues in Europe, roughly
flat revenues in Japan and higher revenues in Canada. In fiscal 1998, we
launched a new version of Quicken throughout Europe and a new version of
QuickBooks in Germany. In Japan, revenues were negatively impacted by the recent
economic slowdown, increasing competition in the high-end small business
accounting market and a weak Japanese currency. This was partially offset by
increased revenues resulting from our acquisition of Nihon Micom. In Canada, we
experienced solid revenue growth from our QuickTax, Quicken and QuickBooks
products. We have refocused our product development in Europe towards small
business products in selected larger markets. As a result, we expect to devote
fewer resources to consumer finance and tax products, and to smaller geographic
markets. We also introduced QuickBooks in Japan in September 1998 in an effort
to target a lower-priced market than our current products reach. While we expect
that international revenues will be flat or slightly down in fiscal year 1999,
there is a risk that they could be significantly lower if our initiatives are
not effective or if the Japanese currency continues to devalue significantly.

In anticipation of the upcoming conversion to a common European currency, we
have performed preliminary evaluations to determine the impact on our internal
systems and products. Based on these evaluations, we currently believe the
conversion will have an immaterial impact on our operations. 

International Division revenues experienced growth of approximately 28% during
fiscal 1997 compared to fiscal 1996. This growth was the result of significant
gains in the Japan and European regions. In Japan, growth resulted from the
release of a Windows-based product acquired from Nihon Micom. In the European
region, sales improved due to Quicken product releases in Germany and the
release of QuickBooks in the U.K. In Canada, fiscal 1997 growth was attributable
to an increase in unit sales of Canadian versions of Quicken, QuickBooks and
QuickTax products.

COST OF GOODS SOLD



(Dollars in millions)         1996        CHANGE      1997            1997          CHANGE        1998
                              -------------------------------     --------------------------------------
                              (GAAP)                    (GAAP)    (Excluding Parsons)           (GAAP)
                                                                                 
 Product .............        $136.5          1%        $137.3         $119.3          1%        $120.5
 % of revenue ........            25%                       23%            23%                       20%

 Amortization of
  purchased software
  and other ..........        $  1.4          7%        $  1.5         $  1.5         93%        $  2.9
 % of revenue ........             0%                        0%             0%                        0%


There are two components of cost of goods sold. The largest is the direct cost
of manufacturing and shipping products. The second component is the amortization
of purchased software, which is the cost of products obtained through business
acquisitions. Excluding the operating results of our divested Parsons subsidiary
for fiscal 1997, cost of goods sold decreased to 20% of net revenue in fiscal
1998 compared to 23% in fiscal 1997. This improvement was the result of our
customers buying more of our CD ROM products, which cost less to manufacture and
ship than disk-based products. We have also improved the efficiency of our
order-taking process in the financial supplies business, which has reduced
costly re-orders. While we are continuing our efforts to reduce these costs, we
expect cost of goods sold as a percentage of net revenue to increase in fiscal
1999 due largely to the changing nature of our business. Primary reasons are as
follows:



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- -       Our expanding service related businesses (such as online payroll and
        support fees for telephone assistance) tend to produce lower margins and
        will result in higher cost of sales as a percentage of revenue.
- -       We are increasing our investment in the infrastructure required to
        support our expanding Internet commerce businesses. Although not
        significant in fiscal 1998, these costs will be classified as cost of
        goods sold in fiscal 1999.
- -       Some of these new cost of sales items (such as depreciation of servers)
        tend to be fixed in nature and may cause significant variations in
        quarterly comparisons of cost of sales as a percentage of revenue.

We believe that all of these factors will continue to put upward pressure on our
cost of goods sold as a percentage of revenue in fiscal 1999 and beyond. Cost of
goods sold could also be negatively impacted if we experience errors in our
current or future products. While this risk is mitigated by our increasing
capability to fix product errors less expensively via the Internet, our results
may suffer if there is a material product error.

Total cost of goods sold decreased as a percentage of net revenue for fiscal
1997 compared to fiscal 1996. This was the result of improvements in supplies
order processing, a reduction of obsolete inventory write-offs in Germany, lower
materials costs, increasing sales of CD ROM products and a decrease in warranty
expenses in fiscal 1997 compared to 1996.

OPERATING EXPENSES



(Dollars in millions)                   1996         CHANGE        1997            1997          CHANGE          1998
                                       ---------------------------------     -----------------------------------------
                                       (GAAP)                      (GAAP)    (Excluding Parsons)               (GAAP)
                                                                                                
 Customer service and technical
 support ......................        $106.9           12%         $119.8         $112.4            5%         $117.7
 % of revenue .................            20%                          20%            21%                          20%

 Selling and marketing ........        $142.3           14%         $162.0         $129.8           27%         $164.8
 % of revenue .................            26%                          27%            25%                          28%

 Research and development .....        $ 75.6           23%         $ 93.0         $ 85.8           27%         $108.6
 % of revenue .................            14%                          16%            16%                          18%

 General and administrative ...        $ 33.1           13%         $ 37.5         $ 35.0            5%         $ 36.7
 % of revenue .................             6%                           6%             7%                           6%


 Charge for purchased research
 and development ..............        $  8.0           38%         $ 11.0         $ 11.0          389%         $ 53.8
 % of revenue .................             1%                           2%             2%                           9%


 Other acquisition costs,
 including amortization of
 goodwill and purchased
 intangibles ..................        $ 40.6          (35)%        $ 26.5         $ 21.5           13%         $ 24.2
 % of revenue .................             8%                           4%             4%                           4%


 Restructuring costs ..........            --          N/A          $ 10.4         $ 10.4         (100)%            --
 % of revenue .................            --                            2%             2%                          --




Customer Service and Technical Support. Excluding the operating results of our
divested Parsons subsidiary for fiscal 1997, customer service and technical
support expenses decreased to 20% of net revenue in fiscal 1998 compared to 21%
in fiscal 1997. We benefited from cost reductions due to the restructuring and
consolidation of our technical support facilities in the United States and
Europe in the fourth quarter of fiscal 1997. We have also benefited from our
initiatives to provide customer service and technical support less expensively
through websites 



                                       31
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and other electronic means. While we anticipate that service and support
expenses will stay relatively flat or decrease as a percentage of revenue
because of the 1997 restructuring and increased fees charged for telephone
support, there is a risk that these expenses could increase. For example, our
new multi-user QuickBooks product may result in higher customer service and
technical support expenses since customers may need considerably more
assistance with this more complex product.

Customer service and technical support expenses remained constant at
approximately 20% of net revenue for both fiscal 1997 and 1996. International
technical support cost increases were offset by improved management of domestic
technical support facilities and resources and higher product quality in fiscal
1997 compared to 1996.

Selling and Marketing. Excluding the operating results of our divested Parsons
subsidiary for fiscal 1997, selling and marketing expenses increased to 28% of
net revenue in fiscal 1998 compared to 25% in fiscal 1997. The significant
increase was due to a charge of $16.2 million related to the AOL agreement in
the third quarter of fiscal 1998, as well as increased selling and marketing
costs in support of our TurboTax product launch and increased promotion of our
Internet products. We expect this trend to continue as competition intensifies
in the personal tax market and for our Internet products in fiscal 1999.

Selling and marketing expenses for fiscal 1997 grew to 27% of net revenue
compared to 26% in 1996. This increase was due to higher marketing expenses in
response to increased tax product competition and the support of several key
international product launches.

Research and Development. Excluding the operating results of our divested
Parsons subsidiary for fiscal 1997, research and development expenses increased
to 18% of net revenue in fiscal 1998 compared to 16% in fiscal 1997. The
development of the multi-user version of QuickBooks contributed to these
increasing costs since it was more expensive to develop than our less complex
single-user products. Increases were also a result of our increased spending to
improve and expand our Internet products in an effort to attract more customer
traffic to Quicken.com. We believe that research and development expenses
related to Internet products will continue to increase in fiscal 1999. This
could have an adverse effect on our operating results, particularly if revenue
from these services does not meet expectations.

Research and development expenses grew to 16% of net revenue in fiscal 1997
compared to 14% in 1996. This increase resulted from an increased investment in
Internet product initiatives as well as the development of our desktop software.
Specifically, expenses rose as a result of development costs related to Quicken
InsureMarket, development work on Open Financial Exchange (a specification for
the exchange of financial information over the Internet) and the development of
other financial websites.

General and Administrative. Excluding the operating results of our divested
Parsons subsidiary for fiscal 1997, general and administrative expenses
decreased to 6% of net revenue in fiscal 1998 compared to 7% in fiscal 1997.
General and administrative expenses remained essentially flat at 6% of net
revenue for both fiscal 1997 and fiscal 1996.

Charge for Purchased Research and Development. When acquiring a company, we
often record a one-time charge for purchased research and development. This
charge represents the value of products we acquire that aren't yet complete
enough to be considered technologically feasible. We recorded such a charge of
$53.8 million in fiscal 1998 as the result of the Lacerte acquisition, $11
million in fiscal 1997 ($4.9 million when we acquired GALT Technologies, Inc.
and $6.1 million when we acquired Nihon Micom) and $8.0 million in fiscal 1996
as a result of the acquisition of IIS. Since these charges are specific to each
particular acquisition, we are unable to estimate what these charges may be in
the future.

The fiscal 1998 charge for purchased in-process research and development
resulted from our acquisition of Lacerte. The amount of this write-off was
determined by valuing the projects under development for which technological
feasibility had not been established. Two projects were identified for products
being developed under separate operating systems (DOS and Windows). The value of
the products was determined by estimating the costs to develop the in-process
technology into commercially feasible products, estimating the net cash flows we
believe 



                                       32
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will result from the products and discounting these net cash flows back
to their present value. We believe these products will be completed by March
1999 and that the risk of these products not being successfully completed is
low. However, if we were unable to successfully develop these products, it could
have a negative impact on our operating results.

Other Acquisition Costs. Other acquisition costs include the amortization of
goodwill and purchased intangibles that are recorded as part of an acquisition.
Excluding the operating results of our divested Parsons subsidiary for fiscal
1997, these costs increased to $24.2 million in fiscal 1998 compared to $21.5
million in fiscal 1997. This increase was due primarily to our acquisition of
Lacerte. Acquisition costs decreased by $14.1 million to $26.5 million in fiscal
1997 compared to 1996. This decrease was due to the fact that a majority of the
intangibles related to our December 1993 acquisition of Chipsoft Inc. became
fully amortized during fiscal 1997. For future periods, acquisition costs will
continue to have an impact on our results. Based on acquisitions completed as of
July 31, 1998, future amortization will reduce net income (after tax) by
approximately $78.5 million, $72.8 million and $61.6 million for the years
ending July 31, 1999 through 2001, respectively. If we complete additional
acquisitions in the future, this could result in additional amortization
charges. Specifically, if we exercise our option to purchase Venture Finance
Software Corp. (see Note 5 (page 50) of the financial statement notes), we would
record substantial intangible assets that would be amortized over the life of
VFSC's technology.

Restructuring Costs. Restructuring charges of $10.4 million were recorded in our
fourth quarter of fiscal 1997 to account for the consolidation of technical
support sales and other operations in the U.S. and Europe. As part of the
restructuring, we closed our Rio Rancho, New Mexico customer support facility.
As of July 31, 1998 we have a balance of approximately $1.8 million in accrued
restructuring related expenses.

OTHER INCOME

For fiscal 1998, interest and other income and expense, net, remained
essentially flat as a percentage of revenue compared to the same periods of the
prior year. The $4.3 million gain on disposal of business in fiscal 1998
resulted from the sale of our Parsons subsidiary in August 1997.

INCOME TAXES

For fiscal 1998 we recorded a tax benefit of $7.7 million and pretax loss of
$19.8 million, resulting in an effective tax benefit rate of 38.9%. The
effective tax rates in prior years were significantly higher due to charges for
in-process research and development and amortization of certain intangibles
related to various acquisitions for which no tax benefit is available. As of
July 31, 1998, we have provided a valuation reserve of $9.6 million related to
the benefit of losses in our foreign subsidiaries that we believe are unlikely
to be realized.

DISCONTINUED OPERATIONS

We sold our ISC subsidiary to Checkfree Corporation in the second quarter of
fiscal 1997. This resulted in a $71.2 million gain, net of tax. See Note 4 of
the financial statement notes for additional information regarding this sale and
the on-going treatment of our investment in Checkfree.


                         LIQUIDITY AND CAPITAL RESOURCES

At July 31, 1998, our unrestricted cash and cash equivalents totaled $138.1
million, a $91.4 million increase from July 31, 1997. Improvements in liquidity
were a result of net cash provided by operations and financing activities,
partially offset by cash used for investing activities.

Our operations provided $68.3 million in cash during the twelve months ended
July 31, 1998. Primary contributors to cash provided were net income adjusted
for non-cash expenses such as acquisition charges and depreciation as well as a
significant increase in accrued liabilities. The increase in liabilities was
driven by higher reserves for rebates and returns resulting from product
releases occurring during the fourth quarter of the current fiscal year. In the
prior fiscal year, product releases occurred during our first and second fiscal
quarters, which generally resulted in lower reserves at year-end. These
increases were partially offset by cash used for payments we made for 



                                       33
   34

expenses related to the ISC and Parsons sales, a reduction in prepaid assets and
a reduction in deferred tax liabilities. We also experienced a significant
increase in accounts receivable balances due to the fourth quarter product
releases.

Investing activities used $473.2 million in cash for the twelve months ended
July 31, 1998. The primary use of cash was our acquisition of Lacerte, a
professional tax preparation software company, for approximately $400 million in
cash. The acquisition was funded by a public offering of 10 million shares of
common stock, discussed below. Other uses of cash included net purchases of both
short-term and long-term investments, in addition to purchases of property and
equipment. Capital expenditures are primarily for equipment and facilities to
support our ongoing and expanding operations and information systems. Uses of
cash were partially offset by $26.4 million in cash proceeds from the sale of
our Parsons subsidiary and $9.0 million from the sale of our technical support
facility in New Mexico. Due to our significant investments in marketable
securities, there is a risk that market value declines may have a negative
impact on our liquidity. For example, we experienced a significant decline in
the value of our investment in Checkfree subsequent to our fiscal year end.
There can be no assurance that similar declines will not occur for any of our
marketable securities. If such declines are deemed to be permanent, they will
result in a charge to our statement of operations. See Note 17 (page 58) of the
financial statement notes for more information about recent declines in
marketable securities.

The $496.3 million in cash provided by financing activities is primarily due to
our public offering of 10 million shares of common stock in the fourth quarter
of fiscal 1998. Net proceeds were approximately $456 million. In March 1997, we
borrowed $30.3 million from Japanese banks in connection with our acquisition of
Nihon Micom. We have guaranteed the loan and pledged approximately $28.5 million
of short-term investments (110% of the current loan balance) to be restricted as
security for the borrowings at July 31, 1998.

Our agreement with AOL obligates us to pay a minimum of $30 million over the
term of the three-year agreement. Of this amount, approximately $16.2 million
was paid to AOL in the third quarter of fiscal 1998. We currently do not have
any other significant capital expenditure commitments, though we may require
additional cash for strategic projects in the future. For example, if we
exercise our option to purchase VFSC (see Note 5 of the financial statement
notes) and elect to pay all or a significant portion of the exercise price in
cash, it would require a significant cash expenditure.

In the normal course of business, we enter into leases for new or expanded
facilities in both domestic and international locations. See Note 7 of the
financial statement notes (page 51) and the "Properties" section (page 19) for
more information on lease commitments.

We believe that our unrestricted cash and cash equivalents will be sufficient to
meet anticipated seasonal working capital and capital expenditure requirements
for at least the next twelve months.


                                    YEAR 2000

Many existing computer systems use only the last two digits to identify a year.
Consequently, as the year 2000 approaches, many systems do not yet recognize the
difference in a year that begins with "20" instead of "19." This, as well as
other date related processing issues, may cause systems to fail or malfunction
unless corrected.

We are currently taking steps to address Year 2000 issues in the following three
areas: (1) our internal systems (including information technology such as
financial and order entry systems and non-information technology systems such as
phones and facilities); (2) our products; and (3) the readiness of third parties
with whom we have business relationships. We have assigned a dedicated Year 2000
project team to develop and implement a comprehensive five-phase Year 2000
readiness plan for our world-wide operations relating to all of these areas.
This plan has executive sponsorship, is regularly reviewed by senior management
and includes progress reports to the board of directors on a regular basis.



                                       34
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Phase One (initiation) involves increasing company awareness by educating and
involving all appropriate levels of management regarding the need to address
Year 2000 issues. Phase Two (inventory) consists of identifying all of our
systems, products and relationships that may be impacted by Year 2000. Phase
Three (assessment) involves determining our current state of Year 2000 readiness
for those areas identified in the inventory phase and prioritizing areas that
need to be fixed. Phase Four (action) will consist of developing a plan for
those areas identified as needing correction in the assessment phase. Phase Five
(implementation) will consist of executing our action plan and completing the
steps identified to attain Year 2000 readiness. We are currently in the
inventory phase of the plan for both our internal systems and third party
relationships. For our products, we are in either the inventory or assessment
phase of our plan. We currently expect to complete implementation for all of the
targeted areas by the end of our 1999 fiscal year (July 1999).

While Year 2000 costs incurred to date (including litigation costs) have not
been material, we will incur additional costs as we complete the project phases.
Based on preliminary assessments resulting from the early phases of our plan in
each of the targeted areas, we are currently unable to determine whether
additional costs to achieve Year 2000 readiness will be material. Additional
costs incurred may include but are not limited to: the cost of manufacturing and
distributing free solutions for products that are not Year 2000 ready; the
impact of lost sales due to distribution of free Year 2000 ready solutions for
affected products; the administrative costs of completing the Year 2000 project;
the cost of correcting our internal systems; and the cost of implementing
necessary contingency plans.

While we are dedicating substantial resources toward attaining Year 2000
readiness, there is no assurance that we will be successful in our efforts to
address all Year 2000 issues. If we are not successful, there could be
significant adverse effects on our operations. For example, failure to achieve
Year 2000 readiness for our internal systems could delay our ability to
manufacture and ship products, disrupt our customer service and technical
support facilities, or interrupt customer access to our online products and
services. If our products are not Year 2000 ready, we could suffer lost sales or
other negative consequences resulting from customer dissatisfaction, including
additional litigation (see discussion below). We also rely heavily on third
parties such as manufacturing suppliers, service providers, financial
institutions and a large retail distribution channel. If these or other third
parties experience Year 2000 failures or malfunctions, there could be a material
negative impact on our ability to conduct ongoing operations. For example, our
ability to manufacture and ship products into the retail channel, to receive
retail sales information necessary to maintain proper inventory levels, or to
complete online transactions dependent upon third party service providers, could
be affected. Many of our products are significantly interconnected with heavily
regulated financial institutions. Our relationships with financial institutions
could be impacted if we do not achieve Year 2000 readiness in a manner and on a
time schedule that permits them to comply with regulatory requirements. We may
also incur additional costs if we are required to accelerate our Year 2000
readiness to meet financial institution requirements. As with all companies, we
also rely on other more widely used entities such as government agencies, public
utilities and other external forces common to business and industry.
Consequently, if such entities were to experience Year 2000 failures, this could
disrupt our ability to conduct ongoing operations.

In an effort to reduce the risks associated with the Year 2000, we have
incorporated contingency planning as part of our five-phase plan, building upon
disaster recovery and contingency planning that we already have in place. This
includes identifying areas where we are most vulnerable to Year 2000 risk and
putting contingency plans in place before we experience potential failures. For
example, we have contracted with multiple suppliers to better ensure that our
products can be manufactured if a particular supplier experiences system
failures. We are building a second data center facility that will give us an
opportunity to develop back-up systems. We have also contracted with multiple
transportation companies to provide product delivery alternatives. While we
believe these contingency plans will reduce certain risks, we are still
assessing the need for additional contingency plans in areas where we believe
there may be significant exposure.

Several class action lawsuits have recently been filed against Intuit in
California and New York, alleging Year 2000 issues with the online banking
functionality in certain versions of our Quicken products, and it is possible
that we will face additional lawsuits. We do not believe the lawsuits have merit
and intend to defend them vigorously. We have been working with financial
institutions to provide solutions to their current online banking customers and
are 



                                       35
   36

planning to make such solutions available before customers experience any Year
2000 problems. See Part I, Item 3, "Legal Proceedings" (page 20) for more
information.

The above discussion regarding costs, risks and estimated completion dates for
the Year 2000 is based on our best estimates given information that is currently
available, and is subject to change. As we continue to progress with this
initiative, we may discover that actual results will differ materially from
these estimates.

ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SHORT-TERM INVESTMENT PORTFOLIO

We do not hold derivative financial instruments in our short-term investment
portfolio. Our short-term investments consist of instruments that meet high
quality standards consistent with our investment policy. This policy dictates
that we diversify our holdings and limit our short-term investments to a maximum
of $5 million to any one issuer. Our policy also dictates that all short-term
investments mature in 30 months or less.

The following table provides expected maturity and interest rate information for
our investment portfolio. Maturity information is based on principal cash flows
and interest rates are calculated on a weighted average basis.

PRINCIPAL AMOUNTS BY EXPECTED MATURITY:
(in thousands, except interest rates)



                                                           YEARS ENDING JULY 31,                                 FAIR VALUE
                                      ----------------------------------------------------------                  JULY 31,
                                      1999            2000            2001          2002    2003      TOTAL         1998
                                      ----            ----            ----          ----    ----      -----         ----
                                                                                            
Cash Equivalents ...........     $   115,751               --               --       --      --     $115,751      $115,751
       Average Interest Rate            4.30%                                                           4.30%

Investments ................     $   109,447      $   163,317      $       408       --      --     $273,172      $273,215
       Average Interest Rate            4.18%            3.90%            3.80%                         4.01%

Total Portfolio ............     $   225,198      $   163,317      $       408       --      --     $388,923      $388,966
       Average Interest Rate            4.24%            3.90%            3.80%                         4.09%


MARKETABLE SECURITIES

We also carry significant balances in marketable equity securities as of July
31, 1998. These securities are subject to considerable market risk due to their
volatility. See Note 17 of the financial statement notes for more information
regarding risks related to our investments in marketable securities.

IMPACT OF FOREIGN CURRENCY RATE CHANGES

During fiscal year 1998, most local currencies of our international subsidiaries
weakened against the U.S. dollar. Since we translate foreign currencies into U.S
dollars for reporting purposes, these weakened currencies had a negative, though
immaterial, impact on our results. We also believe that our exposure to currency
exchange fluctuation risk is insignificant primarily because our international
subsidiaries invoice customers, and satisfy their financial obligations almost
exclusively in their local currencies. There was also an immaterial currency
exchange impact from our intercompany transactions for fiscal year 1998.
Currency exchange risk is also minimized since foreign debt is due almost
exclusively in local foreign currencies. During fiscal 1998, we did not engage
in foreign currency hedging activities.



                                       36
   37

ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INTUIT INC.

1.       INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         The following financial statements are filed as part of this Report:



                                                                                                       PAGE
                                                                                                       ----
                                                                                                    
            Report of Ernst & Young LLP, independent auditors....................................        38

            Consolidated Balance Sheets as of July 31, 1997 and 1998.............................        39

            Consolidated Statements of Operations for the three years ended July 31, 1998........        40

            Consolidated Statements of Stockholders' Equity for the three years ended
                  July 31, 1998..................................................................        41

            Consolidated Statements of Cash Flows for the three years ended July 31, 1998........        42

            Notes to Consolidated Financial Statements...........................................        43


2.       INDEX TO FINANCIAL STATEMENT SCHEDULES

         The following financial statement schedule is filed as part of this
         report and should be read in conjunction with the Consolidated
         Financial Statements:



               SCHEDULE                                                                                PAGE
               --------                                                                                ----
                                                                                                    
                  II        Valuation and Qualifying Accounts....................................        59




                                       37
   38

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



The Board of Directors and Stockholders of Intuit Inc.



We have audited the accompanying consolidated balance sheets of Intuit Inc. as
of July 31, 1997 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended July 31, 1998. Our audits also included the financial statement
schedule listed on the Index to Financial Statement Schedules on the preceding
page. These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Intuit
Inc. at July 31, 1997 and 1998, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended July 31,
1998, in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.




                                        ERNST & YOUNG LLP


Palo Alto, California
August 19, 1998



                                       38
   39

                                   INTUIT INC.

                           CONSOLIDATED BALANCE SHEETS



                                                                                  JULY 31,          JULY 31,
(In thousands, except par value)                                                    1997              1998
                                                                                 -----------       ----------
                                                                                                     
ASSETS
Current assets:
  Cash and cash equivalents .................................................    $  46,780         $  138,133 
  Short-term investments ....................................................      158,319            244,699 
  Marketable securities .....................................................      190,800            499,285 
  Accounts receivable, net of allowance for doubtful accounts                                                 
     of $4,499 and $5,335, respectively (1) .................................       42,190             59,417 
  Inventories ...............................................................        3,295              3,695 
  Prepaid expenses and other current assets (2) .............................       13,393             34,896 
                                                                                  --------         ---------- 
          Total current assets ..............................................      454,777            980,125 
Property and equipment, net .................................................       83,404             69,413 
Purchased intangibles, net ..................................................       19,836             85,797 
Goodwill, net ...............................................................       26,935            285,793 
Other assets ................................................................        2,808             10,937 
Long-term deferred income taxes .............................................           --             21,006 
Investments .................................................................       41,150             17,009 
Restricted investments ......................................................       34,766             28,516 
                                                                                  --------         ---------- 
Total assets ................................................................     $663,676         $1,498,596 
                                                                                  ========         ========== 
                                                                                                              
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                          
Current liabilities:                                                                                          
  Accounts payable ..........................................................     $ 35,688         $   44,035 
  Accrued compensation and related liabilities ..............................       22,458             23,728 
  Deferred revenue ..........................................................       22,732             58,560 
  Income taxes payable ......................................................        3,811              3,044 
  Deferred income taxes .....................................................       27,310            120,482 
  Other accrued liabilities .................................................       99,583            124,820 
                                                                                  --------         ---------- 
          Total current liabilities .........................................      211,582            374,669 
Long-term deferred income taxes .............................................          589                 -- 
Long-term notes payable .....................................................       36,444             35,566 
Commitments and contingencies ...............................................                                 
Stockholders' equity: .......................................................                                 
  Preferred stock, $0.01 par value ..........................................                                 
  Authorized - 3,000 shares total; 145 shares designated Series A; 200 shares                                 
    designated Series B Junior Participating                                                                  
    Issued and outstanding - none; none .....................................           --                 -- 
  Common stock, $0.01 par value                                                                               
     Authorized -- 250,000 shares                                                                             
     Issued and outstanding - 46,942 and 59,320 shares, respectively ........          469                593 
  Additional paid-in capital ................................................      558,391          1,080,554 
  Net unrealized gain on marketable securities ..............................       20,668            181,071 
  Cumulative translation adjustment and other ...............................       (1,236)             1,531 
  Accumulated deficit .......................................................     (163,231)          (175,388)
                                                                                  --------         ---------- 
          Total stockholders' equity ........................................      415,061          1,088,361 
                                                                                  --------         ---------- 
Total liabilities and stockholders' equity ..................................     $663,676         $1,498,596 
                                                                                  ========         ========== 


(1) Includes $1.0 and $3.4 million from Checkfree as of July 31, 1997 and 1998,
respectively. (See Note 15.)

(2) Includes a $7.3 million note receivable from Venture Finance Software
Corporation as of July 31, 1998. (See Note 15.)

                             See accompanying notes.



                                       39
   40

                                   INTUIT INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS




                                                                             YEARS ENDED JULY 31,
                                                                    1996             1997            1998
                                                                 ---------        ---------        ---------
(In thousands, except per share data)

                                                                                                
Net revenue (1) ..........................................       $ 538,608        $ 598,925        $ 592,736
Costs and expenses:
  Cost of goods sold:
     Product .............................................         136,470          137,281          120,538
     Amortization of purchased software and other ........           1,399            1,489            2,905
  Customer service and technical support .................         106,872          119,762          117,714
  Selling and marketing ..................................         142,319          162,047          164,834
  Research and development ...............................          75,558           93,018          108,604
  General and administrative .............................          33,153           37,460           36,719
  Charge for purchased research and development ..........           8,043           11,009           53,800
  Other acquisition costs, including amortization of
   goodwill and purchased intangibles ....................          40,570           26,543           24,204
  Restructuring costs ....................................              --           10,356               --
                                                                 ---------        ---------        ---------
          Total costs and expenses .......................         544,384          598,965          629,318
                                                                 ---------        ---------        ---------
          Loss from operations ...........................          (5,776)             (40)         (36,582)
Interest and other income and expense, net ...............           7,646            9,849           12,438
Gain on disposal of business .............................              --               --            4,321
                                                                 ---------        ---------        ---------
Income  (loss) from continuing operations before
  income taxes ...........................................           1,870            9,809          (19,823)
Provision (benefit)  for income taxes ....................          16,225           12,741           (7,666)
                                                                 ---------        ---------        ---------
Loss from continuing operations ..........................         (14,355)          (2,932)         (12,157)
Loss from operations of discontinued operations, net of
   income tax benefit of $3,725 ..........................          (6,344)              --               --
Gain from sale of discontinued operations, net of
   income tax provision of $52,617 .......................              --           71,240               --
                                                                 ---------        ---------        ---------
Net income (loss) ........................................       $ (20,699)       $  68,308        $ (12,157)
                                                                 =========        =========        =========
Basic net loss per share from continuing operations ......       $   (0.32)       $   (0.06)       $   (0.24)
Basic net loss per share from operations of discontinued
 operations ..............................................           (0.14)              --               --
Basic net income per share from  sale of discontinued
 operations ..............................................              --             1.53               --
                                                                 ---------        ---------        ---------
Basic net income (loss) per share ........................       $   (0.46)       $    1.47        $   (0.24)
                                                                 =========        =========        =========
Shares used in per share amounts .........................          45,149           46,424           49,676
                                                                 =========        =========        =========

Diluted net loss per share from continuing operations ....       $   (0.32)       $   (0.06)       $   (0.24)
Diluted net loss per share from operations of discontinued
  operations .............................................           (0.14)              --               --
Diluted net income per share from sale of discontinued
  operations .............................................              --             1.50               --
                                                                 ---------        ---------        ---------
Diluted net income (loss) per share ......................       $   (0.46)       $    1.44        $   (0.24)
                                                                 =========        =========        =========
Shares used in per share amounts .........................          45,149           47,448           49,676
                                                                 =========        =========        =========




(1) Includes $11.6 and $14.1 million from Checkfree for the years ended July 31,
1997 and 1998, respectively, and $10.3 million from Excite for the year ended
July 31, 1998. (See Note 15.)


                             See accompanying notes.



                                       40
   41

                                   INTUIT INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY




                                                                                   NET
                                                                               UNREALIZED    CUMULATIVE
                                            COMMON STOCK        ADDITIONAL      GAIN ON     TRANSLATION     EARNINGS      TOTAL
                                           ----------------       PAID-IN      MARKETABLE    ADJUSTMENT   (ACCUMULATED STOCKHOLDERS'
                                           SHARES    AMOUNT       CAPITAL      SECURITIES     AND OTHER     DEFICIT)      EQUITY
(Dollars in thousands)                     ------    ------       -------      ----------     ---------     --------      ------
                                                                                                  
Balance at July 31, 1995 .............. 44,516,908  $   445     $   490,698           $--     $     96    $  (210,840)  $   280,399

Issuance of common stock pursuant
  to Intuit KK acquisition ............    650,000        7             473            --           --             --           480
Issuance of common stock pursuant
  to Intuit Insurance Services 
  acquisition .........................    169,181        2           8,431            --           --             --         8,433
Issuance of common stock upon
  exercise of options .................    470,847        4          12,351            --           --             --        12,355
Tax benefit from option transactions...         --       --          18,865            --           --             --        18,865
Amortization of deferred 
  compensation ........................         --       --              --            --           29             --            29
Translation adjustment and other ......         --       --              --            --         (627)            --          (627)
Net loss ..............................         --       --              --            --           --        (20,699)      (20,699)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1996 .............. 45,806,936      458         530,818            --         (502)      (231,539)      299,235

Issuance of common stock pursuant to
  GALT acquisition ....................    212,053        2           8,709            --           --             --         8,711
Issuance of common stock upon
  exercise of options and other .......    826,818        8           7,540            --           --             --         7,548
Issuance of common stock pursuant to
  Employee Stock Purchase Plan ........     96,301        1           1,877            --           --             --         1,878
Release of stock from escrow pursuant
  to Parsons Technology, Inc. 
  acquisition .........................         --       --           2,743            --           --             --         2,743
Tax benefit from employee stock
  option transactions .................         --       --           6,704            --           --             --         6,704
Net unrealized gain on marketable
  securities ..........................         --       --              --        20,668           --             --        20,668
Translation adjustment and other ......         --       --              --            --         (734)            --          (734)
Net income ............................         --       --              --            --           --         68,308        68,308
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1997 .............. 46,942,108      469         558,391        20,668       (1,236)      (163,231)      415,061

Issuance of common stock upon
   exercise of options and other ......  2,230,258       22          41,222            --           --             --        41,244
Issuance of common stock pursuant to
  Employee Stock Purchase Plan ........    147,976        2           3,757            --           --             --         3,759
Issuance of common stock pursuant to
  public offering ..................... 10,000,000      100         455,950            --           --             --       456,050
Tax benefit from employee stock
  option transactions .................         --       --          21,234            --           --             --        21,234
Net unrealized gain on marketable
  securities ..........................         --       --              --       160,403           --                      160,403
Translation adjustment and other ......         --       --              --            --        2,767             --         2,767
Net loss ..............................         --       --              --            --           --        (12,157)      (12,157)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1998 .............. 59,320,342  $   593     $ 1,080,554   $   181,071     $  1,531    $  (175,388)  $ 1,088,361
===================================================================================================================================


                             See accompanying notes.



                                       41
   42

                                   INTUIT INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS



                                                                      YEARS ENDED JULY 31,
                                                                      --------------------
                                                                 1996          1997           1998
(In thousands)                                                ---------      ---------      ---------
                                                                                          
Cash flows from operating activities:
  Net income (loss) .....................................     $ (20,699)     $  68,308      $ (12,157)
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities: ..................            --
       Net gain on sale of discontinued operations ......            --        (71,240)            --
       Discontinued operations loss offset against gain .            --         (9,668)            --
       Gain on disposal of business, net of tax .........            --             --         (1,621)
       Gain on sale of facility .........................            --             --         (1,501)
       Charge for purchased research and development ....         8,043         11,009         53,800
       Amortization of goodwill and other purchased              44,502         29,715         24,330
          intangibles....................................  
       Depreciation .....................................        23,853         28,952         28,908
       Changes in assets and liabilities:
          Accounts receivable ...........................       (10,498)         7,482        (17,055)
          Inventories ...................................         2,128          1,445         (1,044)
          Prepaid expenses ..............................        (4,817)        (4,090)       (14,104)
          Deferred income tax assets and liabilities ....        (1,989)       (14,501)       (39,221)
          Accounts payable ..............................        12,281            (26)         8,206
          Accrued compensation and related liabilities ..            47          6,441          1,403
          Deferred revenue ..............................         9,723             58          6,320
          Accrued acquisition liabilities ...............        (5,733)         1,445        (29,185)
          Other accrued liabilities .....................        (4,624)        22,931         43,491
          Income taxes payable ..........................         9,258          2,888         17,767
                                                              ---------      ---------      ---------
            NET CASH PROVIDED BY OPERATING ACTIVITIES ...        61,475         81,149         68,337
                                                              ---------      ---------      ---------
Cash flows from investing activities:
  Proceeds from sale of facility ........................            --             --          9,025
  Purchase of property and equipment ....................       (69,321)       (27,597)       (33,561)
  Sale of marketable securities .........................            --         29,500             --
  Acquisitions and dispositions, net of cash acquired ...            40        (34,224)      (350,288)
  Increase in other assets ..............................        (1,628)          (970)        (1,276)
  Purchase of short-term investments ....................      (197,003)      (258,892)      (293,306)
  Liquidation and maturity of short-term investments ....       165,046        215,338        213,176
  Purchase of long-term investments .....................            --        (41,150)       (17,009)
                                                              ---------      ---------      ---------
            NET CASH USED IN INVESTING ACTIVITIES .......      (102,866)      (117,995)      (473,239)
                                                              ---------      ---------      ---------
Cash flows from financing activities:
  Principal payments on long-term debt ..................        (3,187)          (661)        (4,798)
  Proceeds from issuance of long-term debt ..............            --         30,277             --
  Net proceeds from issuance of common stock ............        12,864          9,426        501,053
                                                              ---------      ---------      ---------
            NET CASH PROVIDED BY FINANCING ACTIVITIES ...         9,677         39,042        496,255
                                                              ---------      ---------      ---------
Net increase (decrease) in cash and cash equivalents ....       (31,714)         2,196         91,353
Cash and cash equivalents at beginning of period ........        76,298         44,584         46,780
                                                              ---------      ---------      ---------
Cash and cash equivalents at end of period ..............     $  44,584      $  46,780      $ 138,133
                                                              =========      =========      =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid .........................................     $     305      $     652      $     432
                                                              =========      =========      =========
  Income taxes paid .....................................     $   5,791      $  31,906      $   6,054
                                                              =========      =========      =========




                             See accompanying notes.


                                       42
   43
                                   INTUIT INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Intuit Inc. develops, sells and supports small business accounting, tax
preparation and consumer finance desktop software products, financial supplies
(such as computer checks, envelopes and invoices), and Internet products for
individuals and small businesses. Our products and services are designed to
automate commonly performed financial tasks and to simplify the way individuals
and small businesses manage their finances. We sell our products throughout
North America and in many international markets. Sales are made through retail
distribution channels, traditional direct sales to customers and the Internet.

Principles of Consolidation

The consolidated financial statements include the accounts of Intuit and its
wholly-owned subsidiaries. We have eliminated all significant intercompany
accounts and transactions. Investments in which we have a 20% to 50% interest or
otherwise have the ability to exercise significant influence, are accounted for
under the equity method. Investments in which we have less than a 20% interest
and do not have significant influence are carried at cost or estimated
realizable value, if less.

Use of Estimates

To comply with generally accepted accounting principles, we make estimates and
assumptions that affect the amounts reported in the financial statements and
disclosures made in the accompanying notes. Our most significant estimates are
related to the collectibility of accounts receivable, reserves for product
returns and exchanges and reserves for rebates. We also use estimates to
determine the carrying value of goodwill and purchased intangibles. Actual
results may differ from our estimates.

Net Revenue

Intuit recognizes revenue from sales of desktop software products when products
are shipped, less reserves for expected returns from both the retail and direct
channels. To recognize revenue, it must be probable that we will collect the
accounts receivable from our customers. Reserves are provided for excess
quantities of current product versions, as well as previous versions of products
still in the channel when new versions are launched. In some situations, we
receive advance payments from our customers. Revenue associated with these
payments must be deferred until the products are shipped or services are
provided. We also reduce revenue by the estimated cost of rebates when products
are shipped. Warranty reserves are provided at the time revenue is recognized
for the estimated cost of replacing defective products. We recognize Internet
product revenue (such as subscription revenues, Internet advertising and
transaction revenue) as such fees are earned or services are provided.

Research and Development

Research and development expenses are expensed as incurred. The expenses are
primarily the costs incurred to develop software and Internet products.

Customer Service and Technical Support

Customer service and technical support costs include order processing, customer
inquiries and telephone assistance. We also include the costs of post-contract
customer support in this expense category.



                                       43
   44

Advertising

We expense advertising costs as incurred. Advertising expense for the years
ended July 31, 1996, 1997 and 1998 was approximately $24.6 million, $35.3
million and $27.0 million, respectively.

Cash, Cash Equivalents and Short-Term Investments

We consider highly liquid investments with a maturity of three months or less at
the date of purchase to be cash equivalents. Both cash equivalents and
short-term investments are considered available-for-sale securities and are
carried at amortized cost, which approximates fair value. The following schedule
summarizes the estimated fair value of our cash, cash equivalents and short-term
investments:



                                                  JULY 31,             JULY 31,
                                                    1997                1998
                                                  ---------           ---------
(In thousands)
                                                                      
Cash and cash equivalents:
  Cash .................................          $  20,188           $  22,382
  Money market funds ...................              3,369               6,972
  Commercial paper .....................              4,292                  --
  Municipal bonds ......................                 --              81,927
  U.S. Government securities ...........             18,931              26,852
                                                  ---------           ---------
                                                  $  46,780           $ 138,133
                                                  =========           =========

Short-term investments:
  Certificates of deposit ..............          $   5,075           $   5,043
  Corporate notes ......................             37,811               2,000
  Municipal bonds ......................            140,245             256,297
  U.S. Government securities ...........              9,954               9,875
  Restricted short-term investments ....            (34,766)            (28,516)
                                                  ---------           ---------
                                                  $ 158,319           $ 244,699
                                                  =========           =========


The estimated fair value of cash equivalents and short-term investments
classified by date of maturity is as follows:



                                                  JULY 31,             JULY 31,
                                                    1997                1998
                                                  ---------           ---------
                                                                      
(In thousands)
 Due within one year ...................          $ 155,832           $ 225,241
 Due after one year ....................             63,845             163,725
 Restricted short-term investments .....            (34,766)            (28,516)
                                                  ---------           ---------
                                                  $ 184,911           $ 360,450
                                                  =========           =========


For information about our restricted investments, see Note 7. Realized gains and
losses from sales of each type of security were immaterial for all periods
presented.



                                       44
   45

Marketable Securities

Our marketable securities are carried at fair value and include unrealized gains
and losses, net of tax, in stockholders' equity. We held the following
marketable securities at July 31, 1997 and 1998:



                                                                             GROSS UNREALIZED
                                                            COST            GAIN            LOSS         FAIR VALUE
                                                          --------        --------        --------       ----------
                                                                                                   
1997
(In thousands)
  Checkfree Corporation common stock .............        $156,350        $ 34,450        $     --        $190,800
                                                          ========        ========        ========        ========

1998
(In thousands)
  Checkfree Corporation common stock .............        $156,350        $106,000        $     --        $262,350
  Excite, Inc. common stock ......................          39,150         187,050              --         226,200
  Verisign, Inc. common stock ....................           2,000           5,750              --           7,750
  Concentric Network Corporation common stock ....              --           2,985              --           2,985
                                                          --------        --------        --------        --------
                                                          $197,500        $301,785        $     --        $499,285
                                                          ========        ========        ========        ========



In January 1997, we sold our online banking and bill payment transaction
processing business to Checkfree Corporation. We obtained marketable securities
in Checkfree as a result of this sale. Note 4 provides more information on this
sale.

We account for the investment in Checkfree as an available-for-sale equity
security, which accordingly is carried at market value. Checkfree common stock
is quoted on the Nasdaq Stock Market under the symbol CKFR. The closing price of
Checkfree common stock at July 31, 1998 was $24.75 per share. At July 31, 1998,
we held 10.6 million shares, or approximately 19%, of Checkfree's outstanding
common stock.

In June 1997, we purchased 5.8 million shares (as adjusted for a two-for-one
stock split) of common stock of Excite, Inc. ("Excite") as part of an agreement
we entered into with Excite. The agreement provides for the joint development,
promotion and distribution of an online financial channel. Since we are
restricted from selling the shares until December 1998, we initially valued the
shares at cost, or $39.2 million. Beginning in January 1998, these shares were
adjusted to market value, as remaining restrictions on the shares expire within
12 months. Excite's common stock is quoted on the Nasdaq Stock Market under the
symbol XCIT. The closing price of Excite common stock at July 31, 1998 was
$39.00 per share. At July 31, 1998, we held approximately 11% of Excite's
outstanding common stock.

Checkfree, Excite, Verisign, Inc. and Concentric Network Corporation are high
technology companies whose stocks are subject to substantial volatility.
Accordingly, it is possible that the market price of one or more of these
companies' stocks could decline substantially and quickly, which could result in
a material reduction in the carrying value of these assets. See Note 17 for
information regarding significant declines in market prices that occurred
subsequent to July 31, 1998.

Inventories

Our inventory consists primarily of materials used in software products and
related supplies and packaging materials. We value them at the lower of cost
(first-in, first-out) or market (net realizable value or replacement cost).

Property and Equipment

Property and equipment are stated at cost. We calculate depreciation using the
straight-line method over the estimated useful lives of the assets, which range
from 3 to 30 years. Leasehold improvements are amortized using 



                                       45
   46

the straight-line method over the lesser of the estimated useful lives or
remaining lease terms. Property and equipment consisted of the following:



                                                               JULY 31,          JULY 31,
                                                                 1997              1998
                                                               ---------         ---------
      (In thousands)
                                                                                 
      Machinery and equipment ............................     $ 102,241         $  96,780
      Furniture and fixtures .............................        17,739            12,514
      Leasehold improvements .............................        18,659            22,278
      Land and buildings .................................        15,365             3,193
      Construction in progress ...........................            --               763
                                                               ---------         ---------

                                                                 154,004           135,528
      Less accumulated depreciation and amortization .....       (70,600)          (66,115)
                                                               ---------         ---------
                                                               $  83,404         $  69,413
                                                               =========         =========


Goodwill and Intangible Assets

We record goodwill when the cost of net assets we acquire exceeds their fair
value. Goodwill is amortized on a straight-line basis over periods of 3 years.
The cost of identified intangibles is generally amortized on a straight-line
basis over periods ranging from 1 to 10 years. We regularly perform reviews to
determine if the carrying value of the assets is impaired. The reviews look for
the existence of facts or circumstances, either internal or external, which
indicate the carrying value of the asset cannot be recovered. No such impairment
has been indicated to date. If there is impairment in the future, Intuit will
measure the amount of the loss based on undiscounted expected future cash flows
from the impaired assets. The cash flow calculations would be based on
management's best estimates, using appropriate assumptions and projections at
the time. Intangible assets consisted of the following:



                                                 LIFE IN          NET BALANCE AT
                                                  YEARS      JULY 31, 1997   JULY 31, 1998
                                                  -----      -------------   -------------
                                                                    
      (In thousands)
      Goodwill ............................         3          $ 26,935        $285,793
      Customer lists ......................        3-5            3,144          53,517
      Covenant not to compete .............        3-5            2,125           2,211
      Purchased technology ................        1-5            7,517          18,763
      Other intangibles ...................        1-10           7,050          11,306


Included in the other intangibles category are items such as trade names, logos
and other identified intangible assets. Balances presented above are net of
total accumulated amortization of $147.1 million and $103.6 million at July 31,
1997 and July 31, 1998, respectively. The accumulated amortization balance at
July 31, 1997 included $67.8 million relating to assets acquired as part of the
purchase of Parsons Technology, Inc. in September 1994. We subsequently sold 
Parsons in August 1997.  See Note 4.

Concentration of Credit Risk

The personal computer software industry is highly competitive and rapidly
changing. Many circumstances could have an unfavorable impact on Intuit's
operating results. Examples include significant technological changes in the
industry, changes in customer requirements or the emergence of competitive
products or services with new capabilities.

We are also subject to risks related to our significant balances of short-term
investments, marketable securities and trade accounts receivable. At July 31,
1998, we held shares of Checkfree common stock representing approximately 19% of
Checkfree's outstanding common stock. We also held approximately 11% of Excite's
outstanding common stock as of July 31, 1998. Our ability to dispose of these
securities is limited by volume trading and other restrictions. The Excite
shares cannot be sold until December 1998. If there is a permanent decline in
the value of these securities below cost, we will need to report this decline in
our statement of operations. 



                                       46
   47

See "Marketable Securities," above in Note 1 and Note 17 for a discussion of
risks associated with our marketable securities. Our remaining portfolio is
diversified and consists primarily of short-term investment-grade securities.

To reduce the credit risk associated with accounts receivable, Intuit performs
ongoing evaluations of customer credit. Generally, no collateral is required. We
maintain reserves for estimated credit losses and these losses have historically
been within our expectations.

Foreign Currency

Assets and liabilities recorded in foreign currencies are translated at the
exchange rate on the balance sheet date. Revenue, costs and expenses are
translated at average rates of exchange in effect during the year. We report
translation gains and losses as a separate component of stockholders' equity.
Net gains and losses resulting from foreign exchange transactions were
immaterial in all periods presented.

Recent Pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income." SFAS 130 sets standards for reporting comprehensive income in financial
statements. Comprehensive income items include changes in equity (net assets)
that are not included in net income. Examples are foreign currency translation
adjustments and unrealized gains and losses on available-for-sale securities. We
are required to report the disclosures set forth in SFAS 130 beginning with the
quarter ending October 31, 1998.

In June 1997, FASB issued SFAS 131, "Disclosures About Segments of an Enterprise
and Related Information." This statement establishes standards for the way
companies report information about operating segments in financial statements.
It also sets standards for related disclosures about products and services,
geographic areas and major customers. The disclosures prescribed by SFAS 131
will be required beginning in fiscal year 1999.

In October 1997, FASB approved the American Institute of Certified Public
Accountants Statement of Position, "Software Revenue Recognition" ("SOP 97-2").
SOP 97-2 will be effective for Intuit beginning in the first quarter of fiscal
1999. We do not believe the adoption of SOP 97-2 will have a significant impact
on our revenue recognition policy.

2.   PER SHARE DATA

Basic income per share is computed using the weighted average number of common
shares outstanding during the period. Diluted income per share is computed using
the weighted average number of common and dilutive common equivalent shares
outstanding during the period. Common equivalent shares consist of the shares
issuable upon the exercise of stock options under the treasury stock method. All
share and per share data in the financial statements and notes have been
adjusted retroactively to give effect to Intuit's two-for-one stock split in
August 1995. The following table shows the computation of basic and diluted
income per share for the years ended July 31, 1996, 1997 and 1998:



                                                                         YEARS ENDED JULY 31,
                                                              -----------------------------------------
                                                                1996             1997            1998
                                                              --------         --------        --------
                                                                                            
(In thousands, except per share data)

BASIC:

     Weighted average common shares outstanding ......          45,149           46,424          49,676
                                                              ========         ========        ========

     Net income (loss) ...............................        $(20,699)        $ 68,308        $(12,157)
                                                              ========         ========        ========

     Per share amount ................................        $  (0.46)        $   1.47        $  (0.24)
                                                              ========         ========        ========




                                       47
   48

                                                                                            
DILUTED:

     Weighted average common shares outstanding ......          45,149           46,424          49,676

     Equivalent shares issuable upon exercise of
        options ......................................              --            1,024              --
                                                              --------         --------        --------

     Shares used in per share amounts ................          45,149           47,448          49,676
                                                              ========         ========        ========

     Net income (loss) ...............................        $(20,699)        $ 68,308        $(12,157)
                                                              ========         ========        ========

     Per share amount ................................        $  (0.46)        $   1.44        $  (0.24)
                                                              ========         ========        ========



3.   ACQUISITIONS

In January 1996, we acquired Milkyway KK, a provider of PC-based financial
software in Japan. Milkyway KK's name was changed to Intuit KK in February 1997.
We treated the acquisition as a pooling of interests for accounting purposes. We
issued 650,000 shares of Intuit common stock and recorded merger-related
expenses of $0.6 million related to the acquisition. The accompanying
Consolidated Financial Statements are presented on a combined basis for all
periods prior to the acquisition.

Revenue and net income (loss) of Intuit and Milkyway from August 1, 1995 to
January 2, 1996 were as follows:



                                                                    PERIOD ENDED
                                                                    JAN. 2, 1996
                                                                    ------------
                                                                       
      (In thousands;  unaudited)

      Net revenue:
         Intuit ...........................................           $ 164,696
         Milkyway .........................................              14,510
                                                                      ---------
                                                                      $ 179,206
                                                                      =========
      
      Net income (loss):
         Intuit ...........................................           $ (34,037)
         Milkyway .........................................               1,312
                                                                      ---------
                                                                      $ (32,725)
                                                                      =========



In June 1996, we acquired Interactive Insurance Services Corp. for approximately
$9.0 million. The name was changed to Intuit Insurance Services, Inc. ("IIS") in
June 1998. IIS is a developer of an Internet-based system that allows users to
get insurance information and quotes from participating insurance carriers via
the World Wide Web. The acquisition was treated as a purchase for accounting
purposes. We expensed approximately $8.0 million of in-process research and
development in the quarter ended July 31, 1996. Under terms of the agreement, we
issued 169,181 shares of Intuit common stock and options to purchase 3,255
shares of Intuit common stock to IIS stockholders and option holders,
respectively, at the date of acquisition.

In September 1996, we acquired GALT Technologies, Inc. for $14.6 million. GALT
was a provider of mutual fund information on the World Wide Web. The acquisition
was treated as a purchase for accounting purposes. We allocated approximately
$8.5 million of the purchase price to identified intangible assets and goodwill.
These assets are being amortized over a period of three years or less. We also
expensed approximately $4.9 million of in-process research and development at
the time of acquisition. Under terms of the agreement, we issued 212,053 shares
of Intuit common stock and options to purchase approximately 33,686 shares of
Intuit common stock to GALT stockholders and option holders, respectively, at
the date of acquisition.

In March 1997, Intuit KK, a wholly-owned subsidiary of Intuit, acquired Nihon
Micom Co. Ltd., a Japanese small business accounting software company, for cash.
The purchase price was approximately $39.9 million. In addition, we assumed
liabilities of approximately $9.6 million. The acquisition was treated as a
purchase for accounting purposes. We allocated approximately $32.8 million of
the purchase price to identified intangible assets and goodwill. These assets
are being amortized over a period not to exceed three years. We also expensed
$6.1 million 



                                       48
   49

of in-process research and development in the quarter ended April 30, 1997.
Under terms of the agreement, we issued options to purchase 89,170 shares of
Intuit common stock to employees of Nihon Micom on the date of acquisition. We
also agreed to issue options to purchase up to an additional 89,170 shares on or
before the second anniversary of the date of the acquisition. Pro forma
information for Nihon Micom has not been presented because it is not material.

In June 1998, we acquired substantially all of the assets of Lacerte Software
Corporation and Lacerte Educational Services Corporation (together, "Lacerte"),
for cash. Lacerte is a leading developer and marketer of tax preparation
software and services for tax professionals. The purchase price was
approximately $400 million. In addition, we assumed liabilities of $31.8
million. We funded the acquisition by a public offering of 9.0 million shares of
common stock, completed on May 28, 1998 and 1.0 million shares on June 3, 1998.
Note 8 provides more information on this public offering.

The acquisition of Lacerte was treated as a purchase for accounting purposes. We
allocated approximately $358.2 million of the purchase price to identified
intangible assets and goodwill. These assets are being amortized over a period
of three to five years. We also expensed approximately $53.8 million of
in-process research and development in the quarter ended July 31, 1998. The
following table shows pro forma net revenue, net loss from continuing operations
and diluted net loss per share from continuing operations of Intuit and Lacerte
as if we had acquired Lacerte at the beginning of fiscal 1997:



                                                               YEAR ENDED JULY 31, 1997            YEAR ENDED JULY 31, 1998
                                                              ---------------------------         ---------------------------
                                                              INCLUDING            AS             INCLUDING             AS 
                                                               LACERTE          REPORTED           LACERTE           REPORTED
                                                              ---------         ---------         ---------         ---------
                                                                                                              
      (In thousands, except per share data; unaudited)

      Net revenue ....................................        $ 668,077         $ 598,925         $ 668,244         $ 592,736
      Net loss from continuing operations ............          (88,067)           (2,932)          (56,689)          (12,157)
      Diluted net loss per share from continuing
       operations ....................................        $   (1.53)        $   (0.06)        $   (0.95)        $   (0.24)



For acquisitions treated as a purchase for accounting purposes, we must
determine the allocation between developed and in-process research and
development. This allocation is based on whether or not technological
feasibility has been achieved and whether there is an alternative future use for
the technology. SFAS 86, "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed," sets guidelines for establishing
technological feasibility. Technological feasibility can be achieved through the
existence of either a detailed program design or a completed working model. As
of the respective dates of the acquisitions discussed above, we concluded that
the purchased in-process research and development had no alternative future use
and expensed it according to the provisions of SFAS 86.

4.   DISCONTINUED OPERATIONS AND DIVESTITURES

On January 27, 1997, we sold Intuit Services Corporation ("ISC"), our online
banking and bill payment transaction-processing subsidiary, to Checkfree. In
exchange, we received 12.6 million shares of Checkfree common stock. The closing
price of Checkfree common stock was $14.75 per share on January 24, 1997, the
last business day prior to closing. As a result of the transaction, we recorded
a gain on sale of discontinued operations of $71.2 million, net of tax, in the
quarter ended January 31, 1997. The gain was recorded net of certain conditional
items relating to the business sold. In addition to the gain on sale, Checkfree
agreed to pay us $20 million in service and license fees for providing
connectivity between Intuit's Quicken software and Checkfree's bill payment
processing services. Of this $20 million, $10 million of revenue was received
and recorded in January 1997, and $10 million was received and recorded in
October 1997. We accounted for the sale of ISC as a discontinued operation. As
such, its operating results for fiscal 1996 have been segregated into a single
line on our statement of operations. Revenue and net loss from discontinued
operations were $14.3 million and $6.3 million, respectively, for the fiscal
year ended 1996. We deferred operating results for the discontinued operations
for the period beginning August 1, 1996 until the close of the sale on January
27, 1997. These losses were netted against the gain on sale of discontinued
operations.



                                       49
   50

In February 1997, Intuit sold two million shares of the Checkfree common stock.
This reduced our investment in Checkfree to approximately 19.6% of the 54.2
million shares of Checkfree common stock outstanding after the sale was
completed. We are accounting for our investment in Checkfree using the cost
method of accounting.

On August 7, 1997, we sold Parsons, our consumer software and direct marketing
subsidiary, to Broderbund Software, Inc. for approximately $31 million. As a
result of the sale, Broderbund acquired net assets of approximately $17 million
and we incurred direct costs of approximately $9.5 million. We also recorded a
pre-tax gain of $4.3 million and a related tax provision of $2.7 million in the
quarter ended October 31, 1997.

The following information shows pro forma net revenue, net loss from continuing
operations and diluted net loss per share from continuing operations of Intuit
as if we had sold Parsons at the beginning of fiscal 1997:



                                                                        YEAR ENDED JULY 31, 1997
                                                                       ---------------------------
                                                                       EXCLUDING            AS 
                                                                        PARSONS          REPORTED
                                                                       ---------         ---------
                                                                                         
      (In thousands, except per share data; unaudited)
      Net revenue .............................................        $ 525,482         $ 598,925
      Net loss from continuing operations .....................           (3,647)           (2,932)
      Diluted net loss per share from continuing operations ...        $   (0.08)        $   (0.06)



5.   SIGNIFICANT TRANSACTIONS

In June 1997, we entered into an agreement with Excite Inc. to jointly develop,
promote and distribute a new online financial channel now called Excite Money
and Investing by Quicken.com. The channel debuted in early fiscal 1998. We are
the exclusive provider and aggregator of personal financial content for all of
Excite's Internet services. Excite provides hosting, advertising sales and
software services and is the exclusive search and navigation service promoted in
our QuickBooks, TurboTax and Quicken products. We are entitled to receive all
revenue associated with the channel, but we're required to pay certain portions
of the revenue to Excite. As part of the agreement, we made a significant equity
investment in Excite. Note 1 provides more information on this investment.

On February 17, 1998, we announced a three-year agreement with America Online,
Inc. ("AOL"). Under terms of the agreement, subject to certain limited
exceptions, we are the exclusive provider of tax preparation and filing,
multi-carrier life and auto insurance, and multi-lender mortgage services on
both the AOL service and AOL.com, which is AOL's default site for Internet
access by AOL members. In addition, on AOL.com, we are the primary source of
financial content for the Personal Finance Web Channel. We have guaranteed
payments to AOL totaling $30 million over three years, of which $16.2 million
was paid upon signing. The remainder of the guaranteed payments will be made
ratably over the term of the agreement. AOL will also be eligible for additional
revenue sharing payments once Intuit has recovered certain advances and other
amounts.

We recorded a charge to selling and marketing expense of $16.2 million in the
third quarter of fiscal 1998 in connection with the agreement. This expense
represents the excess of guaranteed payments over the expected future net
revenues from the agreement during the agreement term. We calculated future net
revenues using estimated gross revenues less the estimated future costs related
to the agreement. The remaining capitalized amount of $13.8 million is being
amortized ratably over the remainder of the term.

In May 1998, we participated in the formation of a company, Venture Finance
Software Corp. ("VFSC") to focus on the development of certain Web-oriented
finance products. VFSC has received $23 million through the sale of equity
interests to private investors and obtained conditional commitments to receive
up to an additional $23 million in capital contributions from these investors.
Of the $46 million potential funding for VFSC, venture capital funds managed by
Kleiner Perkins Caufield & Byers, of which L. John Doerr, a director of Intuit,
is a general partner, have agreed to invest up to $1 million. In exchange for
its equity interest in VFSC, Intuit has granted VFSC licenses to certain
technology and intellectual property rights related to certain Web-oriented
finance products and 



                                       50
   51

has agreed not to compete with VFSC in certain areas of server-based personal
finance for a period of ten years. Intuit is managing the development of the new
products and the commercialization efforts of VFSC and has been granted the
option to purchase the equity interests of the other investors in VFSC during a
period of time beginning two years after the formation of VFSC at a price to be
determined by a formula. (See Note 15.)

6.   OTHER ACCRUED LIABILITIES



                                                              JULY 31,        JULY 31,
                                                                1997            1998
                                                              --------        --------
                                                                             
      (In thousands)
      Reserve for returns and exchanges ..............        $ 36,310        $ 60,343
      Acquisition and disposition related items ......          38,866          19,181
      Rebates ........................................           2,876          16,870
      Post-contract customer support .................           4,233           4,433
      Other accruals .................................          17,298          23,993
                                                              --------        --------
                                                              $ 99,583        $124,820
                                                              ========        ========



7.   NOTES PAYABLE AND COMMITMENTS

Notes Payable

In March 1997, our Japanese subsidiary, Intuit KK, entered into a three-year
loan agreement with Japanese banks for approximately $30.3 million used to fund
its acquisition of Nihon Micom. The interest rate is variable based on the Tokyo
inter-bank offered rate or the short-term prime rate offered in Japan. At July
31, 1998, the rate was approximately 0.9%. The fair value of the loan
approximates cost as the interest rate on the borrowings is adjusted
periodically to reflect market rates (which are currently significantly lower in
Japan than in the United States). We have guaranteed the loan and pledged
approximately $28.5 million, or 110% of the loan balance, of short-term
investments to be restricted as security for the borrowings at July 31, 1998. We
are obligated to pay interest only until March 2000.

Leases

Intuit leases its office facilities and some equipment under various operating
lease agreements. The leases provide for annual rent increases of up to 10%.
Annual minimum commitments under these leases are as follows:



             YEARS ENDING JULY 31,                                       COMMITMENTS
             ---------------------                                       -----------
                                                                      
             (In thousands)

               1999 ...............................................        $ 9,919
               2000 ...............................................          9,463
               2001 ...............................................          8,095
               2002 ...............................................          7,868
               2003 ...............................................          7,548
               Thereafter .........................................         12,808
                                                                           -------
                                                                           $55,701
                                                                           =======


Total rent expense for the years ended July 31, 1996, 1997 and 1998 was
approximately $9.2 million, $10.1 million and $10.3 million, respectively.

8.   STOCKHOLDERS' EQUITY

Stock Option Plans

On January 31, 1993, we adopted the 1993 Equity Incentive Plan (the "1993
Plan"). Under the 1993 Plan, we may grant incentive and non-qualified stock
options, restricted stock awards and stock bonuses to employees, directors,
consultants, and independent contractors of and advisors to Intuit. The Board of
Directors or its delegees determine 



                                       51
   52

who will receive grants, exercisability, option price and other terms. The
option exercise price is usually the fair market value at the date of grant. The
options generally vest over a four-year period and expire after ten years.

On October 7, 1996, we adopted the 1996 Directors Stock Option Plan. This plan
provides for non-qualified stock options for a specified number of shares to be
granted to non-employee directors of Intuit on an annual basis. The option
exercise price equals the fair market value at the date of grant. Options
generally vest over a four-year period and expire after ten years.

In addition, we have several discontinued option plans with outstanding options.
For example, we assumed options in connection with our purchase of ChipSoft, 
Inc. on December 12, 1993. The options vest over a five-year period and expire
after seven years. We also assumed options in connection with our purchase of
GALT and IIS.

A summary of activity under all option plans is as follows:



                                                                                       OPTIONS OUTSTANDING
                                                                         ---------------------------------------------------
                                                          SHARES                                            WEIGHTED AVERAGE
                                                        AVAILABLE         NUMBER OF          PRICE PER      EXERCISE PRICE
                                                        FOR GRANT          SHARES              SHARE           PER SHARE
                                                        ----------       ----------       ---------------   ----------------
                                                                                                
Balance at July 31, 1995 .........................       3,424,370        6,263,366        $0.05 - $43.13        $18.20
 Options converted in IIS acquisition ............          (3,255)           3,255        $0.44 - $ 8.30        $ 7.62
 Options granted .................................      (2,001,495)       2,001,495       $35.00 - $84.00        $50.54
 Options exercised ...............................              --       (1,120,847)       $0.05 - $56.63        $11.98
 Options canceled or expired .....................         548,853         (581,296)       $3.00 - $84.00        $34.01
                                                        ----------       ---------- 

Balance at July 31, 1996 .........................       1,968,473        6,565,973        $0.05 - $84.00        $27.74
 GALT Plan assumed ...............................          33,686               --                    --            --
 Options converted in GALT acquisition ...........         (33,686)          33,686        $2.27 - $37.37        $23.37
 Additional shares authorized ....................       3,120,000               --                    --            --
 Options granted outside of option plans .........              --          112,006       $21.88 - $84.00        $33.10
 Options granted .................................      (4,388,187)       4,388,187       $21.75 - $38.00        $27.74
 Options exercised ...............................              --         (826,783)       $0.05 - $57.63        $ 9.44
 Options canceled or expired .....................       1,240,207       (1,324,967)       $2.27 - $84.00        $29.65
                                                        ----------       ---------- 
Balance at July 31, 1997 .........................       1,940,493        8,948,102        $0.05 - $84.00        $22.61
 Additional shares authorized ....................       2,150,000               --                    --            --
 Options granted .................................      (3,078,597)       3,078,597       $24.63 - $56.50        $38.18
 Options exercised ...............................              --       (2,230,258)       $0.05 - $44.00        $18.85
 Options canceled or expired .....................       1,141,528       (1,185,168)       $2.27 - $84.00        $25.68
                                                        ----------       ---------- 
Balance at July 31, 1998 .........................       2,153,424        8,611,273        $0.05 - $78.00        $28.70
                                                        ==========       ========== 


There were 1,894,320, 1,931,019 and 2,532,620 options exercisable under the
various plans at July 31, 1996, 1997 and 1998, respectively. At July 31, 1998,
there were 2,078,424 shares available for grant under the 1993 Plan and 75,000
shares available for grant under the 1996 Directors Stock Option Plan.

On September 18, 1996, we repriced 1,787,746 options to reflect an exercise
price of $32.75, the fair market value on the date of repricing. As a condition
of the repricing, employees agreed that repriced options would not be
exercisable, even if vested, until September 17, 1997. Officers at the level of
senior vice president and above were not eligible for the repricing.

On March 27, 1997, we repriced 3,151,445 options to reflect an exercise price of
$23.75, the fair market value on the date of repricing. As a condition of the
repricing, employees agreed that repriced options would not be exercisable, even
if vested, until March 27, 1998. Officers at the level of senior vice president
and above were not eligible for the repricing. On June 30, 1997, 177,600 options
held by employees of a Japanese subsidiary were also repriced to $23.75.



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Stock Split

Intuit's Board of Directors authorized a two-for-one stock split on July 20,
1995. This was accomplished by distributing a 100% stock dividend on August 21,
1995 to stockholders of record on August 4, 1995. We have restated all share and
per share amounts referred to in the financial statements and notes to reflect
the stock split.

Employee Stock Purchase Plan

In October 1996, Intuit adopted an Employee Stock Purchase Plan under Section
423 of the Internal Revenue Code and reserved 300,000 shares of common stock for
future issuance. In January 1998, an additional 200,000 shares of common stock
were reserved for future issuance. The plan allows eligible employees to
purchase Intuit's stock at 85% of the lower of the fair market value at the
beginning or end of each six-month offering period. During fiscal 1997 and 1998,
employees purchased 96,301 and 147,976 shares, respectively.

Stock-Based Compensation

We follow Accounting Principles Board Opinion 25 ("APB 25"), "Accounting for
Stock Issued to Employees," in accounting for stock-based compensation.
Accordingly, we are not required to record compensation expense when stock
options are granted to employees, as long as the exercise price is not less than
the fair market value of the stock when the option is granted, and we are not
required to record compensation expense in connection with the Employee Stock
Purchase Plan as long as the purchase price is not less than 85% of the lower of
the fair market value at the beginning or end of each six-month offering period.
In October 1995, the FASB issued SFAS 123, "Accounting for Stock Based
Compensation." Although SFAS 123 allows us to continue to follow the present APB
25 guidelines, we are required to disclose pro forma net income (loss) and net
income (loss) per share as if we had adopted the new statement. The pro forma
impact of applying SFAS 123 in fiscal 1996, 1997 and 1998 is not likely to be
representative of the pro forma impact in future years.

We have elected to use the Black-Scholes model to estimate the fair value of
options granted. This valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. This model requires the input of highly subjective assumptions
including the expected stock price volatility. Because our employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can materially
affect this estimate, we believe the Black-Scholes model does not necessarily
provide a reliable single measure of the fair value of our employee stock
options. Inputs used for the valuation model are as follows:



                                    OPTIONS                                                    EMPLOYEE STOCK PURCHASE PLAN
                                  ---------------------------------------------      ----------------------------------------------
                                     1996             1997             1998             1996             1997              1998
                                  -----------      -----------      -----------      -----------      -----------       -----------
                                                                                                      
Expected life (years) ........      1.33-4.61        1.17-4.61        1.61-4.61               --             0.50          0.5
Expected volatility ..........           0.60%            0.60%            0.60%              --             0.60%         0.60%
Risk-free interest rate ......     4.83%-6.92%      5.50%-6.88%       5.34%-6.0%              --             5.61%       5.25-5.45%



Our pro forma net income (loss) and net income (loss) per share would have been:



                                                              YEARS ENDED JULY 31,
                                                      1996             1997            1998
                                                   ----------       ----------      ----------
                                                                                   
(In thousands, except per share data)

Net income (loss)
   As reported ..............................      $  (20,699)      $   68,308      $  (12,157)
   Pro forma ................................      $  (27,638)      $   46,409      $  (34,194)

Diluted net income (loss) per share
   As reported ..............................      $    (0.46)      $     1.44      $    (0.24)
   Pro forma ................................      $    (0.61)      $     0.97      $    (0.69)




                                       53
   54

The weighted average fair value of options granted during fiscal 1996, 1997 and
1998 was approximately $23.19, $11.99 and $16.61 per share, respectively.

The following table summarizes information about stock options outstanding at
July 31, 1998:



                                             OPTIONS OUTSTANDING                            OPTIONS EXERCISABLE
                              -----------------------------------------------          ----------------------------
                                             WEIGHTED AVERAGE       WEIGHTED                              WEIGHTED
                                           REMAINING CONTRACTUAL    AVERAGE                                AVERAGE
     EXERCISE PRICE            NUMBER          LIFE (YEARS)      EXERCISE PRICE         NUMBER         EXERCISE PRICE
     ---------------          ---------    --------------------- --------------        ---------       --------------
                                                                                        
     $ 0.05 - $21.75          1,100,719               5.61          $   16.35            874,829          $   15.04
     $21.88 - $22.94            641,541               7.23          $   22.30            315,357          $   22.32
     $23.00 - $23.75          1,933,883               7.73          $   23.69            652,521          $   23.70
     $23.94 - $24.50          1,184,417               8.87          $   24.48            471,874          $   24.47
     $24.63 - $30.25          1,165,402               9.07          $   27.62            110,013          $   27.39
     $31.00 - $36.00            868,288               8.63          $   32.61            100,907          $   33.09
     $36.50 - $78.00            911,911               9.70          $   43.75                738          $   39.43
     $46.81 - $78.00            805,112               9.32          $   49.25              6,381          $   58.46
     ---------------          ---------          ---------          ---------          ---------          ---------
     $ 0.05 - $78.00          8,611,273               8.21          $   28.70          2,532,620          $   21.29
     ===============          =========          =========          =========          =========          =========


Stock Offering

On May 28, 1998, we sold 9.0 million shares of our Common Stock in a registered
underwritten public offering at a price to the public of $47.375 per share,
providing us with net proceeds of approximately $410 million after underwriting
commissions and estimated expenses. As stated in Note 3, $400 million of these
net proceeds were used to fund the acquisition of Lacerte. On June 3, 1998, the
underwriters of the public offering exercised their over-allotment option to
purchase an additional 1 million shares of Intuit common stock at a price of
$47.375 per share, providing us with additional net proceeds of $45.7 million,
net of underwriting commissions.

9.   PROFIT SHARING AND BENEFIT PLANS

Profit Sharing Plans

Full-time employees are eligible to participate in Intuit's profit-sharing
plans. The Compensation Committee of the Board of Directors determines amounts
to be contributed to the plans. Profit-sharing expense for fiscal 1996, 1997 and
1998 was approximately $1.4 million, $4.2 million and $9.1 million,
respectively.

Benefit Plans

We provide two 401(k)-retirement savings plans for full-time employees.
Participating employees may contribute up to 15% of pretax salary to the plan,
subject to IRS limitations. Intuit matches a specified portion of the employee
contributions up to a maximum amount per employee per year. The amount is
subject to change on an annual basis. At July 31, 1997, the match was 25% of the
employee contribution, up to $1,000, and at July 31, 1998, the match was 75%, up
to $1,500. Matching contributions were approximately $0.3 million, $1.6 million
and $3.0 million, respectively, for the years ended July 31, 1996, 1997 and
1998.

10.  SHAREHOLDER RIGHTS PLAN

On April 29, 1998, the Board of Directors adopted a shareholder rights plan
designed to protect the long-term value of the Company for its shareholders
during any future unsolicited acquisition attempt. In connection with the plan,
the Board declared a dividend of one preferred share purchase right for each
share of Intuit's common stock outstanding on May 11, 1998 (the "Record Date")
and further directed the issuance of one such right with respect to each share
of Intuit's common stock that is issued after the Record Date, except in certain
circumstances. If a 



                                       54
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person or a group (an "Acquiring Person") acquires 20 percent or more of
Intuit's common stock, or announces an intention to make a tender offer for
Intuit's common stock, the consummation of which would result in a person or
group becoming an Acquiring Person, then the rights will be distributed (the
"Distribution Date"). After the Distribution Date, each right may be exercised
for 1/1000th of a share of a newly designated Series B Junior Participating
Preferred stock at an exercise price of $250. The preferred stock has been
structured so that the value of 1/1000th of a share of such preferred stock will
approximate the value of one share of common stock. The rights will expire on
May 1, 2008.

11.  INCOME TAXES

Income (loss) before income taxes includes income (loss) from foreign operations
of approximately $10,000, ($8,365,000) and ($14,512,000) for the years ended
July 31, 1996, 1997 and 1998, respectively. The provision for income taxes
consisted of the following:



                                                                         YEARS ENDED JULY 31,
      (In thousands)                                             1996            1997            1998
                                                               --------        --------        --------
                                                                                           
      Current:
        Federal ........................................       $ 15,732        $ 29,117        $ 23,051
        State ..........................................          3,116           5,843           3,694
        Foreign ........................................          1,302             651             390
                                                               --------        --------        --------
                                                                 20,150          35,611          27,135
      Deferred:
        Federal ........................................         (3,378)        (18,144)        (27,999)
        State ..........................................           (547)         (4,726)         (6,802)
                                                               --------        --------        --------
                                                                 (3,925)        (22,870)        (34,801)
                                                               --------        --------        --------
      Total provision (benefit) for income taxes .......       $ 16,225        $ 12,741        $ (7,666)
                                                               ========        ========        ========



Differences between income taxes calculated using the federal statutory income
tax rate of 35% and the provision for income taxes were as follows:



                                                                       YEARS ENDED JULY 31,
      (In thousands)                                           1996            1997            1998
                                                             --------        --------        --------
                                                                                          
      Income (loss)  before income taxes .............       $  1,870        $  9,809        $(19,823)
                                                             ========        ========        ========
      Statutory federal income tax ...................       $    654        $  3,433          (6,938)
      State income tax, net of federal benefit .......          1,670             785          (1,812)
      Federal research and experimental credits ......             --          (4,100)         (2,700)
      Non-deductible merger related charges ..........         13,531          10,637           3,814
      Tax exempt interest ............................         (1,400)         (1,633)         (2,627)
      Foreign losses not benefited ...................             --           3,533           5,396
      Other, net .....................................          1,770              86          (2,799)
                                                             --------        --------        --------
                Total ................................       $ 16,225        $ 12,741        $ (7,666)
                                                             ========        ========        ========



Tax savings from deductions associated with our various stock option plans are
not reflected in the current federal and state provisions. Savings were
approximately $18.9 million in fiscal 1996, $6.7 million in fiscal 1997 and
$21.2 in fiscal 1998. These amounts were credited to stockholders' equity.



                                       55
   56

Significant deferred tax assets and liabilities were as follows:



                                                                              JULY 31,         JULY 31,
      (In thousands)                                                            1997            1998
                                                                             ---------        ---------
                                                                                              
      Deferred tax assets:
        Accruals and reserves not currently deductible ...............       $  27,275        $  43,061
        Deferred foreign taxes .......................................           4,247            8,081
        State income taxes ...........................................           1,742               --
        Merger charges ...............................................             439           24,860
        Restructuring charges ........................................           2,165               --
        Fixed asset adjustments ......................................           6,903            8,044
        Other, net ...................................................           2,353            5,012
                                                                             ---------        ---------
                Total deferred tax assets ............................          45,124           89,058
      Deferred tax liabilities:
        Deferred gain on discontinued operations .....................          54,993           55,688
        Unrealized gain on marketable securities .....................          13,782          120,714
        State income taxes ...........................................              --            2,488
                                                                             ---------        ---------
                Total deferred tax liabilities .......................          68,775          178,890
                                                                             ---------        ---------
      Total net deferred tax liabilities .............................         (23,651)         (89,832)
        Valuation reserve due to foreign losses ......................          (4,248)          (9,644)
                                                                             ---------        ---------
      Total net deferred tax liabilities, net of valuation reserve ...       $ (27,899)       $ (99,476)
                                                                             =========        =========


We have provided a valuation reserve related to the benefit of losses in our
foreign subsidiaries that we believe are unlikely to be realized.

12.  SIGNIFICANT CUSTOMER INFORMATION

One distributor accounted for 13% of net revenue in fiscal 1996, 12% of net
revenue in fiscal 1997 and 15% of net revenue in fiscal 1998.

13.  LITIGATION

Intuit is currently a defendant in the following six class action lawsuits
alleging that certain of our Quicken products have on-line banking functions
that are not Year 2000 compliant: Alan Issokson v. Intuit Inc. (filed April 29,
1998 in the Santa Clara County, California Superior Court); Rocco Chilelli v.
Intuit Inc. (filed May 13, 1998 in the New York Supreme Court, New York County,
New York); Glenn Faegenburg v. Intuit Inc. (filed May 27, 1998 in the New York
Supreme Court, New York County, New York); Joseph Rubin v. Intuit Inc. (filed
May 27, 1998 in the Santa Clara County, California Superior Court); Donald
Colbourn v. Intuit Inc. (filed June 4, 1998 in the San Mateo County, California
Superior Court); and Jerald M. Stein v. Intuit Inc. (filed June 23, 1998 in the
New York Supreme Court, New York County, New York). All of the lawsuits are
substantively very similar. The lawsuits assert breach of implied warranty
claims, violations of federal and/or state consumer protection laws, violations
of various state business practices laws, and the plaintiffs seek compensatory
damages, disgorgement of profits, and (in certain cases) attorneys' fees. See
MD&A, page 34, for a discussion of Intuit's status and plans with respect to
Year 2000 compliance.

On June 23, 1998, Intuit moved to dismiss the Issokson complaint. In August
1998, our motion was granted but the plaintiff still has an opportunity to amend
the complaint to allege injury. We believe this will be difficult in light of
the remedies that we are providing to our Quicken customers. However, if the
complaint is amended in a manner that is satisfactory to overcome another motion
to dismiss, we believe we have good and valid defenses to the claims asserted,
and we intend to vigorously defend against the lawsuit.

We have filed motions to dismiss the complaints in every other case except the
Colburn action. We plan on filing a demurrer in the Colburn action in the
future. Discovery is stayed in the New York actions pending hearings on the
motions. Discovery is ongoing in the Issokson and Stein actions. Given the
outcome of the motion to dismiss in the Issokson case, we believe we may prevail
on these motions as well. However, the ultimate outcome of any



                                       56
   57

litigation is uncertain, and regardless of outcome, litigation can have an
adverse impact on Intuit because of defense costs, diversion of management
resources and other factors.

We are subject to other legal proceedings and claims that arise in the course of
our business. We currently believe that the ultimate amount of liability, if
any, for any pending actions (either alone or combined) will not materially
affect our financial position, results of operations or liquidity. However, as
noted above, the ultimate outcome of any litigation is uncertain, and either
unfavorable or favorable outcomes could have a material negative impact.

14.   RESTRUCTURING COSTS

In fiscal 1997, we restructured our U.S. technical support operations. We closed
our technical support facility in Rio Rancho, New Mexico and consolidated the
operations of that facility within our Tucson, Arizona technical support
location. We also reorganized our European region to consolidate management
operations for our core European markets in our German headquarters in Munich.
All European customer service, technical support, manufacturing and order
fulfillment functions were outsourced to third party vendors. As a result of
these actions and concurrent staff reductions in Northern California, Intuit's
worldwide workforce was reduced by approximately 270 employees, or approximately
9%. As a result, we incurred a $10.4 million restructuring charge in the fourth
quarter of fiscal 1997. At July 31, 1998 the remaining restructuring reserve is
approximately $1.8 million. This balance is expected to be used by July 31,
1999.

15.   RELATED PARTY TRANSACTIONS

We held approximately 11% of Excite's outstanding common stock as of July 31,
1998. On April 30 1998, we provided Excite with a short-term unsecured loan in
the amount of $50 million. The loan bore interest at 5.9% per year and was due
no later than October 30, 1998. In June 1998, Excite repaid the loan in full. As
part of shared advertising activities, we reported revenue of $10.3 million from
Excite for the year ended July 31, 1998. (See Note 5.)

At July 31, 1998 and 1997, we held approximately 19% of Checkfree's outstanding
common stock. In exchange for providing connectivity between Checkfree's bill
payment processing service and our Quicken products, we reported revenues of
$14.1 million and $11.6 million from Checkfree for the years ended July 31, 1998
and 1997, respectively. These totals include royalty payments of $10 million
received in January 1997 and October 1997. We held a receivable due from
Checkfree for $3.4 and $1.0 million at July 31, 1998 and 1997, respectively.
(See Note 4.)

As of July 31, 1998, we held a 49% equity interest in Venture Finance Software
Corporation (VFSC). (See Note 5.) We have entered into agreements with VFSC to
provide them with services related to on-going development of Web-oriented
finance products. At July 31, 1998, we held a receivable due from VFSC for $7.3
million as a result of development and administrative services provided to VFSC.

16.  SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)



                                                                            FISCAL 1997 QUARTER ENDED
                                                         OCTOBER 31(1)     JANUARY 31      APRIL 30(2)        JULY 31
                                                         -------------     ----------      -----------       ---------
                                                                                                       
      (In thousands, except per share data)
      Net revenue ..................................       $ 102,506        $ 265,978       $ 136,326        $  94,115
      Cost of goods sold ...........................          27,085           58,735          29,443           23,507
      All other costs and expenses .................         114,511          133,634         108,730          103,320
      Income (loss) from continuing operations .....         (28,304)          44,700             488          (19,816)
      Gain on sale of discontinued operations,
        net of tax .................................              --           71,240              --               --
      Net income (loss) ............................         (28,304)         115,940             488          (19,816)
      Basic net income (loss) per share ............           (0.61)            2.50            0.01            (0.42)
      Diluted net income (loss) per share ..........           (0.61)            2.44            0.01            (0.42)




                                       57
   58



                                                                           FISCAL 1998 QUARTER ENDED
                                                           OCTOBER 31       JANUARY 31      APRIL 30        JULY 31(3)
                                                           ----------       ----------      --------        ---------- 
                                                                                                      
      (In thousands, except per share data)
      Net revenue ..................................       $  95,958        $ 237,513       $ 141,996        $ 117,269
      Cost of goods sold ...........................          23,099           46,129          29,919           24,296
      All other costs and expenses .................          98,464          125,753         119,386          162,272
      Income (loss) from continuing operations .....         (12,759)          41,844          (2,206)         (39,036)
      Net income (loss) ............................         (12,759)          41,844          (2,206)         (39,036)
      Basic net income (loss) per share ............           (0.27)            0.88           (0.05)           (0.70)
      Diluted net income (loss) per share ..........           (0.27)            0.85           (0.05)           (0.70)



(1)  Includes a charge of $4.9 million related to purchased research and
     development at the time of the GALT acquisition.

(2)  Includes a charge of $6.1 million related to purchased research and
     development at the time of the Nihon Micom acquisition. 

(3)  Includes a charge of $53.8 million related to purchased research and
     development at the time of the Lacerte acquisition.

17.  SUBSEQUENT EVENTS (UNAUDITED)

As discussed in Note 1, our marketable securities are subject to substantial
volatility. Subsequent to year-end, the price of Checkfree common stock declined
from $24.75 per share as of July 31, 1998 to $9.875 per share as of September
30, 1998, resulting in a decrease of $157.7 million in the estimated fair value
of our holdings in Checkfree. We own 10.6 million shares of Checkfree at a cost
of $14.75 per share. In addition, our investment in Excite common stock has been
subject to significant volatility. We own 5.8 million shares of Excite at a cost
of $6.75 per share. Although these fluctuations are not considered to be
permanent declines in value at this time, any declines deemed to be permanent
would be reported in our statement of operations.

In March 1998, we announced a memorandum of understanding ("MOU") with Bank of
America, TCI and @Home to form a venture to develop a system designed to deliver
financial services to consumers on their television sets. The establishment of
the venture was subject to negotiation and execution of definitive agreements.
Subsequent to our fiscal year end, negotiations pursuant to the MOU were
terminated, and we do not expect to sign definitive agreements as contemplated
by the MOU.



                                       58
   59

                                                                     SCHEDULE II

                                   INTUIT INC.

                        VALUATION AND QUALIFYING ACCOUNTS



                                                 BALANCE AT      ADDITIONS                         BALANCE
                                                 BEGINNING OF    CHARGED TO                       AT END OF
Classification                                     PERIOD         EXPENSE        WRITE-OFFS         PERIOD
- --------------                                   ------------    ---------       ----------       ---------
                                                                                           
(In thousands)

Year ended July 31, 1996
   Allowance for doubtful accounts .......        $  2,408        $  4,728        $ (2,185)        $  4,951
   Reserve for returns and exchanges .....        $ 29,197        $ 57,128        $(62,122)        $ 24,203

Year ended July 31, 1997
   Allowance for doubtful accounts .......        $  4,951        $  3,308        $ (3,760)        $  4,499
   Reserve for returns and exchanges .....        $ 24,203        $ 73,775        $(61,668)        $ 36,310

Year ended July 31, 1998
   Allowance for doubtful accounts .......        $  4,499        $  3,380        $ (2,544)        $  5,335
   Reserve for returns and exchanges .....        $ 36,310        $ 80,602        $(56,569)        $ 60,343




                                       59
   60

ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information about directors that is required by this Item is incorporated by
reference to our Proxy Statement for our January 1999 Annual Meeting of
Stockholders. Information about executive officers that is required by this Item
can be found in Item 4A on page 20.

ITEM 11

EXECUTIVE COMPENSATION

This information is incorporated by reference to our Proxy Statement for our
January 1999 Annual Meeting.

ITEM 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This information is incorporated by reference to our Proxy Statement for our
January 1999 Annual Meeting.

ITEM 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information is incorporated by reference to our Proxy Statement for our
January 1999 Annual Meeting.

PART IV

ITEM 14

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a)  The following documents are filed as part of this report:

          1.   Financial Statements - See Index to Consolidated Financial
               Statements in Part II, Item 8.

          2.   Financial Statement Schedules - See Index to Consolidated
               Financial Statements in Part II, Item 8.

          3.   Exhibits

            
2.01(1)        Exchange Agreement between Intuit and Kabushiki Kaisha Milkyway
               and its stockholders dated December 26, 1995 (schedules and
               similar attachments will be furnished to the Commission upon
               request)

2.02(1)        Agreement and Plan of Merger among Checkfree Corporation,
               Checkfree Acquisition Corporation II, Intuit and Intuit Services
               Corporation dated September 15, 1996 (schedules and similar
               attachments will be furnished to the Commission upon request)

2.03(2)        Amendment No. 1 to Agreement and Plan of Merger dated as of
               September 15, 1996 by and among Intuit Inc., Intuit Services
               Corporation, Checkfree Corporation and Checkfree Acquisition
               Corporation II

2.04(3)        Amended and Restated Checkfree Corporation Stock Restriction
               Agreement dated September 15, 1996 between Intuit and Checkfree
               Corporation

2.05(4)        Stock Purchase Agreement, dated as of June 11, 1997, between
               Excite, Inc. and Intuit





                                       60
   61

                             
2.06(5)        Stock Purchase Agreement dated as of August 6, 1997 by and among
               Intuit, Broderbund Software, Inc. and Parsons Technology, Inc.
               (schedules and similar attachments to be furnished to the
               Commission upon request)

2.07(2)        Amended and Restated Registration Rights Agreement dated as of
               September 15, 1996 between Intuit and Checkfree Corporation

2.08(4)        Nomination and Observer Agreement, dated as of June 25, 1997,
               between Excite, Inc. and Intuit

2.09(4)        Registration Rights Agreement, dated as of June 25, 1997, between
               Excite, Inc. and Intuit

2.10(4)        Right of First Refusal Agreement, dated as of June 25, 1997,
               between Excite, Inc. and Intuit

2.11(4)        Amendment to Restated and Amended Investors' Rights Agreement,
               dated as of June 25, 1997, among Excite, Inc., Institutional
               Venture Partners VI, Institutional Venture Management VI, IVP
               Founders Fund I, L.P., Kleiner Perkins Caufield & Byers VII, KPCB
               VII Founders Fund, KPCB Information Sciences Zaibatsu Fund II and
               Intuit

2.12(19)       Asset Purchase Agreement by and among Lacerte Software
               Corporation, Lacerte Educational Services Corporation, Intuit
               Inc. and IL Acquisition Corporation, dated May 18, 1998

3.01(6)        Certificate of Incorporation of Intuit dated February 1, 1993

3.02(7)        Certificate of Amendment to Intuit's Certificate of Incorporation
               dated December 14, 1993

3.03(8)        Certificate of Amendment to Intuit's Certificate of Incorporation
               dated January 18, 1996

3.04(18)       Certificate of Designations of Series B Junior Participating
               Preferred Stock dated May 1, 1998

3.05*          Amended and Retated Rights Agreement, dated October 5, 1998

3.06*          Certificate of Retirement of Series A Preferred Stock dated
               September 16, 1998

3.07(17)       Bylaws of Intuit, as amended and restated effective April 29,
               1998

4.01*          Form of Specimen Certificate for Intuit's Common Stock

4.02*          Form of Right Certificate for Series B Junior Participating
               Preferred Stock (included in Exhibit 3.05)

10.01(6)+      Intuit 1988 Stock Option Plan and related documents

10.02(16)+     Intuit Inc. 1996 Employee Stock Purchase Plan, as amended through
               January 16, 1998

10.03(16)+     Intuit Inc. 1996 Directors Stock Option Plan, as amended through
               January 16, 1998

10.04(6)+      Intuit's form of Non-Plan Non-Qualified Stock Option Agreement

10.05(20)+     Intuit Inc. 1993 Equity Incentive Plan, as amended through April
               29, 1998

10.06(6)       Form of Indemnification Agreement entered into by Intuit with
               each of its directors and certain executive officers

10.07(9)+      1992 Stock Option Plan of ChipSoft and related documents

10.08(9)+      1989 Stock Option Plan of ChipSoft and related documents

10.09(9)+      Softview Acquisition Stock Option Plan of ChipSoft and related
               documents

10.10(9)+      Restricted Stock Purchase Agreement dated as of March 28, 1991,
               between ChipSoft and Alan A. Gleicher

10.11(9)+      Non-Transferable, Non Qualified Stock Option Agreement dated as
               of March 28, 1991, between ChipSoft and Alan A. Gleicher

10.12(9)+      Non-Transferable, Non Qualified Stock Option Agreement dated as
               of August 1, 1991, between ChipSoft and William H. Harris Jr.

10.13(7)+      Letter Agreement of Employment dated March 30, 1994 between
               Intuit and William V. Campbell

10.14(10)+     Severance Agreement dated September 30, 1994 between Intuit and
               Charles H. Gaylord, Jr.

10.15(11)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2700 Coast Drive, Mountain View,
               California to commence on January 1, 1999

10.16(11)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2750 Coast Drive, Mountain View,
               California to commence on January 1, 1998

10.17(11)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2475 Garcia Drive, Mountain View,
               California

10.18(11)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2525 Garcia Drive, Mountain View,
               California

10.19(11)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2535 Garcia Drive, Mountain View,
               California

10.20(15)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2500 Garcia Drive, Mountain View,
               California 





                                       61
   62

            
10.21(15)      Lease Agreement dated as of November 30, 1994 between Intuit and
               Charleston Properties for 2550 Garcia Drive, Mountain View,
               California

10.22*         Lease Agreement dated as of January 7, 1998 between Intuit and
               Charleston Properties for 2650 Casey Drive, Mountain View,
               California

10.23(12)      Build-to-Suit Lease Agreement dated as of June 9, 1995 between
               Intuit and Kilroy Realty Corporation, successor to UTC Greenwich
               Partners, a California limited partnership

10.24(12)      Lease Agreement dated as of August 31, 1995 between Intuit and
               Airport Business Center Associates Limited Partnership, an
               Arizona limited partnership

10.25*         Offer to Purchase Real Estate Agreement dated as of October 14,
               1997, as amended on December 5, 1997, between Intuit Inc. and
               General American Life Insurance Company, for property located at
               110 Juliad Court, Fredericksburg, Virginia (purchase and sale
               agreement)

10.26*         Build-to-Suite lease Agreement dated as of April 8, 1998, between
               Intuit and TACC Investors, LLC for property located at 2800 East
               Commerce Center Place, Tucson, Arizona

10.27*         Amendment to Lease Agreement dated as of June 9, 1995, dated
               April 14, 1998 between Intuit and Kilroy Realty Corporation, a
               successor to UTC Greenwich Partners, a California Limited
               Partnership

10.28(13)      Supply Agreement dated August 23, 1995 by and between Intuit Inc.
               and John H. Harland Company

10.29(5)       Distribution, Assumption and Assignment Agreement dated as of
               August 7, 1997 between Intuit and Parsons Technology, Inc.
               (schedules and attachments thereto to be furnished to the
               Commission upon request)

12.01*         Computation of Ratio of Earnings to Fixed Charges

21.01*         List of Intuit's Subsidiaries

23.01*         Consent of Ernst & Young LLP, Independent Auditors

23.02(21)      Consent of PricewaterhouseCoopers LLP, Independent Accountants

24.01*         Power of Attorney (see signature page)

27.01*         Financial Data Schedule (filed only in electronic format)



- ----------

+    Indicates a management contract or compensatory plan or arrangement

*    Filed with this Form 10-K

(1)  Filed as an exhibit to Intuit's Form 10-K for the fiscal year ended July
     31, 1996, filed with the Commission on October 24, 1996 and incorporated by
     reference

(2)  Filed as an exhibit to Intuit's Form 10-Q for the quarter ended January 31,
     1997, filed with the Commission on March 14, 1997 and incorporated by
     reference

(3)  Incorporated by reference from Intuit's report on Schedule 13D with respect
     to its beneficial ownership of shares of Checkfree Corporation filed with
     the Commission on February 6, 1997

(4)  Incorporated by reference from Intuit's report on Schedule 13D filed with
     the Commission on July 7, 1997

(5)  Filed as an exhibit to Intuit's Form 8-K filed with the Commission on
     August 22, 1997 and incorporated by reference

(6)  Filed as an exhibit to Intuit's Registration Statement on Form S-1, filed
     with the Commission on February 3, 1993, as amended (File No. 33-57884) and
     incorporated by reference

(7)  Filed as an exhibit to Intuit's Form 10-K as originally filed with the
     Commission on October 31, 1994, as amended, and incorporated by reference

(8)  Filed as an exhibit to Intuit's Form 10-Q for the quarter ended January 31,
     1996, filed with the Commission on March 15, 1996 and incorporated by
     reference

(9)  Filed as an exhibit to the ChipSoft Form S-1 registration statement filed
     with the Commission on February 24, 1993 (file No. 33-57692) and
     incorporated by reference

(10) Filed as an exhibit to Intuit's Form 10-Q for the quarter ended October 31,
     1994, filed with the Commission on December 13, 1994 and incorporated by
     reference

(11) Filed as an exhibit to Intuit's Form 10-Q for the quarter ended January 31,
     1995, filed with the Commission on March 17, 1995 and incorporated by
     reference

(12) Filed as an exhibit to Intuit's Form 10-K for the fiscal year ended July
     31, 1995, filed with the Commission on October 30, 1995 and incorporated by
     reference

(13) Filed as an exhibit to Intuit's Form 10-Q for the quarter ended October 31,
     1995, filed with the Commission on December 14, 1995 and incorporated by
     reference



                                       62
   63

(14) Filed as an exhibit to Intuit's Form 8-K filed with the Commission on
     September 3, 1996 and incorporated by reference

(15) Filed as an exhibit to Intuit's Form 10-K for the fiscal year ended July
     31, 1997, filed with the Commission on October 15, 1997 and incorporated by
     reference

(16) Filed as an exhibit to Intuit's Form 10-Q, Amendment No. 1, for the quarter
     ended January 31, 1998, filed with the Commission on May 18, 1998 and
     incorporated by reference

(17) Filed as an exhibit to Intuit's Form 8-K filed with the Commission on May
     2, 1998 and incorporated by reference

(18) Filed as an exhibit to Intuit's Registration Statement on Form 8-A filed
     with the Commission on May 5, 1998 and incorporated by reference

(19) Filed as an exhibit to Intuit's Form 8-K, Amendment No. 1, filed with the
     Commission on May 19, 1998 and incorporated by reference

(20) Filed as an exhibit to Intuit's Form 10-Q for the quarter ended April 30,
     1998, filed with the Commission on June 12, 1998 and incorporated by
     reference

(21) Filed as an exhibit to Intuit's Form 8-K filed with the Commission on 
     July 6, 1998 and incorporated by reference

(b)  Reports on Form 8-K

         1.   On May 5, 1998, Intuit filed a report on Form 8-K to report under
              Item 5 the adoption of a Shareholder Rights Plan and amendment of
              Intuit's Bylaws

         2.   On May 18, 1998, Intuit filed a report on Form 8-K to report under
              Items 5 and 7 (i) certain management changes; (ii) the results of
              the third quarter of fiscal 1998; (iii) the proposed acquisition
              of Lacerte Software Corporation and Lacerte Educational Services
              Corporation; (iv) the formation of a joint venture company to
              focus on the development of certain Web-oriented finance products;
              and (v) certain SFAS 128 information and certain unaudited
              financial information of Intuit and the historical and pro forma
              financial statements of Lacerte Software Corporation and Lacerte
              Educational Services Corporation

         3.   On May 19, 1998, Intuit filed an Amendment No. 1 to the Form 8-K
              referred to in (2) above to file under Item 7 as Exhibit 2.01 a
              copy of the Asset Purchase Agreement

         4.   On May 22, 1998, Intuit filed an Amendment No. 2 to the Form 8-K
              referred to in (2) above to file under Item 7 as Exhibit 99.04 a
              copy of the Amended Intuit Inc./Lacerte Software
              Corporation/Lacerte Educational Services Corporation pro forma
              financial statements to reflect the larger secondary offering size

         5.   On May 22, 1998, Intuit filed a report on Form 8-K to report under
              Item 5 that Intuit had entered into an Underwriting Agreement with
              Deutsche Morgan Grenfell Inc. and the other underwriters named
              therein (the "Agreement"), and to file as Exhibits 1.01 and 99.01,
              respectively, a copy of the Agreement and certain press releases

         6.   On July 6, 1998, Intuit filed a report on Form 8-K to report under
              Item 2 the closing of the acquisition of Lacerte Software
              Corporation and Lacerte Educational Services Corporation

         7.   On September 8, 1998, Intuit filed an Amendment No. 1 to the Form
              8-K referred to in (6) above to file under Item 7 as Exhibit 99.04
              the pro forma financial information with respect to the
              acquisition of Lacerte Software Corporation and Lacerte
              Educational Services Corporation.

(c)  Exhibits

     See Item 14(a)(3) above.



                                       63
   64

(d)      Financial Statement Schedules

         See Item 14(a)(2) above.



                                       64
   65

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        INTUIT INC.


Dated:  October 6, 1998                By:  /s/ GREG J. SANTORA
                                             -----------------------------------
                                             Greg J. Santora
                                             Vice President and Chief Financial
                                             Officer



                                       65
   66

                                POWER OF ATTORNEY

By signing this Form 10-K below, I hereby appoint each of William H. Harris, Jr.
and Greg J. Santora, as my attorney-in-fact to sign all amendments to this Form
10-K on my behalf, and to file this Form 10-K (including all exhibits and other
documents related to the Form 10-K) with the Securities and Exchange Commission.
I authorize each of my attorneys-in-fact to (1) appoint a substitute
attorney-in-fact for himself and (2) perform any actions that he believes are
necessary or appropriate to carry out the intention and purpose of this Power of
Attorney. I ratify and confirm all lawful actions taken directly or indirectly
by my attorneys-in-fact and by any properly appointed substitute
attorneys-in-fact.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.



               NAME                                       TITLE                                 DATE
- ------------------------------------         ----------------------------------          ------------------
                                                                                   
PRINCIPAL EXECUTIVE OFFICER:


/s/  WILLIAM H. HARRIS, JR                   President, Chief Executive Officer          October 6, 1998
- ------------------------------------         and Director
William H. Harris, Jr.              


PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:


/s/  GREG J. SANTORA                         Vice President and                          October 6, 1998
- ------------------------------------         Chief Financial Officer
Greg J. Santora                     


ADDITIONAL DIRECTORS:


/s/  WILLIAM V. CAMPBELL                     Chairman of the Board of Directors          October 6, 1998
- ------------------------------------
William V. Campbell


/s/  SCOTT D.  COOK                          Director                                    October 6, 1998
- ------------------------------------
Scott D.  Cook


/s/  CHRISTOPHER W.  BRODY                   Director                                    October 6, 1998
- ------------------------------------
Christopher W.  Brody


/s/  L. JOHN DOERR                           Director                                    October 6, 1998
- ------------------------------------
L. John Doerr


/s/  MICHAEL R. HALLMAN                      Director                                    October 6, 1998
- ------------------------------------
Michael R. Hallman


/s/  BURTON J.  MCMURTRY                     Director                                    October 6, 1998
- ------------------------------------
Burton J.  McMurtry




                                       66
   67

                                  EXHIBIT INDEX



Exhibit
Number            Description                                                                                  Page
- ------            -----------                                                                                  ----
                                                                                                         
3.05              Amended and Retated Rights Agreement, dated October 5, 1998...............................
3.06              Certificate of Retirement of Series A Preferred Stock dated September 16, 1998............
4.01              Form of Specimen Certificate for Intuit's Common Stock....................................
4.02              Form of Right Certificate for Series B Junior Participating  Preferred Stock (included in 
                  Exhibit 3.05).............................................................................

10.22             Lease  Agreement  dated as of January 7, 1998 between Intuit and  Charleston  Properties
                  for 2650 Casey Drive, Mountain View, California...........................................
10.25             Offer to Purchase  Real Estate  Agreement dated as of October 14, 1997, as amended on
                  December 5, 1997, between  Intuit Inc. and General  American Life Insurance  Company,
                  for property located at 110 Juliad Court, Fredericksburg, Virginia (purchase and sale
                  agreement)................................................................................
10.26             Build-to-Suite  lease  Agreement  dated as of April 8,  1998,  between  Intuit  and TACC
                  Investors, LLC for property located at 2800 East Commerce Center Place, Tucson, Arizona...
10.27             Amendment  to Lease  Agreement  dated as of June 9, 1995,  dated April 14, 1998  between
                  Intuit  and  Kilroy  Realty  Corporation,  a  successor  to UTC  Greenwich  Partners,  a
                  California Limited Partnership............................................................
12.01             Computation of Ratio of Earnings to Fixed Charges.........................................
21.01             List of Intuit's Subsidiaries.............................................................
23.01             Consent of Ernst & Young LLP, Independent Auditors........................................
24.01             Power of Attorney (see signature page)....................................................
27.01             Financial Data Schedule (filed only in electronic format).................................




                                       67

EX-3.05

   1

                                                                  Exhibit 3.05


                                   INTUIT INC.

                                       AND

                   AMERICAN STOCK TRANSFER AND TRUST COMPANY,

                                  RIGHTS AGENT



                              AMENDED AND RESTATED

                                RIGHTS AGREEMENT

                          DATED AS OF OCTOBER 5, 1998





   2

                                TABLE OF CONTENTS



                                                                                Page
                                                                                ----
                                                                          
Section 1.     Certain Definitions                                                 1

Section 2.     Appointment of Rights Agent                                         4

Section 3.     Issue of Right Certificates                                         4

Section 4.     Form of Right Certificates                                          6

Section 5.     Countersignature and Registration                                   6

Section 6.     Transfer, Split Up, Combination and Exchange of Right
               Certificates; Mutilated, Destroyed, Lost or Stolen Right
               Certificates                                                        7

Section 7.     Exercise of Rights; Purchase Price; Expiration Date of Rights       7

Section 8.     Cancellation and Destruction of Right Certificates                  9

Section 9.     Status and Availability of Preferred Shares                         9

Section 10.    Preferred Shares Record Date                                        9

Section 11.    Adjustment of Purchase Price, Number of Shares or
               Number of Rights                                                    9

Section 12.    Certificate of Adjusted Purchase Price
                      or Number of Shares                                         16

Section 13.    Consolidation, Merger or Sale or Transfer of Assets
               or Earning Power                                                   16

Section 14.    Fractional Rights and Fractional Shares                            17

Section 15.    Rights of Action                                                   18

Section 16.    Agreement of Right Holders                                         19

Section 17.    Right Certificate Holder Not Deemed a Stockholder                  19

Section 18.    Compensation and Indemnity of the Rights Agent                     19

Section 19.    Merger or Consolidation or Change of Name of Rights Agent          20


                                       i
   3

                                                                          
Section 20.    Rights and Duties of Rights Agent                                  20

Section 21.    Change of Rights Agent                                             22

Section 22.    Issuance of New Right Certificates                                 23

Section 23.    Redemption                                                         24

Section 24.    Exchange                                                           24

Section 25.    Notice of Certain Events                                           26

Section 26.    Notices                                                            26

Section 27.    Supplements and Amendments                                         27

Section 28.    Successors                                                         27

Section 29.    Benefits of this Agreement                                         28

Section 30.    Severability                                                       28

Section 31.    Governing Law                                                      28

Section 32.    Counterparts                                                       28

Section 33.    Descriptive Headings                                               28

Section 34.    Entire Agreement                                                   28

Signatures                                                                        29

Exhibit A -    Form of Certificate of Designations of Series B Junior
               Participating Preferred Stock

Exhibit B -    Form of Right Certificate

Exhibit C -    Summary of Rights to Purchase Preferred Shares




                                       ii

   4

                                RIGHTS AGREEMENT



        Agreement, amended and restated as of October 5, 1998, between Intuit
Inc., a Delaware corporation (the "Company"), and American Stock Transfer and
Trust Company (the "Rights Agent").

        On April 29, 1998, the Board of Directors of the Company authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding at the Close of
Business (as hereinafter defined) on May 11, 1998 (the "Record Date"), each
Right representing the right to purchase one one-thousandth of a Preferred Share
(as hereinafter defined), upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance of one Right
with respect to each Common Share that shall become outstanding (i) between the
Record Date and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter defined) or (ii)
following the Distribution Date and prior to the Redemption Date or Final
Expiration Date, pursuant to the exercise of stock options or under any employee
plan or arrangement or upon the exercise, conversion or exchange of other
securities of the Company, which options or securities were outstanding prior
to the Distribution Date. On May 1, 1998, the Company and the Rights Agent
entered into a Rights Agreement, which permitted the amendment thereof.

        On September 16, 1998, the Board of Directors of the Company authorized
the amendment and restatement of the Rights Agreement.

        Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby agree as follows:

        Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:

                      (a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% (the "Designated Percentage") or more of the Common
Shares of the Company then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or any Subsidiary of the Company or (iv) any entity holding Common
Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing,

                             (A) No Person shall become an Acquiring Person if
the Board of Directors of the Company determines in good faith that a Person who
would otherwise be an Acquiring Person has become such inadvertently, and such
Person as promptly as practicable takes such actions as may be necessary so that
such Person would no longer be considered an Acquiring Person.

                      (B) No Person shall become an "Acquiring Person" as the
result of an acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person and such Person's Affiliates and Associates to
the Designated Percentage or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person, together with such Person's
Affiliates and Associates, shall become the Beneficial Owner of the Designated
Percentage or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and such Person, together with its
Affiliates and Associates, shall, after public announcement of such share
purchases by the Company, become the Beneficial 


   5

Owner of any additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person."

               (b) "Affiliate" and "Associate" shall have the following
meanings:

                      (i) An "Affiliate" of, or a Person "affiliated" with, a
specified Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified. For this purpose, "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise;

                      (ii) The term "Associate" used to indicate a relationship
with any Person shall mean (A) any corporation or organization (other than the
Company or a majority-owned subsidiary of the Company) of which such Person is
an officer or partner or is, directly or indirectly, the Beneficial Owner of 10%
or more of any class of equity securities, (B) any trust or other estate in
which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity, and (C) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person or who is a director or officer of the Company or any
of its parents or Subsidiaries.

               (c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:

                      (i) which such Person owns, directly or indirectly;

                      (ii) which such Person has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), written or
otherwise, or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed to be the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

                      (iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person has any agreement,
arrangement or understanding (other than 



                                       2
   6

customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), written or
otherwise, for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.

                      Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, (A) the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder, and (B) a Person who is a
director or officer of the Company or who is an Affiliate or Associate of a
director or officer of the Company (each, an "Exempted Person") shall not be
deemed to "beneficially own" Common Shares held by another Exempted Person
solely by reason of any agreement, arrangement or understanding, written or
otherwise, entered into in opposition to a transaction that, at the time such
agreement, arrangement or understanding was entered into, has not been approved
or recommended by the Board of Directors to the stockholders of the Company.

               (d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.

               (e) "Close of Business" on any given date shall mean 5:00 p.m.,
Pacific Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Pacific Time, on the next succeeding
Business Day.

               (f) "Common Shares" when used with reference to the Company shall
mean the shares of common stock, par value $0.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.

               (g) "Designated Percentage" shall have the meaning set forth in
Section 1(a) hereof.

               (h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.



                                       3
   7

               (i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

               (j) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.

               (k) "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, business trust, unincorporated association or
other entity, and shall include any successor (by merger or otherwise) of such
entity.

               (l) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.

               (m) "Preferred Shares" shall mean shares of Series B Junior
Participating Preferred Stock, par value $0.01 per share, of the Company having
the rights and preferences set forth in the Certificate of Designation attached
to this Agreement as Exhibit A.

               (n) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.

               (o) "Shares Acquisition Date" shall mean the earlier of the date
of (i) the public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such or (ii) the public disclosure of facts by the
Company or an Acquiring Person indicating that an Acquiring Person has become
such.

               (p) "Subsidiary" of any Person shall mean any Person of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.

               (q) A "Successor" shall mean the estate or legal representative
of a deceased individual, the beneficiary of a deceased individual's estate, a
trust created by a deceased individual as grantor, or the beneficiary of a trust
created by a deceased individual as grantor.

        Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.

        Section 3.  Issue of Right Certificates.

               (a) Until the earlier of (i) the tenth day after the Shares
Acquisition Date or (ii) the tenth Business Day (or, such later date as may be
determined by action of the Board of Directors of the Company prior to such time
as any Person becomes an Acquiring Person after the first public announcement of
the intention of any Person (other than 



                                       4
   8

the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence a tender or exchange
offer the consummation of which would result in any such Person becoming an
Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"); (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.

               (b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto, prior to the amendment hereof (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.

               (c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:

             This certificate also evidences and entitles the holder hereof to
             certain rights (the "Rights") as set forth in a Rights Agreement
             between Intuit Inc. and American Stock Transfer and Trust Company,
             dated as of May 1, 1998, as such may subsequently be amended (the
             "Rights Agreement"), the terms of which are hereby incorporated
             herein by reference and a copy of which is on file at the principal
             executive offices of Intuit Inc. Under certain circumstances, as
             set forth in the Rights Agreement, such Rights will be evidenced by
             separate certificates and will no longer be evidenced by this
             certificate. Intuit Inc. will mail to the holder of this



                                       5
   9

             certificate a copy of the Rights Agreement without charge after
             receipt of a written request therefor. As described in Section
             11(a)(ii) of the Rights Agreement, Rights beneficially owned by any
             Person who becomes an Acquiring Person (as defined in the Rights
             Agreement) and certain other Persons shall become null and void.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.

        Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the other
provisions of this Agreement, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a Preferred Share as
shall be set forth therein at the Purchase Price, but the number of such one
one-thousandths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.

        Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent (unless applicable exchange rules and law permit facsimile
signature, in which case the Rights Agent signature may be by facsimile) and
shall not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.



                                       6
   10

        Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.

        Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Company shall execute and the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient for any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

        Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.

        Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.

               (a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-thousandth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on May 1, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.



                                       7
   11

               (b) The purchase price for each one one-thousandth of a Preferred
Share pursuant to the exercise of a Right (the "Purchase Price") shall initially
be $250.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

               (c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and certificate duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of one one-thousandths
of a Preferred Share to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
requisition from any depositary agent for the Preferred Shares depositary
receipts representing such number of one one-thousandths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional Preferred Shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate.

               (d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.

               (e) The Company covenants and agrees that it will cause to be
reserved and kept available, out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with this Section 7.

               (f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.



                                       8
   12

        Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.

        Section 9. Status and Availability of Preferred Shares. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and non-assessable shares.

        The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.

        Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred Shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

        Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.



                                       9
   13

               (a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.

                      (ii) Subject to the last paragraph of this subparagraph
(ii) and to Section 24 of this Agreement, in the event that any Person shall
become an Acquiring Person, unless the event causing the Designated Percentage
threshold to be crossed and the Person to thereby become an Acquiring Person is
a transaction set forth in Section 13 hereof, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price of the Company's
Common Shares (determined pursuant to Section 11(d) hereof) on the date such
Person became an Acquiring Person.

                         From and after the occurrence of any Person becoming an
Acquiring Person, any Rights that are or were acquired or beneficially owned by
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person)
shall be void and any holder of 



                                       10
   14

such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any Associate
or Affiliate thereof shall be cancelled. This paragraph shall apply not only to
an initial Acquiring Person, and its Affiliates and Associates, but also to
subsequent Acquiring Persons, and their Affiliates and Associates.

                      (iii) In the event that the number of Common Shares which
are authorized by the Company's certificate of incorporation and not outstanding
or subscribed for, or reserved or otherwise committed for issuance for purposes
other than upon exercise of the Rights, is not sufficient to permit the holder
of each Right to purchase the number of Common Shares to which such holder would
be entitled upon the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of paragraph (a) of this Section 11, the Company
shall: (A) determine the excess of (1) the value of the Common Shares issuable
upon the exercise of a Right (calculated as provided in the last sentence of
this subparagraph (iii)) pursuant to Section 11(a)(ii) hereof (the "Current
Value") over (2) the Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for such Common
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Shares or other equity securities of the
Company (including, without limitation, shares, or units of shares, of preferred
stock which the Board of Directors of the Company has determined to have the
same value as shares of common stock (such equity securities, "common stock
equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
of the Company in good faith; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of an event
triggering the rights to purchase Common Shares described in Section 11(a)(ii)
and (y) the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon
the surrender for exercise of a Right without requiring payment of the Purchase
Price, shares of common stock (to the extent available) and then, if necessary,
cash, which shares and cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of common stock could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(f) hereof, that such 



                                       11
   15

action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall make a public announcement, and shall deliver to the Rights Agent a
statement, stating that the exercisability of the Rights has been temporarily
suspended. At such time as the suspension is no longer in effect, the Company
shall make another public announcement, and deliver to the Rights Agent a
statement, so stating. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the current per share market price (as determined
pursuant to Section 11(d)(i) hereof) of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any "common stock equivalent" shall be
deemed to have the same value as the Common Shares on such date.

               (b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
to subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

               (c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend 



                                       12
   16

or a dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price of the
Preferred Shares on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.

               (d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price of
the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq Stock Market
("Nasdaq") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.



                                       13
   17

                      (ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.

               (e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-millionth of a
Preferred Share or one ten-thousandth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than three years from the
date of the transaction which requires such adjustment.

               (f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, the number of such other shares so receivable upon exercise of any Right
shall thereafter be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.

               (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

               (h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
ten-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.



                                       14
   18

               (i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been distributed, shall be at least 10 days later than the
date of the public announcement. If Right Certificates have been distributed,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates to be so distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.

               (j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a Preferred Share issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.

               (k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par value of
the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable Preferred Shares at such adjusted Purchase Price.

               (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall 



                                       15
   19

deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.

               (m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, (iii) dividends on
Preferred Shares payable in Preferred Shares or (iv) issuance of any rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.

               (n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise other than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then in any such case
(i) the number of one one-thousandths of a Preferred Share purchasable after
such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-thousandths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (ii) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.

               (o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 and 27, take (or
permit any Subsidiary to take) any action if the purpose of such action is to,
or if at the time such action is taken it is reasonably foreseeable that such
action will, diminish substantially or eliminate the benefits intended to be
afforded by the Rights.

        Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof.

        Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event that any Person shall become an Acquiring Person,
and, directly or indirectly, (a) the Company shall consolidate with, or merge
with and into, an Acquiring Person, or an Affiliate or Associate of an 



                                       16
   20

Acquiring Person, (b) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such
merger and, in connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (c) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Person in the transaction (including the
Company as successor thereto or as the surviving corporation) who is issuing the
consideration with the greatest fair market value to the Company and its
stockholders in connection with such transaction (the "Principal Issuer") as
shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-thousandths of a Preferred Share for which a
Right is then exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of the Principal Issuer
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) the Principal Issuer shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to the Principal Issuer; and (iv) the Principal Issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company covenants and agrees that it shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and the
Principal Issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions of this Section
13 shall similarly apply to successive mergers or consolidations or sales or
other transfers.

        Section 14.  Fractional Rights and Fractional Shares.

               (a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current 



                                       17
   21

market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.

               (b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fractions of the current market
value of one Preferred Share. For the purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.

               (c) The holder of a Right by the acceptance of the Right
expressly waives any right to receive fractional Rights or fractional shares
upon exercise of a Right (except as provided above).

        Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares) may, without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the 



                                       18
   22

Common Shares), in such holder's own behalf and for such holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, such holder's right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.

        Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

               (a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;

               (b) after the Distribution Date, the Right Certificates are
transferable only on the registry books maintained by the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and

               (c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.

        Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.

        Section 18. Compensation and Indemnity of the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the 



                                       19
   23

exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent (including employees, directors, officers and agents
of the Rights Agent) for, and to hold it harmless against, any loss, liability
or expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent (including employees, directors, officers and agents of
the Rights Agent), for anything done or omitted by the Rights Agent (including
employees, directors, officers and agents of the Rights Agent) in connection
with the acceptance and administration of this Agreement.

        Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.

        In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.

        Section 20. Rights and Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:

               (a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.



                                       20
   24

               (b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the General Counsel,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

               (c) The Rights Agent shall be protected and shall incur no
liability for any action taken, suffered or omitted by it in good faith unless a
court of competent jurisdiction determines that the Rights Agent's gross
negligence or willful misconduct was the primary cause of any loss to the
Company or any holder of a Right Certificate (or, prior to the Distribution
Date, any holder of a Right as holder of a Common Share). The Rights Agent makes
no representation or warranty with respect to and is not responsible for the
validity, value or availability of the Rights, the Right Certificates or the
Preferred Shares.

               (d) The Rights Agent shall be protected and shall incur no
liability for any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in this Section 20.

               (e) The Rights Agent shall not be assumed to have knowledge of
and shall not be required to take note of or act upon any fact or circumstance
including, without limitation, the occurrence of facts or circumstances leading
to the Shares Acquisition Date or the Distribution Date, facts or circumstances
relating to whether any Person may be an Affiliate or an Associate of any other
Person, facts or circumstances relevant to an adjustment to the Purchase Price,
facts or circumstances relevant to events described in Section 13 (mergers,
etc.), Section 23 (redemption) and Section 24 (exchange) which may be relevant
to performance by the rights Agent under this Agreement unless the Company has
provided written notice thereof to the Rights Agent; and the Company agrees that
it will (i) promptly notify the Rights Agent in writing of the occurrence of the
Shares Acquisition Date (including the identity of the Acquiring Person and the
date on which the Shares Acquisition Date occurred), the Distribution Date, the
Redemption Date, and of any events described in Section 13 (merger), and (ii)
promptly provide the Rights Agent with such other information as the Rights
Agent may reasonably request in connection with the performance of its duties
under this Agreement.

               (f) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect or
consequential damage or loss of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised 



                                       21
   25

of the likelihood of such loss or damage and regardless of the form of action,
provided the Rights Agent has acted in good faith under this Agreement.

               (g) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

               (h) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the General Counsel, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent with respect to its duties or obligations under this Rights
Agreement and the date on and/or after which such action shall be taken or
omitted and the Rights Agent shall not be liable for any action taken or omitted
in accordance with a proposal included in any such application on or after the
date specified therein (which date shall not be less than three Business Days
after the date any such officer actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking or omitting any such action, the Rights Agent has received written
instructions in response to such application specifying the action to be taken
or omitted.

               (i) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

               (j) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.

        Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and 



                                       22
   26

to each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (i) a corporation
organized and doing business under the laws of the United States or of the State
of California (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of California), in good standing, having an office in the State of California,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million dollars or (ii) a
subsidiary of a corporation described in clause (i) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

        Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, following the
Distribution Date and prior to the redemption or expiration of the Rights, in
connection with the issuance or sale of Common Shares pursuant to the exercise
of stock options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of other securities of the Company, in each case, which
options or securities are outstanding prior to the Distribution Date, the Board
of Directors shall issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Rights Certificate shall be issued and this sentence shall be null and
void ab initio if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued or
would create a significant risk of or result in such options' or employee plans'
or arrangements' failing to qualify 



                                       23
   27

for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

        Section 23.  Redemption.

               (a) The Board of Directors of the Company may, by a resolution of
the Board of Directors, at its option, at any time prior to such time as any
Person becomes an Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). After the period for redemption of the
Rights has expired, the Board of Directors may not extend the period for
redemption of the Rights or otherwise provide for their redemption. The
redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis and subject to such conditions as the Board of Directors in
its sole discretion may establish.

               (b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights pursuant to paragraph (a), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. If the
payment of the Redemption Price is not included in such notice, each such notice
shall state the method by which the payment of the Redemption Price will be
made. Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.


        Section 24.  Exchange.

               (a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and 



                                       24
   28

exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary or any entity holding Common Shares for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of a majority of the Common Shares then
outstanding.

               (b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant Section 24(a) hereof and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.

               (c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Shares (or common stock equivalents, as
such term is defined in Section 11(a)(iii) hereof) for Common Shares
exchangeable for Rights, at the initial rate of one one-thousandth of a
Preferred Share (or common stock equivalents) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share shall have the same
voting rights as one Common Share.

               (d) In the event that there shall not be sufficient Common
Shares, Preferred Shares or common stock equivalents authorized by the Company's
certificate of incorporation and not outstanding or subscribed for, or reserved
or otherwise committed for issuance for purposes other than upon exercise of
Rights, to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to
authorize additional Common Shares, Preferred Shares or common stock equivalents
for issuance upon exchange of the Rights.

               (e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional 



                                       25
   29

Common Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current per
share market value of a whole Common Share. For the purposes of this paragraph
(e), the current per share market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.

        Section 25.  Notice of Certain Events.

               (a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.

               (b) In case any event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.

        Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:



                                       26
   30

               Intuit Inc.
               2535 Garcia Avenue
               Mountain View, California  94043
               Attention:  Corporate Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:

               American Stock Transfer and Trust Company
               40 Wall Street
               New York, New York  10005
               Attention:  Corporate Trust Department

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

        Section 27. Supplements and Amendments. The Company may, by a resolution
of the Board of Directors, from time to time, and the Rights Agent shall, if the
Company directs, supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any other provisions or changes
with respect to the Rights which the Company may deem necessary or desirable,
including, without limitation, to modify or amend the definition of Acquiring
Person set forth in Section 1(a) hereof, to change the Purchase Price set forth
in Section 7(b), or to extend or shorten the period for redemption of the
Rights; provided, however, that from and after such time as any Person becomes
an Acquiring Person, this Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights (other than an
Acquiring Person and its Affiliates and Associates) including, without
limitation, to extend the period for redemption of the Rights, or otherwise
provide for their redemption, or to provide for an earlier Final Expiration
Date. Any such supplement or amendment will be evidenced by a writing signed by
the Company and the Rights Agent. The Rights Agent shall not be obligated to
enter into any amendment or supplement to this Agreement which in the opinion of
the Rights Agent, may materially adversely affect the rights, duties,
liabilities to the Company or immunities to the Company of the Rights Agent.

        Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.



                                       27
   31

        Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).

        Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, then such term, provision,
covenant or restriction shall be enforced to the maximum extent permissible, and
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

        Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.

        Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

        Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

        Section 34. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof.


                                       28
   32


        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.



                                    Company:

                                    INTUIT INC.


                                    By:   /s/ William V. Campbell
                                       -----------------------------------------
                                    Title: President and Chief Executive Officer
                                          --------------------------------------


                                    Rights Agent:


                                    AMERICAN STOCK TRANSFER AND TRUST COMPANY


                                    By:   /s/ HERBERT J. LEMMER
                                       -----------------------------------------
                                    Title:   Vice President
                                          --------------------------------------

                                       29
   33

                                                                       EXHIBIT A

                                      FORM

                                       of

                           CERTIFICATE OF DESIGNATIONS

                                       of

                  SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

                                       of

                                   INTUIT INC.

                         (Pursuant to Section 151 of the

                        Delaware General Corporation Law)



        Intuit Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on April 29, 1998:

        RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of
the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:

        Series B Junior Participating Preferred Stock:

        Section 1.    Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 200,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.


   34

        Section 2.    Dividends and Distributions.

               (A)    Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any other stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, the holders of shares of
Series B Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series B Preferred Stock, in an amount (if any) per share (rounded to the
nearest cent), subject to the provision for adjustment hereinafter set forth,
equal to 1000 times the aggregate per share amount of all cash dividends, and
1000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock, par value $0.01 per share (the "Common Stock"), of the Company or
a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series B Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

               (B)    The Corporation shall declare a dividend or distribution
on the Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).

               (C)    Dividends due pursuant to paragraph (A) of this Section
shall begin to accrue and be cumulative on outstanding shares of Series B
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
B Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series B Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive payment of
a 



                                       2
   35

dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.

        Section 3. Voting Rights. The holders of shares of Series B Preferred
Stock shall have the following voting rights:

               (A)    Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle the holder thereof
to 1000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

               (B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series B Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.

               (C) Except as set forth herein, or as otherwise provided by
law, holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.

        Section 4. Certain Restrictions.

                (A)  Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:

                      (i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred Stock;

                      (ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, except dividends paid ratably on the Series B Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled; or



                                       3
   36

                      (iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series B Preferred Stock.

                (B)  The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.

        Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.

        Section 6. Liquidation, Dissolution or Winding Up.

                (A) Upon any liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series B Preferred Stock shall be entitled
to receive, prior and in preference to any distribution of any assets of the
Corporation to the holders of Common Stock, the amount of $10.00 per share for
each share of Series B Preferred Stock then held by them. Thereafter, the
holders of shares of Series B Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1000 times the aggregate amount to be distributed per share
to holders of shares of Common Stock plus an amount equal to any accrued and
unpaid dividends. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

                (B) If the assets of the Corporation legally available for
distribution to the holders of shares of Series B Preferred Stock upon
liquidation, dissolution or winding up of the Corporation are insufficient to
pay the full preferential amount set forth in the first sentence of paragraph
(A) above, then the entire assets of the Corporation legally available for
distribution to the holders of Series B Preferred Stock shall be distributed
among such holders in proportion to the shares of Series B Preferred Stock then
held by them.



                                       4
   37

                (C) The foregoing rights upon liquidation, dissolution or
winding up provided to the holders of Series B Preferred Stock shall be subject
to the rights of the holders of any other series of Preferred Stock (or any
other stock) ranking prior and superior to the Series B Preferred Stock upon
liquidation, dissolution or winding up.

        Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or other property, then in any such case each share of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

        Section 8. No Redemption. The shares of Series B Preferred Stock shall
not be redeemable.

        IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its President and attested by its Assistant 
Secretary this 1st day of May, 1998.


                                       INTUIT INC.


                                       By:
                                           -------------------------------------
                                           President

Attest:


By:
   -----------------------------
   Assistant Secretary



                                       5
   38

                                                                       EXHIBIT B


                            FORM OF RIGHT CERTIFICATE

Certificate No. R-                                                  _____ Rights

        NOT EXERCISABLE AFTER MAY 1, 2008 OR EARLIER IF REDEMPTION OR EXCHANGE
        OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO
        EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

                                RIGHT CERTIFICATE

                                   INTUIT INC.

        This certifies that____________________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May 1, 1998, as amended and restated as of October 5,
1998 (the "Rights Agreement"), between Intuit Inc., a Delaware corporation (the
"Company"), and American Stock Transfer and Trust Company (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 p.m., Pacific Time,
on May 1, 2008 at the principal office of the Rights Agent, or at the office of
its successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series B Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Shares"), of the Company, at a purchase price of $[250.00]
per one one-thousandth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Certification and
the Form of Election to Purchase duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one-thousandths of a Preferred
Share which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of
[______], based on the Preferred Shares as constituted at such date. As provided
in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.

        This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.

        This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right


   39

Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.

        Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$0.001 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, par value $0.01 per share.

        No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandths of a Preferred Share, which may, at the
election of the Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.

        No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.

        This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.

        WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.

Dated as of ___________.

Attest:                                 INTUIT INC.


By:                                     By:
   --------------------------------        -------------------------------------

Countersigned:

AMERICAN STOCK TRANSFER AND TRUST COMPANY, Rights Agent


By:
    ----------------------------
    Authorized Signature




                                       2
   40

                    Form of Reverse Side of Right Certificate


                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
                holder desires to transfer the Right Certificate)


        FOR VALUE RECEIVED ___________________________________hereby sells,
assigns and transfers unto ___________________________________________________
(Please print name and address of transferee) this Right Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint __________________________________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.


Dated:________________________



                                              ----------------------------------
                                              Signature


Signature(s) Guaranteed:

SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15


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


        The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).


                                               ---------------------------------
                                               Signature

   41

              ----------------------------------------------------
              Form of Reverse Side of Right Certificate--continued

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                         exercise the Right Certificate)

To _______________________:

        The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:

Please insert social security
or other identifying number

- ---------------------------------------------
(Please print name and address)

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

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

If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

- ---------------------------------------------
(Please print name and address)

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

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

Dated: __________________

                                                   -----------------------------
                                                   Signature

Signature(s) Guaranteed:

SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15


                                       2

   42

              Form of Reverse Side of Right Certificate--continued

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


        The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).



                                               --------------------------------
                                               Signature


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


                                     NOTICE

        The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or any change whatsoever.

        In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.



   43

                                                                       EXHIBIT C


                          SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED SHARES


        On April 29, 1998, the Board of Directors of Intuit Inc. (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $0.01 per share (the "Common
Shares"), of the Company. The dividend is payable to stockholders of record on
May 11, 1998 (the "Record Date"). In addition, one Right shall be issued with
each Common Share that becomes outstanding (i) between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are defined in the Agreement) or (ii) following the
Distribution Date and prior to the Redemption Date or Final Expiration Date,
pursuant to the exercise of stock options or under any employee plan or
arrangement or upon the exercise, conversion or exchange of other securities of
the Corporation, which options or securities were outstanding prior to the
Distribution Date. Each Right entitles the registered holder to purchase from
the Company one one-thousandth of a share of Series B Junior Participating
Preferred Stock, par value $0.01 per share (the "Preferred Shares"), of the
Company, at a price of $250.00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and American Stock Transfer and Trust Company, as Rights Agent (the
"Rights Agent").

        Until the earlier to occur of (i) 10 days following a public
announcement or disclosure that a person or group of affiliated or associated
persons (an "Acquiring Person"), has acquired beneficial ownership of 20% (the
"Designated Percentage") or more of the outstanding Common Shares or (ii) 10
business days (or, such later date as may be determined by action of the Board
of Directors), following the announcement of an intention to make a tender offer
or exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificates with a copy of this Summary of Rights attached thereto. No
Person shall become an Acquiring Person if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an Acquiring
Person has become such inadvertently, and such Person as promptly as practicable
takes such actions as may be necessary so that such Person would no longer be
considered an Acquiring Person.


   44

        The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the Close of Business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.

        The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 1, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.

        The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).

        The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock dividend on the Common Shares payable in
Common Shares or subdivisions, consolidations or combinations of the Common
Shares occurring, in any such case, prior to the Distribution Date.

        Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 1000 times the dividend declared per Common Share. In the event of
liquidation, each Preferred Share will be entitled to a $10.00 preference, and
thereafter the holders of the Preferred Shares will be entitled to an aggregate
payment of 1000 times the aggregate payment made per Common Share. Each
Preferred Share will have 1000 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
1000 times the amount received per Common Share. These rights are protected by
customary antidilution provisions.

        Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.


                                       2

   45
 In the event that any person becomes an Acquiring Person, unless the event
causing the Designated Percentage threshold to be crossed and the Person to
thereby become an Acquiring Person is a merger, acquisition or other business
combination described in the next paragraph each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price of the Right
on the terms and conditions set forth in the Rights Agreement. If the Company
does not have authorized but unissued Common Shares sufficient to satisfy such
obligation to issue Common Shares, the Company is obligated to deliver upon
payment of the exercise price of a Right an amount of cash or other securities
equivalent in value to the Common Shares issuable upon exercise of a Right.

        In the event that, any person or group becomes an Acquiring Person and
the Company merges into or engages in certain other business combination
transactions with an Acquiring Person, or 50% or more of its consolidated assets
or earning power are sold to an Acquiring Person, each holder of a Right, other
than Rights beneficially owned by an Acquiring Person, will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right.

        At any time after any person becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one Common Share, or one one-thousandth of a
Preferred Share (or of a share of a class or series of the Company's preferred
stock having equivalent rights, preferences and privileges), per Right (subject
to adjustment).

        With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.


                                       3

   46
        At any time prior to such time as a person or group becomes an Acquiring
Person, the Board of Directors of the Company may redeem, the Rights in whole,
but not in part, at a price of $0.001 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. After the period for redemption of the Rights has expired, the Board
may not amend the Rights Agreement to extend the period for redemption of the
Rights. Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.

        The terms of the Rights may be amended by a resolution of the Board of
Directors without the consent of the holders of the Rights, except that from and
after such time as any person or group becomes an Acquiring Person, no such
amendment may adversely affect the interests of the holders of the Rights (other
than an Acquiring Person).

        Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

        A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A/A
dated ________, 1998. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.


                                       4

EX-3.06

   1
                                                                   Exhibit 3.06

                               STATE OF DELAWARE

                        OFFICE OF THE SECRETARY OF STATE

                                                                          Page 1

     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY 
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF 
RETIREMENT OF "INTUIT INC.", FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF 
SEPTEMBER, A.D. 1998, AT 9 O'CLOCK A.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE 
COUNTY RECORDER OF DEEDS.



     [SEAL]                             /s/ EDWARD J. FREEL
                                        -----------------------------------
                                        Edward J. Freel, Secretary of State

                                        AUTHENTICATION: 9305220

                                        DATE:  09-16-98
   2
                           CERTIFICATE OF RETIREMENT

                                       OF

                            SERIES A PREFERRED STOCK

                                       OF

                                  INTUIT INC.



     Intuit Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), certifies as
follows:

     FIRST:    On February 1, 1993, the Corporation filed with the Delaware
Secretary of State a Certificate of Incorporation authorizing 33,000,000 shares
of authorized stock, consisting of two classes: 30,000,000 shares of Common
Stock, par value $0.01 per share, and 3,000,000 shares of Preferred Stock, par
value $.01 per share, and designating 1,800,000 of the shares of Preferred Stock
of the Company as Series A Preferred stock, par value $0.01 per share with the
powers, preferences, rights, limitations and restrictions specified therein.

     SECOND:   On December 14, 1993, the Corporation filed a Certificate of
Amendment of Certificate of Incorporation that increased the number of shares of
authorized stock to 63,000,000 shares consisting of two classes: 60,000,000
shares of Common Stock, par value $0.01 per share, and 3,000,000 shares of
Preferred Stock, par value $0.01 per share.

     THIRD:    On January 18, 1996, the Corporation filed a Certificate of
Amendment of Certificate of Incorporation that increased the number of shares of
authorized stock to 253,000,000 shares, consisting of two classes: 250,000,000
shares of Common Stock, par value $0.01 per share, and 3,000,000 shares of
Preferred Stock, par value of $0.01 per share.

     FOURTH:   On March 12, 1993, 1,655,082 shares of the Series A Preferred
Stock of the Corporation were converted into shares of the Corporation's Common
Stock and ceased to be outstanding, leaving 144,918 shares of Series A Preferred
Stock authorized but unissued.

     FIFTH:    Article IV, Part C, Section 7 of the Corporation's Certificate of
Incorporation prohibits the reissuance of the converted Series A Preferred Stock
as Series A Preferred Stock.

     SIXTH:    Pursuant to the provisions of Section 243 of the General
Corporation Law of Delaware, 1655,082 shares of the Series A Preferred Stock of
the Corporation are hereby retired. 

     EXECUTED effective this 16th day of September, 1998.



                                        INTUIT INC.



                                        By:  /s/ CATHERINE L. VALENTINE
                                           -------------------------------
                                           Catherine L. Valentine
                                           Vice President, General Counsel
                                           and Secretary



    STATE OF DELAWARE
    SECRETARY OF STATE
 DIVISION OF CORPORATIONS
FILED 09:00 AM 09/16/1998
   981359426 - 2324451

EX-4.01

   1
                                                                   EXHIBIT 4.01


                                     INTUIT

              INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

                                                            CUSIP 461202 10 3
                                                         SEE REVERSE FOR CERTAIN
                                                         DEFINITIONS AND LEGENDS

THIS CERTIFIES THAT


                                    SPECIMEN


is the owner of


            FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
                         PAR VALUE $0.01 PER SHARE, OF

                                  INTUIT INC.

transferable on the books of the Corporation by the holder in person or by duly 
authorized attorney on surrender of this certificate properly endorsed. This 
certificate is not valid until countersigned and registered by the Transfer 
Agent and Registrar.

     WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officer.

                              CERTIFICATE OF STOCK

        SPECIMEN                                          SPECIMEN

     PRESIDENT AND                            VICE PRESIDENT, GENERAL COUNSEL
CHIEF EXECUTIVE OFFICER                                AND SECRETARY


                                     [SEAL]
                                  INTUIT INC.
                                  INCORPORATED
                                  FEBRUARY 1,
                                      1993
                                    DELAWARE

   2
     The Corporation is authorized to issue Common Stock and Preferred Stock.
The Board of Directors of the Corporation has authority to determine the
authorized number of shares of each series of Preferred Stock and to determine
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, and to increase or
decrease (but not below the number of shares of such series then outstanding) 
the number of shares of any series subsequent to the issue of shares of that 
series.

     A statement of the rights, preferences, privileges and restrictions 
granted to or imposed upon the respective classes or series of shares and the 
number of shares constituting each class and series, and the designations 
thereof, may be obtained by the holder hereof upon request and without charge 
from the Secretary of the Corporation at the principal office of the 
Corporation.

     This certificate also evidences and entitles the holder hereof to certain 
rights (the "Rights") as set forth in a Rights Agreement between Intuit Inc. 
and American Stock Transfer & Trust Company, dated as of May 1, 1998, as such 
may subsequently be amended (the "Rights Agreement"), the terms of which are 
hereby incorporated herein by reference and a copy of which is on file at the 
principal executive offices of Intuit Inc. Under certain circumstances, as set 
forth in the Rights Agreement, such rights will be evidenced by separate 
certificates and will no longer be evidenced by this certificate. Intuit Inc. 
will mail to the holder of this certificate a copy of the Rights Agreement 
without charge after receipt of a written request therefor. As described in 
Section 11(a)(ii) of the Rights Agreement, Rights beneficially owned by any 
person who becomes an Acquiring Person (as defined in the Rights Agreement) and
certain other persons shall become null and void.

     The following abbreviations, when used in the inscription on the face of 
this Certificate, shall be construed as though they were written out in full 
according to applicable laws or regulations:

     TEN COM - as tenants in common
     TEN ENT - as tenants by the entireties
     JT TEN  - as joint tenants with right of survivorship and not as tenants 
               in common

UNIF GIFT MIN ACT ______________________ Custodian____________________________
                         (Cust)                         (Minor)
                   under Uniform Gifts to Minors
                   Act___________________________________________
                                    (State)

    Additional abbreviations may also be used though not in the above list.

For value received,_______________________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------

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

________________________________________________________________________________
 (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

________________________________________________________________________________
                                                                        
________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby 
irrevocably constitute and appoint ___________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.


Dated _________________________________

_________________________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS 
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT 
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.


SIGNATURE(S) GUARANTEED:



_________________________________________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION 
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH 
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO 
S.E.C. RULE 17Ad-18.

EX-10.22

   1
                                                                  EXHIBIT 10.22

                                LEASE AGREEMENT


THIS LEASE, made this ________ day of January  , 1998 between CHARLESTON
PROPERTIES, a California General Partnership, hereinafter called Landlord and
INTUIT, INC. a Delaware Corporation, hereinafter called Tenant.


                                  WITNESSETH:

        Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the "Premises") outlined in red on Exhibit "A",
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:

        The entire Two story building comprising 41,636 gross square feet of
space located in Mountain View, Santa Clara County, California and further
identified at the following address: 2650 Casey.  The building leased hereunder
shall be known between Landlord and Tenant as Building "B".

        As used herein the Complex shall mean and include all of the land
outlined in red and described in Exhibit "B", attached hereto, and all of the
buildings, improvements, fixtures and equipment now or hereafter situated on
said land.  The Complex of which the premises form a part shall further be known
as Complex 4.

        Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions.  This Lease is made upon the conditions of such
performance and observance.

1.      USE  Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of Office,
Sales, R&D and related uses necessary for Tenant to conduct its business,
provided such uses are permitted and conform to City zoning laws and all other
governmental laws, regulations, rules and ordinances and for no other purpose.
Tenant shall not do or permit to be done in or about the Premises or the Complex
nor bring or keep or permit to be brought or kept in or about the Premises or
the Complex anything which is prohibited by or will in any way increase the
existing rate of (or otherwise affect) fire or any insurance covering the
Complex or any part thereof, or any of its contents, or will cause a
cancellation of any insurance covering the Complex or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in, on or
about the Premises or the Complex which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Complex or injure or annoy
them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises or the Complex. No sale by auction
shall be permitted on the Premises. Tenant shall not place any loads upon the
floors, walls, or ceiling, which endanger the structure, or place any harmful
fluids or other materials in the drainage system of the building, or overload
existing electrical or other mechanical systems. No waste materials or refuse
shall be dumped upon or permitted to remain upon any part of the Premises or
outside of the building in which the Premises are a part, except in trash
containers placed inside exterior enclosures designated by Landlord for that
purpose or inside of the building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises or on any portion of common area of the Complex. No
loudspeaker or other device, system or apparatus which can be heard outside the
Premises shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. Tenant shall indemnify, defend and hold Landlord harmless
against any loss, expense, damage, attorneys' fees, or liability arising out of
failure of Tenant to comply with any applicable law where compliance is Tenant's
obligation hereunder. Tenant shall comply with any covenant, condition, or
restriction ("CC&R's") affecting the Premises. The provisions of this paragraph
are for the benefit of Landlord only and shall not be construed to be for the
benefit of any tenant or occupant of the Complex.

2.      TERM

        A.  The term of this Lease shall be for a period of Eight years (8)
years (unless sooner terminated as hereinafter provided) and, subject to
Paragraphs 2(B) and 3, shall commence on the 15th day of April, 1999, and end
on the 14th day of April, 2007.

        B.  Possession of the Premises shall be deemed tendered and the term of
this Lease shall commence when the first of the following occurs:
Ninety days after the date Landlord offers Tenant possession of the Premises
for the commencement of construction of Tenant Improvements (if any)

        (2)  Upon the occupancy of the Premises by any of Tenant's operating
personnel; or
        (3)  N/A
             (This paragraph 2 is continued on page 10 below)

3.      POSSESSION If Landlord, for any reason whatsoever, cannot offer
possession of said Premises to Tenant at the commencement of the said term, as
hereinbefore specified, this Lease shall not be void or voidable; no obligation
of Tenant shall be affected thereby; nor shall Landlord or Landlord's agents be
liable to Tenant for any loss or damage resulting therefrom (subject to the
provisions of paragraph 2.B.(1) on page 10 below), but in that event the
commencement and termination dates of the Lease, and all other dates affected
thereby shall be revised to conform to the date of Landlord's delivery of
possession, as specified in Paragraph 2(b), above. The above is, however,
subject to the provision that the period of delay of delivery of the Premises
shall not exceed 90 days from the commencement date herein (except those delays
caused by Acts of God, strikes, war, utilities, governmental bodies, weather,
unavailable materials, and delays beyond Landlord's control shall be excluded in
calculating such period) in which instance Tenant, at its option, may, by
written notice to Landlord, terminate this Lease.

Notwithstanding anything herein to the contrary, if Landlord has not offered
possession to Tenant of the Premises by May 15, 1999 then Tenant may cancel this
Lease.


   2
4.      RENT

        A.  Basic Rent.  Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum
of Six Million, Four Hundred Eighty Two Thousand Fifty Two and 
20/100. ($6,482,052.20) Dollars in lawful money of the United States of
America, payable as follows:

                 (Paragraph 4A is continued on Page 10 below)

        B.  Time for Payment.  In the event that the term of this Lease
commences on a date other than the first day of a calendar month, on the date
of commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number
of days between such date of commencement and the first day of the next
succeeding calendar month bears to thirty (30). In the event that the term of
this Lease for any reason ends on a date other than the last day of a calendar
month, on the first day of the last calendar month of the term hereof Tenant
shall pay to Landlord as rent for the period from said first day of said last
calendar month to and including the last day of the term hereof that proportion
of the monthly rent hereunder which the number of days between said first day
of said last calendar month and the last day of the term hereof bears to thirty 
(30).

        C.  Late Charge.  Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rent as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten (10)
days. Said late charge shall equal ten (10%) percent of each rental payment so
in default. Landlord shall not assess a late charge after such 10 day period
unless Landlord thereafter notifies Tenant by telephone or fax that Tenant's
rental is delinquent and said rental remains delinquent for 48 hours after said
notice to Tenant.

        D.  Additional Rent.  Beginning with the commencement date of the term
of this Lease, Tenant shall pay to Landlord in addition to the Basic Rent and
as Additional Rent the following:

            (1)  Tenant's proportionate share of all utilities relating to the
                 Complex as set forth in Paragraph 11, and

            (2)  Tenant's proportionate share of all Taxes relating to the 
                 Complex as set forth in Paragraph 12, and

            (3)  Tenant's proportionate share of all insurance premiums
                 relating to the Complex, as set forth in Paragraph 15, and

            (4)  Tenant's proportionate share of expenses for the operation,
                 management, maintenance and repair of the Building (including
                 common areas of the Building) and Common Areas of the Complex
                 in which the Premises are located as set forth in Paragraph 7, 
                 and

            (5)  All charges, costs and expenses, which Tenant is required to
                 pay hereunder, together with all interest and penalties, costs
                 and expenses including attorneys' fees and legal expenses,
                 that may accrue thereto in the event of Tenant's failure to 
                 pay such amounts, and all damages, reasonable costs and 
                 expenses which Landlord may incur by reason of default of
                 Tenant or failure on Tenant's part to comply with the terms of 
                 this Lease. In the event of nonpayment by Tenant of Additional
                 Rent, Landlord shall have all the rights and remedies with 
                 respect thereto as Landlord has for nonpayment of rent.

Tenant shall pay to Landlord monthly, in advance, Tenant's prorata share of an
amount estimated by Landlord to be Landlord's approximate average monthly
expenditure for such Additional Rent items, which estimated amount shall be
reconciled within 120 days of the end of each calendar year as compared to
Landlord's actual expenditure for said Additional Rent items, with Tenant paying
to Landlord, upon demand, any amount of actual expenses expended by Landlord in
excess of said estimated amount, or Landlord refunding to Tenant (providing
Tenant is not in default in the performance of any of the terms, covenants and
conditions of this Lease) any amount of estimated payments made by Tenant in
excess of Landlord's actual expenditures for said Additional Rent items.
Landlord shall provide Tenant reasonably adequate supportive documentation to
the reconciliation. Tenant's payment for such Additional Rent as of the
commencement of the term of this lease shall be Seven Thousand Two Hundred and
00/000 ($7,200.00) Dollars per month. Any payments required to be made by Tenant
for Additional Rent shall be made by check or instrument separate from that
check or instrument used by Tenant to make any payments for Basic Rent, pursuant
to paragraph 4 A.

        The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease,
and if the term hereof shall expire or shall otherwise terminate on a day
other than the last day of a calendar year, the actual Additional Rent incurred
for the calendar year in which the term hereof expires or otherwise terminates
shall be determined and settled on the basis of the statement of actual
Additional Rent for such calendar year and shall be prorated in the proportion
which the number of days in such calendar year preceding such expiration or
termination bears to 365.

                       (Paragraph 4D is continued below.)

        E.  Place of Payment of Rent and Additional Rent. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at 3201 Ash Street, Palo Alto, CA 94306 or
to such other person or to such other place as Landlord may from time to time
designate in writing.

        F.  Security Deposit. Concurrently with Tenant's execution of this
Lease, Tenant shall deposit with Landlord the sum of Seventy Five Thousand and
00/100 ($75,000.00) Dollars. Said sum shall be held by Landlord as a Security
Deposit for faithful performance by Tenant of all of the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the term
hereof. If Tenant defaults with respect to any provision of this Lease,
including, but not limited to, the provisions relating to the payment of rent
and any of the monetary sums due herewith, Landlord may (but shall not be
required to) use, apply or retain all or any part of this Security Deposit for
the payment of any other amount which Landlord may spend by reason of Tenant's
default or to compensate Landlord for any other loss or damage which Landlord
may suffer by reason of Tenant's default. If any portion of said Deposit is so
used or applied, Tenant shall, within ten (10) days after written demand
therefor, deposit cash with Landlord in the amount sufficient to restore the
Security Deposit to its original amount. Tenant's failure to do so shall be a
material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs
every provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or at Landlord's option, to the
last assignee of Tenant's interest hereunder) at the expiration of the Lease
term and after Tenant has vacated the Premises. In the event of termination of
Landlord's interest in this Lease, Landlord shall transfer said Deposit to
Landlord's successor in interest whereupon Tenant agrees to release Landlord
from liability for the return of such Deposit or the accounting therefor. 

                       (Paragraph 4F is continued below)

5.      RULES AND REGULATIONS AND COMMON AREA.  Subject to the terms and
conditions of this Lease and such Rules and Regulations as Landlord may from
time to time prescribe, Tenant and Tenant's employees, invitees and customers
shall, in common with other occupants of the Complex in which the Premises are
located, and their respective employees, invitees and customers, and others
entitled to the use thereof, have the non-exclusive rights to use the access
roads, parking areas, and facilities provided and designated by Landlord for the
general use and convenience of the occupants of the Complex in which the
Premises are located, which areas and facilities are referred to herein as
"Common Area." This right shall terminate upon the termination of this Lease.
Landlord reserves the right from time to time to make reasonable changes in the
shape, size, location, amount and extent of Common Area. All such changes shall
not unreasonably affect Tenant's access or use of the Premises and shall not
diminish Tenant's parking rights. Landlord further reserves the right to
promulgate such reasonable rules and regulations relating to the use of the
Common Area, and any part of parts thereof, as Landlord may deem appropriate for
the best interests of the occupants of the Complex. The Rules and Regulations
shall be binding upon Tenant upon delivery of a copy of them to Tenant, and
Tenant shall abide by them and cooperate in their observance. Such Rules and
Regulations may be reasonably amended by Landlord from time to time, with or
without advance notice, and all amendments shall be effective upon delivery of a
copy to Tenant. Landlord shall not be responsible to Tenant for the
non-performance by any other tenant or occupant of the Complex of any of said
Rules and Regulations.

        Landlord shall operate, manage and maintain the Common Area. The Common
Area shall be maintained in a first class manner and the expenditures for such 
maintenance shall be at the discretion of Landlord.


                                  Page 2 of 9
   3
6.  PARKING.  Landlord hereby acknowledges that Tenant shall have the right to
restripe parking lots at Tenant's own expense (provided Tenant is the only
occupant of a Complex to be restriped). Any restriping shall be in compliance
with all applicable codes and regulations and Landlord shall cooperate with
Tenant in this effort. Tenant shall have the right to use with other tenants or
occupants of the Complex its proportionate share of parking spaces in the common
parking areas of the Complex. Tenant agrees that Tenant, Tenant's employees,
agents, representatives and/or invitees shall not use parking spaces outside of
the Complex parking allocated to Tenant hereunder. Landlord shall have
the right, at Landlord's sole discretion, to specifically designate the location
of Tenant's parking spaces within the common parking areas of the Complex in the
event of a dispute among the tenants occupying the building and/or Complex
referred to herein, in which event Tenant agrees that Tenant, Tenant's
employees, agents, representatives and/or invitees shall not use any parking
spaces other than those parking spaces specifically designated by Landlord for
Tenant's use. Said parking spaces, if specifically designated by Landlord to
Tenant, may be relocated by Landlord at any time, and from time to time.
Landlord reserves the right, at Landlord's sole discretion, to rescind any
specific designation of parking spaces, thereby returning Tenant's parking
spaces to the common parking area. Landlord shall give Tenant written notice of
any change in Tenant's parking spaces. Tenant shall not, at any time, park, or
permit to be parked, any trucks or vehicles adjacent to the loading areas so as
to interfere in any way with the use of such areas, nor shall Tenant at any time
park, or permit the parking of Tenant's trucks or other vehicles or the trucks
and vehicles of Tenant's suppliers or others, in any portion of the common area
not designated by Landlord for such use by Tenant. Tenant shall not park nor
permit to be parked, any inoperative vehicles or equipment on any portion of the
common parking area or other common areas of the Complex. Tenant agrees to
assume responsibility for compliance by its employees with the parking provision
contained herein. If Tenant or its employees park in other than such designated
parking areas, then Landlord may charge Tenant, as an additional charge, and
Tenant agrees to pay, ten ($10.00) Dollars per day for each day or partial day
each such vehicle is parked in any area other than that designated. Tenant
hereby authorizes Landlord at Tenant's sole expense to tow away from the Complex
any vehicle belonging to Tenant or Tenant's employees parked in violation of
these provisions, or to attach violation stickers or notices to such vehicles.
Tenant shall use the parking areas for vehicle parking only, and shall not use
the parking areas for storage.

7.  EXPENSES OF OPERATION, MANAGEMENT AND MAINTENANCE OF THE COMMON AREAS OF THE
COMPLEX, PREMISES AND BUILDING IN WHICH THE PREMISES ARE LOCATED.  As
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant's proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of all expenses of operation,
management, maintenance and repair of the Common Areas of the Complex
including, but not limited to, license, permit and inspection fees; security;
utility charges associated with exterior landscaping and lighting (including
water and sewer charges); all charges incurred in the maintenance of landscaped
areas, lakes, parking lots, sidewalks, driveways; maintenance, repair and
replacement of all fixtures and electrical, mechanical and plumbing systems;
structural elements and exterior surfaces of the building; salaries and
employee benefits of personnel and payroll taxes applicable thereto; supplies,
materials, equipment and tools; the cost of capital expenditures which have the
effect of reducing operating expenses, provided, however, that in the event
Landlord makes such capital improvements, Landlord may amortize its investment
in said improvements (together with interest at the rate of fifteen (15%)
percent per annum on the unamortized balance) as an operating expense in
accordance with standard accounting practices, provided, that such amortization
is not at a greater than the anticipated savings in the operating expenses.

        As additional Rent and in accordance with paragraph 4D of this Lease,
Tenant shall pay its proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of the cost of operation
(including common utilities), management, maintenance and repair of the
Premises and the building (including common areas such as lobbies, restrooms,
janitor's closets, hallways, elevators, mechanical and telephone rooms,
stairwells, entrances, spaces above the ceilings) in which the Premises are
located. The maintenance items herein referred to include, but are not limited
to, electrical systems (such as outlets, lighting fixtures, lamps, bulbs,
tubes, ballasts), heating and airconditioning controls (such as mixing boxes,
thermostats, time clocks, supply and return grills), all interior improvements
within the Premises including but not limited to: wall coverings, window
coverings, acoustical ceilings, vinyl tile, carpeting, partitioning, doors
(both interior and exterior, including closing mechanisms, latches, locks), and
all other interior improvements of any nature whatsoever, all windows, window
frames, plate glass, glazing, truck doors, main plumbing systems of the
building (such as water and drain lines, sinks, toilets, faucets, drains,
showers and water fountains), main electrical systems (such as panels and
conduits), heating and airconditioning systems (such as compressors, fans, air
handlers, ducts, boilers, heaters), store fronts, roofs, downspouts, building
common area interiors (such as wall coverings, window coverings, floor
coverings and partitioning), ceilings, building exterior doors, skylights (if
any), automatic fire extinguishing systems and elevators; license,
permit, and inspection fees; security; salaries and employee benefits of
personnel and payroll taxes applicable thereto; supplies, materials, equipment
and tools; the cost of capital expenditures which have the effect of reducing
operating expenses, provided, however, that in the event Landlord makes such
capital improvements, Landlord may amortize its investment in said improvements
(together with interest at the rate of fifteen (15%) percent per annum on the
unamortized balance) as an operating expense in accordance with standard
accounting practices, provided, that such amortization is not at a rate greater
than the anticipated savings in the operating expenses. Tenant hereby waives all
rights under, and benefits of, subsection 1 of Section 1932 and Sections 1941
and 1942 of the California Civil code and under any similar law, statute or
ordinance now or hereafter in effect. Tenant agrees to provide carpet shields
under all rolling chairs or to otherwise be responsible for wear and tear of
the carpet caused by such rolling chairs if such wear and tear exceeds that
caused by normal foot traffic in surrounding areas. Areas of excessive wear
shall be replaced at Tenant's sole expense upon Lease termination.

        "Additional Rent" as used herein shall not include Landlord's debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partitioning or any other tenant improvements; cost of attracting tenants;
depreciation; interest, or executive salaries.

        Tenant agrees to contract and pay directly for five-day janitorial
service for the leased Premises and Landlord agrees to maintain the Complex in
a first-class manner.

8.  ACCEPTANCE AND SURRENDER OF PREMISES.  By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof except
as otherwise provided herein. Any exceptions to the foregoing must be by written
agreement executed by Landlord and Tenant. Tenant agrees on the last day of the
Lease term, or on the sooner termination of this Lease, to surrender the
Premises promptly and peaceably to Landlord in good condition and repair (damage
by Acts of God, fire or normal wear and tear excepted), with all interior walls
painted, or cleaned so that they appear freshly painted, and repaired and
replaced, if damaged; all floors cleaned and waxed; all carpets cleaned and
shampooed; the airconditioning and heating equipment serviced by a reputable and
licensed service firm and in good operating condition (provided the maintenance
of such equipment has been Tenant's responsibility during the term of this
Lease) together with all alterations, additions and improvements which may have
been made in, to, or on the Premises (except movable trade fixtures installed at
the expense of Tenant) except that subject to paragraph 9 of this Lease Landlord
shall notify Tenant at the same time as Landlord provides its consent to such
alterations, additions or improvements which exceed $15,000 in construction
costs whether Landlord desires to have the Premises or any part or parts thereof
restored to their condition and configuration as when the Premises existed prior
to such alteration, addition, or improvement and if Landlord shall so desire,
then Tenant shall restore said Premises or such part or parts thereof before the
end of this Lease at Tenant's sole cost and expense. Tenant, on or before the
end of the term or sooner termination of this Lease, shall remove all of
Tenant's personal property and trade fixtures from the Premises, and all
property not so removed on or before the end of the term or sooner termination
of this Lease shall be deemed abandoned by Tenant and title to same shall
thereupon pass to Landlord without compensation to Tenant. Landlord may, upon
termination of this Lease, remove all moveable furniture and equipment so
abandoned by Tenant, at Tenant's sole cost, and repair any damage caused by such
removal at Tenant's sole cost. If the Premises be not surrendered at the end of
the term or sooner termination of this Lease, Tenant shall indemnify Landlord
against loss or liability resulting from the delay by Tenant in so surrendering
the Premises including, without limitation, any claims made by any succeeding
tenant founded on such delay. Nothing contained herein shall be construed as an
extension of the term hereof or as a consent of Landlord to any holding over by
Tenant. The voluntary or other surrender of this Lease or the Premises by Tenant
or a mutual cancellation of this Lease shall not work as a merger and, at the
option of Landlord, shall either terminate all or any existing subleases or
subtenancies or operate as an assignment to Landlord of all or any such
subleases or subtenancies.

(See paragraph 50 below)

9.  ALTERATIONS AND ADDITIONS.  Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises, or any part thereof, without the written
consent of Landlord first had and obtained by Tenant, but at the cost of Tenant,
and any addition to, or alteration of, the Premises, except moveable furniture
and trade fixtures, shall at once become a part of the Premises and belong to
Landlord. If Landlord consents to the making of any alteration, addition, or
improvement to or of the Premises by Tenant, the same shall be made at Tenant's
sole cost and expense. Any modifications to the building or building systems
required by governmental code or otherwise as a result of Tenant's alterations,
additions or improvements shall be made at Tenant's sole cost and expense.
Tenant shall retain title to all moveable furniture and trade fixtures placed in
the Premises. All heating, lighting, electrical, airconditioning, partitioning,
drapery, carpeting and floor installations made by Tenant, together with all
property that has become an integral part of the Premises, shall not be deemed
trade fixtures. Tenant agrees that it will not proceed to make any alterations
or additions, without having obtained consent from Landlord to do so, and until
five (5) days from the receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements, Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work. Tenant
shall, if required by Landlord, secure at Tenant's own cost and expense, a
completion and lien indemnity bond reasonably satisfactory to Landlord, for such
work in excess of $100,000. Tenant further covenants and agrees that any
mechanic's lien filed against the Premises or against the Complex for work
claimed to have been done for, or materials claimed to have been furnished to
Tenant, will be discharged by Tenant, by bond or otherwise, within ten (10) days
after the filing thereof, at the cost and expense of Tenant. Any exceptions to
the foregoing must be made in writing and executed by both Landlord and Tenant.

(Paragraph 9 is continued on page 12 below)

                                                                         [SIG]
                                                                        --------
 
                                  Page 3 of 9

   4
(Paragraph 11 is continued on page 13 below)

12.     TAXES  A. As Additional Rent and in accordance with Paragraph 4D of
this Lease, Tenant shall pay to Landlord Tenant's proportionate share of all
Real Property Taxes, which prorata share shall be allocated to the leased
Premises by square footage or other equitable basis, as calculated by Landlord.
The term "Real Property Taxes", as used herein, shall mean (i) all taxes,
assessments, levies and other charges of any kind or nature whatsoever, general
and special, foreseen and unforeseen (including all installments of principal
and interest required to pay any general or special assessments for public
improvements and any increases resulting from reassessments caused by any change
in ownership of the Complex) now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of, all or any portion of the Complex (as
now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein; any improvements located
within the Complex (regardless of ownership); the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part of and located
in the Complex; or parking areas, public utilities, or energy within the
Complex; (ii) all charges, levies or fees imposed by reason of environmental
regulation or other governmental control of the Complex; and (iii) all costs and
fees (including attorneys' fees) incurred by Landlord in contesting any Real
Property Tax and negotiating with public authorities as to any Real Property
Tax. In the event said contesting results in a refund of Real Property Taxes,
Tenant shall be credited with the appropriate proportionate share of said refund
reflecting Tenant's period of occupancy. If at any time during the term of this
Lease the taxation or assessment of the Complex prevailing as of the
commencement date of this Lease shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Complex or
Landlord's interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Complex, on Landlord's business of leasing the Complex, or
computed in any manner with respect to the operation of the Complex, then any
such tax or charge, however designated, shall be included within the meaning of
the term "Real Property Taxes" for purposes of this Lease. If any Real Property
Tax is based upon property or rents unrelated to the Complex, then only that
part of such Real Property Tax that is fairly allocable to the Complex shall be
included within the meaning of the term "Real Property Taxes". Notwithstanding
the foregoing, the term "Real Property Taxes" shall not include estate,
inheritance, gift or franchise taxes of Landlord or the federal or state net
income tax imposed on Landlord's income from all sources.

        B.  Taxes on Tenant's Property

(1) Tenant shall be liable for and shall pay ten days before delinquency, taxes
levied against any personal property or trade fixtures placed by Tenant in or
about the Premises. If any such taxes on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property or if the assessed
value of the Premises is increased by the inclusion therein of a value placed
upon such personal property or trade fixtures of Tenant and if Landlord, after
written notice to Tenant, pays the taxes based on such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof,
but only under proper protest if requested by Tenant, Tenant shall upon demand,
as the case may be, repay to Landlord the taxes so levied against Landlord, or
the proportion of such taxes resulting from such increase in the assessment;
provided that in any such event Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest, and any amount so recovered shall belong to Tenant.

(2) If the Tenant improvements in the Premises, whether installed, and/or paid
for by Landlord or Tenant and whether or not affixed to the real property so as
to become a part thereof, are assessed for Real Property Tax purposes at a
valuation higher than the valuation at which standard office improvements in
other space in the Complex are assessed, then the Real Property Taxes and
assessments levied against Landlord or the Complex by reason of such excess
assessed valuation shall be deemed to be taxes levied against personal property
of Tenant and shall be governed by the provisions of 12A(i), above. If the
records of the County Assessor are available and sufficiently detailed to serve
as a basis for determining whether said Tenant improvements are assessed at a
higher valuation than standard office improvements in other spaces in the
Complex, such records shall be binding on both the Landlord and the Tenant. If
the records of the County Assessor are not available or sufficiently detailed
to serve as a basis for making said determination, the actual cost of
construction shall be used.

13.     LIABILITY INSURANCE  Tenant, at Tenant's expense, agrees to keep in
force during the term of this Lease a policy of comprehensive public liability
insurance with limits in the amount of $1,000,000/1,000,000 for injuries to or
death of persons occurring in on or about the Premises or the Complex, and
property damage insurance with limits of $500,000. The policy or policies
affecting such insurance, certificates of which shall be furnished to Landlord,
shall name Landlord as additional insureds, and shall insure any liability of
Landlord, contingent or otherwise, as respects acts or omissions of Tenant, its
agents, employees or invitees or otherwise by any conduct or transactions of
any of said persons in or about or concerning the Premises, including any
failure of Tenant to observe or perform any of its obligations hereunder; shall
be issued by an insurance company admitted to transact business in the State of
California; and shall provide that the insurance effected thereby shall not be
canceled, except upon thirty (30) days' prior written notice to Landlord. If,
during the term of this Lease, in the reasonable opinion of Landlord's Lender,
insurance advisor or counsel, the amount of insurance described in this
paragraph 13 is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord's Lender, insurance advisor or counsel shall
deem adequate. Landlord shall carry a reasonable amount of liability insurance.

14.     TENANT'S PERSONAL PROPERTY INSURANCE AND WORKER'S COMPENSATION
INSURANCE  Tenant shall maintain a policy or policies of fire and property
damage insurance in "all risk" form with a sprinkler leakage endorsement
insuring the personal property, inventory, trade fixtures and leasehold
improvements within the leased Premises for the full replacement value thereof.
The proceeds from any of such policies shall be used for the repair or
replacement of such items so insured.

        Tenant shall also maintain a policy or policies of worker's
compensation insurance and any other employee benefit insurance sufficient to
comply with all laws.

15.     PROPERTY INSURANCE  Landlord shall purchase and keep in force and, as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant's proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of the cost of policy or
policies of insurance covering loss or damage to the Premises and Complex in
the amount of the full replacement value thereof, providing protection against
those perils included within the classification of "all risks" insurance and
flood and/or earthquake insurance, if available, plus a liability policy and a
policy of rental income insurance in the amount of one hundred (100%) percent
of twelve (12) months Basic Rent, plus sums paid as Additional Rent. If such
insurance cost is increased due to Tenant's use of the Premises or the Complex,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Complex.

        Landlord and Tenant do each hereby respectively release the other, to
the extent of insurance coverage of the releasing party, from any liability for
loss or damage caused by fire or any of the extended coverage casualties
included in the releasing party's insurance policies, irrespective of the cause
of such fire or casualty; provided, however, that if the insurance policy of
either releasing party prohibits such waiver, then this waiver shall not take
effect until consent to such waiver is obtained. If such waiver is so
prohibited, the insured party affected shall promptly notify the other party 
thereof.



                                  Page 4 of 9
   5
     16.  INDEMNIFICATION  Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against Landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises or the
Complex by or from any cause whatsoever, including, without limitation, gas,
fire, oil, electricity or leakage of any character from the roof, walls,
basement or other portion of the Premises or the Complex but excluding, however,
the negligence or willful misconduct of Landlord, its agents, servants,
employees, invitees, or contractors of which negligence Landlord has knowledge
and reasonable time to correct, the requirements of knowledge and reasonable
time to correct, shall not apply to direct negligent acts by Landlord or
Landlord's agents, servants, employees, Invitees or contractors. Except as to
injury to persons or damage to property the principal cause of which is the
negligence or willful misconduct of Landlord, its agents, servants, employees,
invitees or contractors Tenant shall hold Landlord harmless from and defend
Landlord against any and all expenses, including reasonable attorneys' fees, in
connection therewith, arising out of any injury to or death of any person or
damage to or destruction of property occurring in, on or about the Premises, or
any part thereof, from any cause whatsoever.

17.  COMPLIANCE  Tenant at its sole cost and expense, shall promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or the
admission of Tenant in any action against Tenant, whether Landlord be a party
thereto or not, that Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. This paragraph shall not
be interpreted as requiring Tenant to make structural changes or improvements,
except to the extent such changes or improvements are required as a result of
Tenant's use of the Premises. Tenant shall, at its sole cost and expense, comply
with any and all requirements pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance covering the Premises. 

(SEE PARAGRAPH 48)


18.  LIENS  Tenant shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligation incurred
by Tenant. In the event that Tenant shall not, within ten (10) days following
the imposition of such lien, cause the same to be released of record, Landlord
shall have, in addition to all other remedies provided herein and by law, the
right, but no obligation, to cause the same to be released by such means as it
shall deem proper including payment of the claim giving rise to such lien.  All
sums paid by Landlord for such purpose, and all expenses incurred by it in
connection therewith, shall be payable to Landlord by Tenant on demand with
interest at the prime rate of interest as quoted by the Bank of America.

19.  ASSIGNMENT AND SUBLETTING.  Tenant shall not assign, transfer or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. Tenant
agrees to pay to Landlord, as additional rent, fees of all rents (after Tenant
deducts all costs of subleasing) or additional consideration received by Tenant
from its assignees, transferees or subtenants in excess of the rent payable by
Tenant to Landlord hereunder. Tenant shall by thirty days' (30) written notice,
advise Landlord of its intent to assign or transfer Tenant's interest in the
Lease or sublet the Premises or any portion thereof for any part of the term
hereof. In the event Tenant is allowed to assign, transfer or sublet the whole
or any part of the Premises, with the prior written consent of Landlord, no
assignee, transferee or subtenant shall assign or transfer this Lease, either in
whole or in part, or sublet the whole or any part of the Premises, without also
having obtained the prior written consent of Landlord. A consent of Landlord to
one assignment, transfer, hypothecation, subletting, occupation or use by any
other person shall not release Tenant from any of Tenant's obligations hereunder
or be deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this Lease by
Tenant and shall, at the option of Landlord exercised by written notice to
Tenant, terminate this Lease. The leasehold estate under this Lease shall not,
nor shall any interest therein, be assignable for any purpose by operation of
law without the written consent of Landlord. As a condition to its consent,
Landlord may require Tenant to pay all reasonable expenses in connection with
the assignment, and Landlord may require Tenant's assignee or transferee (or
other assignees or transferees) to assume in writing, all of the obligations
under this Lease and for Tenant to remain liable to Landlord under the Lease.

                       (Paragraph 19 is continued below)

20.  SUBORDINATION AND MORTGAGES  In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest
of Landlord in the land and buildings in which the demised Premises are
located, to secure a loan from a lender (hereinafter referred to as "Lender")
to Landlord, Tenant shall, at the request of Landlord or Lender, execute in
writing an agreement subordinating its rights under this Lease to the lien of
such deed of trust, or, if so requested, agreeing that the lien of Lender's
deed of trust shall be or remain subject and subordinate to the rights of
Tenant under this Lease. Tenant hereby irrevocably appoints Landlord the
attorney in fact of Tenant to execute, deliver and record any such instrument
or instruments for and in the name and on behalf of Tenant. Notwithstanding any
such subordination, Tenant's possession under this Lease shall not be
disturbed if Tenant is not in default and so long as Tenant shall pay all rent
and observe and perform all of the provisions set forth in this Lease and any
such subordination agreement shall so reflect. Tenant agrees to send to any
mortgagees and/or deed of trust holders, by registered mail, a copy of any
notice of default served by Tenant upon the Landlord, provided that prior to
such notice, Tenant has been notified, in writing (by way of notice of
assignment of rents or otherwise) of the addresses of such mortgagees and/or
deed of trust holders. Tenant further agrees that if Landlord shall have failed
to cure such default within the time provided for in this Lease, any such
mortgagees and/or deed of trust holders shall have an additional thirty (30)
days within which to cure such default, or if such default is not reasonably
susceptible of cure within that time, then such additional time as may be
reasonably necessary if within such (30) days, any mortgagee and/or deed of
trust holder has commenced and is diligently pursuing the remedies necessary to
cure such default, (including but not limited to commencement of foreclosure
proceedings), in which event this Lease shall not be terminated when such
remedies are being diligently pursued.  (SEE PARAGRAPH 52 BELOW)

21.  ENTRY BY LANDLORD  Landlord reserves, and shall during normal business
hours, have, the right to enter the Premises to inspect them; to perform any
services to be provided by Landlord hereunder; to submit the Premises to
prospective purchasers, mortgagors or tenants; to post notices of
nonresponsibility; and to alter, improve or repair the Premises and any portion
of the Complex, all without abatement of rent; and may erect scaffolding and
other necessary structures in or through the Premises where reasonably required
by the character of the work to be performed; provided, however, that the
business of Tenant shall be interfered with to the least extent that is
reasonably practical. For each of the foregoing purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in an
emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord by any of said means, or otherwise, shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into or a detainer of the Premises or an eviction, actual or
constructive, of Tenant from the Premises or any portion thereof. Landlord
shall also have the right at any time to change the arrangement or location of
entrances or passageways, doors and doorways, and corridors, elevators, stairs,
toilets or other public parts of the Complex and to change the name, number or
designation by which the Complex is commonly known, and none of the foregoing
shall be deemed an actual or constructive eviction of Tenant, or shall entitle
Tenant to any reduction of rent hereunder, and no such changes shall
unreasonably interfere with Tenant's use of or access to the building leased
hereunder.

22.  BANKRUPTCY AND DEFAULT  The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord's option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant's unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty (30)
days after an order for relief in a liquidation action or within thirty (30)
days after the commencement of any action.

     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.

     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act.  Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.

         The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided.
Tenant shall have a period of five (5) days from the date of written notice from
Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of twenty (20) days from the date of written
notice from Landlord within which to commence to cure any other default under
this Lease and Tenant shall diligently prosecute the cure to completion. Upon an
uncured default of this Lease by Tenant, Landlord shall have the following
rights and remedies in addition to any other rights or remedies available to
Landlord at law or in equity: 




   6
        (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2. Any proof by Tenant under subparagraph
(2) and (3) of Section 1951.2 of the California Civil Code of the amount of
rental loss that could be reasonably avoided shall be made in the following
manner: Landlord and Tenant shall each select a licensed real estate broker in
the business of renting property of the same type and use as the Premises and
in the same geographic vicinity. Such two real estate brokers shall select a
third licensed real estate broker, and the three licensed real estate brokers
so selected shall determine the amount of the rental loss that could be
reasonably avoided from the balance of the term of this Lease after the time of
award. The decision of the majority of said licensed real estate brokers shall
be final and binding upon the parties hereto.

        (b) The rights and remedies provided by California Civil Code which
allows Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant's right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord's initiative to protect its
interest under this Lease shall not constitute a termination of Tenant's right
to possession.

        (c) The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law.

        (d) The right and power, as attorney-in-fact for Tenant, to enter the
Premises and remove therefrom all persons and property, to store such property
in a public warehouse or elsewhere at the cost of and for the account of Tenant
and to sell such property and apply such proceeds therefrom pursuant to
applicable California law. Landlord, as attorney-in-fact for Tenant, may from
time to time sublet the Premises or any part thereof for such term or terms
(which may extend beyond the term of this Lease) and at such rent and such
other terms as Landlord in its sole discretion may deem advisable, with the
right to make alterations and repairs to the Premises. Upon each subletting,
(i) Tenant shall be immediately liable to pay Landlord, in addition to
indebtedness other than rent due hereunder, the cost of such subletting,
including, but not limited to, reasonable attorneys' fees, and any real estate
commissions actually paid, and the cost of such alterations and repairs
incurred by Landlord and the amount, if any, by which the rent hereunder for
the period of such subletting (to the extent such period does not exceed the
term hereof) exceeds the amount to be paid as rent for the Premises for such
period or (ii) at the option of Landlord, rents received from such subletting
shall be applied first to payment of indebtedness other than rent due hereunder
from Tenant to Landlord; second, to the payment of any costs of such subletting
and of such alterations and repairs; third to payment of rent due to unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future rent as the same becomes due hereunder. If Tenant has been
credited with any rent to be received by such subletting under option (i) and
such rent shall not be promptly paid to Landlord by the subtenant(s), or if
such rentals received from such subletting under option (ii) during any month
be less than that to be paid during that month by Tenant hereunder, Tenant
shall pay any such deficiency to Landlord. Such deficiency shall be calculated
and paid monthly. For all purposes set forth in this subparagraph (d), Landlord
is hereby irrevocably appointed attorney-in-fact for Tenant, with power of
substitution. No taking possession of the Premises by Landlord, as
attorney-in-fact for Tenant, shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention be given to
Tenant. Notwithstanding any such subletting without termination, Landlord may at
any time hereafter elect to terminate this Lease for such previous breach.

        (c) The right to have a receiver appointed for Tenant upon application
by Landlord, to take possession of the Premises and to apply any rental
collected from the Premises and to exercise all other rights and remedies
granted to Landlord as attorney-in-fact for Tenant pursuant to subparagraph
(d) above.

23.  ABANDONMENT  Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by the process of law, or otherwise, any
personal property belonging to Tenant and left on the Premises shall be deemed
to be abandoned, at the option of Landlord, except such property as may be
mortgaged to Landlord.

24.  DESTRUCTION

                       (Paragraph 24 is continued below)

25  EMINENT DOMAIN  If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor,
and Landlord shall be entitled to any and all payment, income, rent, award or
any interest therein whatsoever which may be paid or made in connection with
such taking or conveyance, and Tenant shall have no claim against Landlord or
otherwise for the value of any unexpired term of this Lease. Notwithstanding
the foregoing paragraph, any compensation specifically awarded Tenant for loss
of business, Tenant's personal property, moving cost or loss of goodwill, shall
be and remain the property of Tenant.

        If (i) any action or proceeding is commenced for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any
entity or body having the right or power of condemnation of is intention to
condemn the Premises or any portion thereof, or (ii) any of the foregoing
events occur with respect to the taking of any space in the Complex not leased
hereby, or if any such spaces so taken or conveyed in lieu of such taking and
Landlord shall decide to discontinue the use and operation of the Complex, or
decide to demolish, alter or rebuild the Complex, then, in any of such events
Landlord shall have the right to terminate this Lease by giving Tenant written
notice thereof within sixty (60) days of the date of receipt of said written
advice, or commencement of said action or proceeding, or taking conveyance,
which termination shall take place as of the first to occur of the last day of
the calendar month next following the month in which such notice is given or
the date on which title to the Premises shall vest in the condemnor.

        In the event of such a partial taking or conveyance of the Premises, if
the Premises taken or conveyed is so substantial that the Tenant can no longer
reasonably conduct its business, Tenant shall have the privilege of terminating
this Lease within sixty (60) days from the date of such taking or conveyance,
upon written notice to Landlord of its intention so to do, and upon giving of
such notice this Lease shall terminate on the last day of the calendar month
next following the month in which such notice is given, upon payment by Tenant
of the rent from the date of such taking or conveyance to the date of 
termination.

        If a portion of the Premises be taken by condemnation or conveyance in
lieu thereof and neither Landlord nor Tenant shall terminate this Lease as
provided herein, this Lease shall continue in full force and effect as to the
part of the Premises not so taken or conveyed, and the rent herein shall be
apportioned as of the date of such taking or conveyance so that thereafter the
rent to be paid by Tenant shall be in the ratio that the area of the portion of
the Premises not so taken or conveyed bears to the total area of the Premises
prior to such taking.

26. SALE OF CONVEYANCE BY LANDLORD  In the event of a sale or conveyance of the
Complex or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any
liability thereafter arising upon any of the terms, covenants or conditions
(express or implied) herein contained in favor of Tenant, and in such event,
insofar as such transfer is concerned, Tenant agrees to look solely to the
responsibility of the successor in interest of such transferor in and to the
Complex and this Lease. This Lease shall not be affected by any such sale or
conveyance, and Tenant agrees to attorn to the successor in interest of such
transferor.

27. ATTORNMENT TO LENDER OR THIRD PARTY  In the event the interest of Landlord
in the Land and buildings in which the leased Premises are located (whether such
interest of Landlord is a fee title interest or a leasehold interest) is
encumbered by deed of trust, and such interest is acquired by the lender or any
third party through judicial foreclosure or by exercise of a power of sale at
private trustee's foreclosure sale, Tenant hereby agrees to attorn to the
purchaser at any such foreclosure sale and to recognize such purchaser as the
Landlord under this lease. In the event the lien of the deed of trust securing
the loan from a Lender to Landlord is prior and paramount to the lease, this
Lease shall nonetheless continue in full force and effect for the remainder of
the unexpired term hereof, at the same rental herein reserved and upon all the
other terms, conditions and covenants herein contained.


                                  Page 6 of 9

   7
28. HOLDING OVER Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred twenty-five (125%) percent of the monthly Basic
Rent required during the last month of the Lease term. 

(Paragraph 28 is continued below)

29. CERTIFICATE OF ESTOPPEL Tenant shall at any time upon not less than ten
(10) days' prior written notice from Landlord execute, acknowledge and deliver
to Landlord a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or
specifying such defaults, if any, are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises. Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant that this Lease is in full force and effect, without
modification except as may be represented by Landlord; that there are no
uncured defaults in Landlord's performance, and that not more than one month's
rent has been paid in advance. If requested by Tenant, Landlord shall issue
Tenant a certificate of Estoppel stating whether or not Tenant is in compliance
with the Lease and current on rental payments.

30. CONSTRUCTION CHANGES Landlord does not guarantee the accuracy of any
drawings supplied to Tenant and verification of the accuracy of such drawings
rests with Tenant.

31. RIGHT OF LANDLORD TO PERFORM All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's sole cost and expense and without any reduction of rent. If
Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to perform any other term or covenant hereunder
on its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord, Landlord, without waiving or
releasing Tenant from any obligation of Tenant hereunder, may, but shall not be
obligated to, make any such payment or perform any such other term or covenant
on Tenant's part to be performed. All sums so paid by Landlord and all
necessary costs of such performance by Landlord together with interest thereon
at the rate of the prime rate of interest per annum as quoted by the Bank of
America from the date of such payment of performance by Landlord, shall be paid
(and Tenant covenants to make such payment) to Landlord on demand by Landlord,
and Landlord shall have (in addition to any other right or remedy of Landlord)
the same rights and remedies in the event of nonpayment by Tenant as in the
case of failure by Tenant in the payment of rent hereunder.

32. ATTORNEYS' FEES

    (A) In the event that Landlord should bring suit for the possession of the
Premises, for the recovery of any sum due under this Lease, or because of the
breach of any provision of this Lease, or for any other relief against Tenant
hereunder, or in the event that Tenant should bring suit against Landlord for
the recovery of any sum due hereunder or because of the breach of any provision
of this Lease or for any other relief against Landlord hereunder, then all
costs and expenses, including reasonable attorneys' fees, incurred by the
prevailing party therein shall be paid by the other party, which obligation on
the part of the other party shall be deemed to have accrued on the date of the
commencement of such action and shall be enforceable whether or not the action
is prosecuted to judgement

    (B) Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder,
Tenant shall pay to Landlord its costs and expenses incurred in such suit,
including a reasonable attorney's fee, except to the extent Landlord's cost and
expense were caused by the negligence or willful misconduct of Landlord, its
agents or employees.

33. WAIVER The waiver by either party of the other party's failure to perform
or observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent failure of the party failing to
perform or observe the same or any other such term, covenant or condition
therein contained, and no custom or practice which may develop between the
parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.

34. NOTICES All notices, demands, requests, advices or designations which may
be or are required to be given by either party to the other hereunder shall be
in writing. All notices, demands, requests, advices or designations by Landlord
to Tenant shall be sufficiently given, made or delivered if personally served
on Tenant by leaving the same at the Premises or if sent by United States
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices, demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage
prepaid, addressed to Landlord at its offices at 3201 Ash Street, Palo Alto, CA
94306. Each notice, request, demand, advice or designation referred to in this
paragraph shall be deemed received on the date of the personal service or
mailing thereof in the manner herein provided, as the case may be.

35. EXAMINATION OF LEASE Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its
execution and delivery by both Landlord and Tenant. Landlord and Tenant
mutually intend that neither shall have any binding contractual obligations to
the other with respect to the matters referred to herein unless and until this
instrument has been fully executed by both parties.

36. DEFAULT BY LANDLORD Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event earlier than thirty (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord's obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.

                       (Paragraph 36 is continued below.)

37. CORPORATE AUTHORITY If Tenant is a corporation (or a partnership) each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said corporation (or partnership) in accordance with the
by-laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days of written request by Landlord after execution
of this Lease, deliver to Landlord a certified copy of the resolution of the
Board of Directors of said corporation authorizing or ratifying the execution
of this Lease.

38.

39. LIMITATION OF LIABILITY In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agree that, in the event of
any actual or alleged failure, breach or default hereunder by Landlord:

    (i)    the sole and exclusive remedy shall be against Landlord and 
           Landlord's assets;

    (ii)   no partner of Landlord shall be sued or named as a party in any suit
           or action (except as may be necessary to secure jurisdiction of the
           partnership)

    (iii)  no service of process shall be made against any partner of Landlord
           (except as may be necessary to secure jurisdiction of the 
           partnership)

    (iv)   no partner of Landlord shall be required to answer or otherwise
           plead to any service of process;

    (v)    no judgment shall be taken against any partner of Landlord;

    (vi)   any judgment taken against any partner of Landlord may be vacated
           and set aside at any time without hearing;

    (vii)  no writ of execution will ever be levied against the assets of any
           partner of Landlord;

    (viii) these covenants and agreements are enforceable both by Landlord and
           also by any partner of Landlord.


                                  Page 7 of 9


   8
        (ix) The term, "Landlord", as used in this section, shall mean only the
owner or owners from time to time of the fee title or the tenant's interest
under a ground lease of the land described in Exhibit "B", and in the event of
any transfer of such title or interest, Landlord herein named (and in case of
any subsequent transfers the then grantor) shall be relieved from and after the
date of such transfer of all liability as respects Landlord's obligations
thereafter to be performed, provided that any funds in the hands of Landlord or
the then grantor at the time of such transfer, in which Tenant has an interest,
shall be delivered to the grantee. Similarly, the obligations contained in this
Lease to be performed by Landlord shall be binding on Landlord's successors and
assigns only during their respective periods of ownership. Tenant agrees that
each of the foregoing covenants and agreements shall be applicable to any
covenant or agreement either expressly contained in this Lease or imposed by
statute or at common law.

40.     BROKERS  Tenant warrants that it had dealing with only the following
real estate brokers or agents in connection with the negotiation of this Lease:
None, and that it knows of no other real estate broker or agent who is entitled
to a commission in connection with this Lease.

41.     SIGNS  No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside of the
Premises or any exterior windows of the Premises without the written consent of
Landlord first had and obtained and Landlord shall have the right to remove any
such sign, placard, picture, advertisement, name or notice without notice to and
at the expense of Tenant. If Tenant is allowed to print or affix or in any way
place a sign in, on or about the Premises, then upon expiration or other sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.

        All approved signs or lettering on outside doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved of
by Landlord.

        Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.

                (Paragraph 41 is continued below)

42.     FINANCIAL STATEMENTS  In the event Tenant tenders to Landlord any
information on the financial stability, creditworthiness or ability of the
Tenant to pay the rent due and owing under the Lease, then Landlord shall be
entitled to rely upon the information provided in determining whether or not to
enter into this Lease Agreement with Tenant and Tenant hereby represents and
warrants to Landlord the following: (i) that all documents provided by Tenant to
Landlord are true and correct copies of the originals; and (ii) Tenant has not
withheld any information from Landlord which is material to Tenant's
creditworthiness, financial condition or ability to pay the rent; and (iii) all
information supplied by Tenant to Landlord is true, correct and accurate in
every material aspect and (iv) no part of the information supplied by Tenant to
Landlord contains misleading or fraudulent statements as to any material matter.

        A default under this paragraph shall be a non-curable default on behalf
of Tenant and Landlord shall be entitled to pursue any right or remedy available
to Landlord under the terms of this Lease or available to Landlord under the
laws of the State of California.

43.     HAZARDOUS MATERIALS

        A. As used herein, the term "Hazardous Material" shall mean any
substance or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property including all of those materials and substances designated or
defined as "hazardous" or "toxic" by (i) the Environmental Protection Agency,
the California Water Quality Control Board, the Department of Labor, the
California Department of Industrial Relations, the Department of Transportation,
the Department of Agriculture, the Consumer Product Safety Commission, the
Department of Health and Human Services, the Food and Drug Agency or any other
governmental agency now or hereafter authorized to regulate materials and
substances in the environment, or by (ii) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq., as
amended; the Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq., as
amended; the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as
amended; the Hazardous Waste Control Law, California Health & Safety Code 25100
et seq., as amended; Sections 66680 through 66685 of Title 22 of the California
Administration Code, Division 4, chapter 30, as amended; and in the regulations
adopted and publications promulgated pursuant to said laws.

        B. Tenant shall not cause or permit any Hazardous Material to be
improperly or illegally used, stored, discharged, released or disposed of in,
from, under or about the Premises or the Complex, or any other land or
improvements in the vicinity of the Premises or the Complex. Without limiting
the generality of the foregoing, Tenant, at its sole cost, shall comply with all
laws relating to Hazardous Materials. If the presence of Hazardous Materials on
the Premises or the Complex caused or permitted by Tenant results in
contamination of the Premises or the Complex or any soil in or about the
Premises or the Complex, Tenant, at its expense shall promptly take all actions
necessary to return the Premises or the Complex to the condition existing prior
to the appearance of such Hazardous Material. The termination of this Lease
shall not terminate or reduce the liability or obligations of Tenant under this
Section, or as may be required by law, to clean up, monitor or remove any
Hazardous Materials from the Premises or the Complex.

        Tenant shall defend, hold harmless and indemnify Landlord and its agents
and employees with respect to all claims, damages and liabilities arising out of
or in connection with any Hazardous Material used, stored, discharged, released
or disposed of in, from, under or about the Premises or the Complex, where said
Hazardous Material is or was attributable to the activities of Tenant, its
agents or contractors during the Lease term and whether or not Tenant had
knowledge of such Hazardous Material, including, without limitation, any cost of
monitoring or removal, any reduction in the fair market value or fair rental
value of the Premises or the Complex and any loss, claim or demand by any third
person or entity relating to bodily injury or damage to real or personal
property.

        Tenant shall not suffer any lien to be recorded against the Premises or
the Complex as a consequence of a Hazardous Material, including any so called
state, federal or local "super fund" lien related to the "clean up" of a
Hazardous Material in or about the Premises, where said Hazardous Material is or
was attributable to the activities of the Tenant.

        C. In the event Hazardous Materials are discovered in or about the
Premises or the Complex, and Landlord has substantial reason to believe that
Tenant was responsible for the presence of the Hazardous Material, then Landlord
shall have the right to appoint a consultant, at Tenant's expense, to conduct an
investigation to determine whether Hazardous Materials are located in or about
the Premises or the Complex and to determine the corrective measures, if any,
required to remove such Hazardous Materials. Tenant, at its expense, shall
comply with all recommendations of the consultant, as required by law. To the
extent it is determined that Tenant was not responsible for the presence of the
Hazardous Materials, then Landlord shall reimburse Tenant for any costs incurred
by Landlord and paid by Tenant under the terms of this paragraph 45.C.

        Tenant shall immediately notify Landlord of any inquiry, test,
investigation or enforcement proceeding by or against Tenant or the premises or
the Complex concerning a Hazardous Material. Tenant acknowledges that Landlord,
as the owner of the property, at its election, shall have the sole right, at
Tenant's expense, to negotiate, defend, approve and appeal any action taken or
order issued with regard to a Hazardous Material by an applicable governmental
authority. Provided Tenant is not in default under the terms of this Lease,
Tenant shall likewise have the right to participate in any negotiations,
approvals or appeals of any actions taken or orders issued with regard to the
Hazardous Material and Landlord shall not have the right to bind Tenant in said
actions or orders.

        Landlord shall defend, hold harmless and indemnify Tenant and its agents
and employees with respect to all claims, damages and liabilities arising out of
or in connection with any Hazardous Material used, stored, discharged, released
or disposed of in, from, under or about the Premises or the Complex, where said
Hazardous Material is or was not attributable to the activities of Tenant, its
agents or contractors during the Lease term and whether or not Tenant had
knowledge of such Hazardous Material, including, without limitation, any cost of
monitoring or removal, any reduction in the fair market value or fair rental
value of the Premises or the Complex and any loss, claim or demand by any third
person or entity relating to bodily injury or damage to real or personal
property.

        D. It shall not be unreasonable for Landlord to withhold its consent to
any proposed assignment or subletting if (i) the proposed assignee's or
subtenant's anticipated use of the Premises involves the storage, use or
disposal of Hazardous Material; (ii) if the proposed assignee or subtenant has
been required by any prior landlord, lender or governmental authority to "clean
up" Hazardous Material; (iii) if the proposed assignee or subtenant is subject
to investigation or enforcement order or proceeding by any governmental
authority in connection with the use, disposal or storage of a Hazardous
Material.

        E. Tenant shall surrender the Premises to Landlord, upon the expiration
or earlier termination of the Lease, free of Hazardous Materials which are or
were attributable to Tenant. If Tenant fails to so surrender the Premises,
Tenant shall indemnify and hold Landlord harmless form all damages resulting
from Tenant's failure to surrender the Premises as required by this paragraph,
including, without limitation, any claims or damages in connection with the
condition of the Premises including, without limitation, damages occasioned by
the inability to relet the Premises or a reduction in the fair market and/or
rental value of the Premises or the Complex by reason of the existence of any
Hazardous Materials, which are or were attributable to the activities of Tenant,
in or around the Premises or the Complex.

        Notwithstanding any provision to the contrary in this Lease, if any
action is required to be taken by a governmental authority to clean-up, monitor
or remove any Hazardous Materials, which are or were attributable to the
activities of Tenant, from the Premises or the Complex and such action is not
completed prior to the expiration or earlier termination of the Lease, then at
Landlord's election (i) this Lease shall be deemed renewed for a term commencing
on the expiration date of this Lease and ending on the date the clean-up,
monitoring or removal procedure is completed (provided, however, that the total
term of this Lease shall not be longer than 34 years and 11 months); or (ii)
Tenant shall be deemed to have impermissibly held over and Landlord shall be
entitled to all damages directly or indirectly incurred in connection with such
holding over, including without limitation damages occasioned by the inability
to relet the Premises or a reduction in the fair market and/or fair rental value
of the Premises or the Complex by reason of the existence of the Hazardous
Material.

        F. Upon the Lease Commencement Date, Tenant shall provide to Landlord a
complete list of all chemicals, toxic waste or Hazardous Materials employed by
Tenant within the Premises. Throughout the term of this Lease, Tenant shall
continue to update this list of chemicals, contaminants and Hazardous Materials.


Landlord hereby warrants Tenant that there is no asbestos in the buildings.

                                  Page 8 of 9
   9
44. MISCELLANEOUS AND GENERAL PROVISIONS

    a.  Tenant shall not, without the written consent of Landlord, use the name
    of the building for any purpose other than as the address of the business
    conducted by Tenant in the Premises.

    b.  This Lease shall in all respects be governed by and construed in
    accordance with the laws of the State of California. If any provision of
    this Lease shall be invalid, unenforceable or ineffective for any reason
    whatsoever, all other provisions hereof shall be and remain in full force
    and effect.

    c.  The term "Premises" includes the space leased hereby and any
    improvements now or hereafter installed therein or attached thereto. The
    term "Landlord" or any pronoun used in place thereof includes the plural
    as well as the singular and the successors and assigns of Landlord. The term
    "Tenant" or any pronoun used in place thereof includes the plural as well as
    the singular and individuals, firms, associations, partnerships and
    corporations, and their and each of their respective heirs, executors,
    administrators, successors and permitted assigns, according to the context
    hereof, and the provisions of this Lease shall inure to the benefit of and
    bind such heirs, executors, administrators, successors and permitted
    assigns.

        The term "person" includes the plural as well as the singular and
    individuals, firms, associations, partnerships and corporations. Words used
    in any gender include other genders. If there be more than one Tenant the
    obligations of Tenant hereunder are joint and several. The paragraph
    headings of this Lease are for convenience of reference only and shall have
    no effect upon the construction or interpretation of any provision hereof.

    d.  Time is of the essence of this Lease and of each and all of its
    provisions.

    e.  At the expiration or earlier termination of this Lease, Tenant shall
    execute, acknowledge and deliver to Landlord, within ten (10) days after
    written demand from Landlord to Tenant, any quitclaim deed or other document
    required by any reputable title company, licensed to operate in the State of
    California, to remove the cloud or encumbrance created by this Lease from
    the real property of which Tenant's Premises are a part.

    f.  This instrument along with any exhibits and attachments hereto
    constitutes the entire agreement between Landlord and Tenant relative to the
    Premises and this agreement and the exhibits and attachments may be altered,
    amended or revoked only by an instrument in writing signed by both Landlord
    and Tenant. Landlord and Tenant hereby agree that all prior or
    contemporaneous oral agreements between and among themselves and their
    agents or representatives relative to the leasing of the Premises are merged
    in or revoked by this agreement.

    g.  Neither Landlord nor Tenant shall record this Lease or a short form
    memorandum hereof without the consent of the other.

    h.  Tenant further agrees to execute any amendments required by a lender to
    enable Landlord to obtain financing, so long as Tenant's rights hereunder
    are not substantially affected.

    i.  Paragraph(s) 45 through 54 are/is added hereto and are/is included as a
    part of this Lease.

    j.  Clauses, plats and riders, if any, signed by Landlord and Tenant and
    endorsed on or affixed to this Lease are a part hereof.

    k.  Tenant covenants and agrees that no diminution or shutting off of light,
    air or view by any structure which may be hereafter erected (whether or not
    by Landlord) shall in any way affect this Lease, entitle Tenant to any
    reduction of rent hereunder or result in any liability of Landlord to
    Tenant.

Paragraph 44 is continued below.

IN WITNESS WHEREOF, Landlord and tenant have executed and delivered this Lease
as of the day and year first above written.


LANDLORD:                              TENANT:

CHARLESTON PROPERTIES, a               INTUIT, INC., a
California General Partnership         Delaware Corporation


By   /s/                               By /s/ Greg J. Santora
   -------------------------------     -----------------------------------


Title                                  Title Vice President of Finance and
      ----------------------------        --------------------------------
                                             Corporate Services and CFO
                                          --------------------------------
   10
2.B.(continued). TENANT'S COMPENSATION IN THE EVENT OF A DELAY

        (1)     In the event Landlord is unable to make the Premises available
                to Tenant 90 days prior to the Lease Commencement Date as set
                forth in Paragraph 2A above to permit Tenant to commence
                construction of desired changes within the Premises, Tenant
                shall receive any and all monies received by Landlord as
                penalties (hereinafter referred to as Sun Excess Rent) from Sun
                Microsystems (the prior Tenant) in excess of the Basic Rent
                amount that Sun Microsystems would have been obligated to pay
                Charleston Properties during any holdover period. For example,
                if Sun Microsystems paid Landlord 150% of Basic Rent during a
                holdover period, Landlord would receive 100% of the Basic Rent
                and Tenant would receive the 50% Sun Excess Rent.

Paragraph 2.C. EARLY OCCUPANCY FOR CONSTRUCTION PURPOSES

                The Lease Commencement Date for the Premises leased hereunder
                shall remain as stated in paragraph 2A provided Landlord has
                granted Tenant access to the Premises ninety days prior to the
                commencement of the Lease for the purpose of Tenant's
                construction of Tenant Improvements. At such time as Landlord
                has made the Premises available for the commencement of
                construction, Tenant or Tenant's contractor, shall be permitted
                to commence construction. During this 90 day period, Tenant
                shall hold Landlord, and WSJ Properties (Landlord's Property
                Management Company retained to manage the Complex) harmless from
                any loss or damage caused by Tenant's or Tenant's contractor's
                construction activities during this period. During this 90 day
                construction period, Tenant shall not be obligated to pay Basic
                or Additional Rent on the Premises so under construction unless
                Tenant elects to occupy the Premises during this 90 day period
                with Tenant's operating personnel. In the event Tenant does
                occupy the Premises with operating personnel, Tenant shall
                occupy the Premises under all the terms and conditions of the
                Lease and Tenant shall pay Landlord Basic and Additional Rent
                beginning with said Date of occupancy by Tenant's operating
                personnel up and until the specified Commencement Date of the
                term of the Lease in the following daily amounts:

                Daily Basic Rent      $2,068.00 
                Daily Additional Rent $  387.00 (estimated)

                The Commencement Date and Termination Date of Lease for the
                Premises shall not be affected by this early occupancy and shall
                remain as stated.



Paragraph 4A (1) (continued). BASIC RENT

                The table below represents a specific Basic Rent expressed in
                dollars per square foot per month for a specific time period.
                The Basic Rent due and payable is calculated by multiplying the
                gross square footage leased times the Basic Rent per square foot
                per month as indicated.

                The Basic Rent rates are as follows:

                           
4/15/1999 - 12/31/1999         $1.50 per square foot per month
 1/1/2000 - 12/31/2003         $1.60 per square foot per month
 1/1/2004 - 12/31/2007         $1.70 per square foot per month
 1/1/2008 - 12/31/2008         $1.75 per square foot per month
                               or the Fair Market Value,



                                       10


   11
                                                   whichever is greater
                1/1/2009 and thereafter            The rate per square foot per
                                                   month shall be increased by
                                                   $.05/per square foot per
                                                   month as of each January 1
                                                   during the term over the
                                                   prior year or shall be the
                                                   Fair Market Value, whichever
                                                   is greater.

                (See paragraph 46 for Fair Market Value definition and
                determination and paragraph 50 for Basic Rent Abatement for
                Tenant Improvements).

Paragraph 4A (2). PAYMENT UPON EXECUTION OF LEASE AND TIMELY PAYMENT OF MONTHLY
                  BASIC AND ADDITIONAL RENT

                Upon execution of this Lease, Tenant shall pay Landlord $62,049
                (41,366 x $1.50) representing the first month's Basic Rent
                payment. During the term of the Lease, Tenant's monthly
                Basic and Additional Rent shall be due and payable on or before
                the first day of each month of the Lease term.


Paragraph 4D (continued).  ADDITIONAL RENT

                For purposes of calculating Tenant's proportionate share of
                Additional Rent Expenses for the Complex it is hereby mutually
                agreed the Complex totals 79,893 rentable square feet
                (Buildings A, B).


                Landlord's monthly estimate for Additional Rent items described
                in paragraph 4D (excluding taxes) for calendar year 1999 is
                $7,200 per month (41,366 x $0.174). The following represents a
                line item breakdown of Landlord's estimate of monthly expenses
                (expressed in dollars per square foot per month):


                                                       
                Exterior maintenance and landscape                 $    0.050
                Building maintenance and HVAC                           0.079
                Insurance (including earthquake insurance)              0.025
                Management                                              0.02
                Utilities (Tenant pays directly)                        -0-
                Janitorial (Tenant pays directly)                       -0-
                                                                   ----------
                              Total                                $    0.174

                

                Landscape water for the Complex shall be paid directly by Tenant
                if Tenant occupies the entire Complex.

                Taxes shall be billed separately and prorated for periods of
                occupancy and shall be due December 1st and April 1st of each
                calendar year. Landlord's estimate for the 1995-1996 Tax year
                (July 1, 1995 - June 30, 1996) for the Complex is as follows:

                Parcel #116-03-027 (Buildings A,B)

                $102,033 or $52,829 per Building per year

                Tenant shall have the right, during normal business hours and at
                Tenant's own expense, to audit Landlord's records concerning
                Additional Rent items. In the event a discrepancy of greater
                than 3% of Tenant's correct share of costs is discovered,
                Landlord shall pay the cost of Tenant's out of pocket costs to
                third parties and shall credit or refund to Tenant the amount of
                the discrepancy. If the audit indicates Tenant owes Landlord an
                additional

                                       11


   12
                        amount, Tenant shall pay the additional amount promptly.

Paragraph 4F (continued). SECURITY DEPOSIT

        Notwithstanding anything in the Lease to the contrary, Landlord agrees
to accept, and Tenant shall have the right, at Tenant's sole discretion, to pay
for the Security Deposit by tendering to Landlord, on execution of this Lease,
an irrevocable standby Letter of Credit. The form of the irrevocable standby
Letter of Credit must be acceptable to Landlord, and in the event the term of
said Letter of Credit is for one year, then Tenant agrees to renew said Letter
of Credit 30 days prior to expiration of the Letter of Credit. Tenant's failure
to renew the Letter of Credit for an additional year, 30 days prior to its
expiration date, shall entitle Landlord to draw against the Letter of Credit the
amount of the Security Deposit.

Paragraph 7 (continued)

        Further, Landlord hereby represents and covenants that with respect to
direct maintenance of the Premises only WSJ's overhead shall be included in
these costs and no profit component is or will be built into the cost of the
services or materials provided by any of Landlord's subsidiaries or affiliates
who are under contract to provide services and materials to the Premises
(including without limitation WSJ Properties). Excluded as reimbursable costs
from Tenant to Landlord are the follows:

        1. any fines, costs, penalties or interest resulting from the negligence
or willful misconduct of the Landlord or its agents, contractors, or employees;

        2. any costs of any services sold or provided to tenants or other
occupants for which Landlord-or Managing Agent is entitled to be reimbursed by
such tenants or other occupants.

        3. acquisition costs for sculptures, paintings, or other objects of art;

        4. costs for which Landlord has been compensated by a management fee;
for example, accounting costs necessary to operate the Complex and report its
financial status to the Landlord.

        Paragraph 9 (continued). ALTERATIONS AND ADDITIONS 

        Landlord shall lease the promises to Tenant in an "as-is" condition, and
other than Landlord's repair obligation per paragraph 49 and Landlord's code
compliance obligation per paragraph 48, all cost of construction including
demolition, architectural, drawings, permitting fees, etc., shall be paid by
Tenant with landlord's contributions limited to those described in paragraph 50.

        Notwithstanding anything herein to the contrary, upon Landlord's
approval of Tenant's initial Tenant Improvements to be installed and paid for by
Tenant (except as provided for in paragraph 50), Tenant shall not be required to
restore the initial build-out to the configuration and condition in existence as
of the date Landlord first delivers possession of the Premises to Tenant. Should
Tenant elect to install a ceiling and lighting system that is other than a
standard 2 x 2 or 2 x 4 T-Bar grid and 2 x 2 or 2 x 4 drop-in parabolic lens
with fluorescent bulb fixtures Landlord may, in its sole discretion determined
at the time Landlord approves the plans, require restoration to the existing
ceiling system and similar light fixtures. If Tenant makes no changes to the
Premises at the outset and uses the Premises in an as-is condition, and later
makes substantial renovations or improvements, then, at Landlord's option, any
future restoration required shall be to the original condition and configuration
as first delivered to Tenant. At the time any subsequent alterations are
requested,


                                       12


   13
Landlord shall notify Tenant of any restoration requirements per this paragraph
9. Landlord shall not have the right to approve or disapprove or to require
restoration in the event any changes subsequent to the initial build-out of any
building meet the following criteria:

        1)      The total cost of construction is less than $15,000.

        2)      The changes do not in anyway affect exiting or fire corridors,
                restrooms, building entrances, lobbies, building systems or
                structure. Landlord's granting approval to Tenant to make
                changes herein described without the obligation to restore is in
                reliance upon Tenant's making commercially reasonably
                alterations and Tenant agrees not to use this subparagraph to
                circumvent Landlord's right to require Tenant to restore the
                premises under paragraph 9.

        Tenant shall have the right to employ a general contractor of its
choosing for any modifications desired to be made to the Premises leased
hereunder. However, Tenant hereby agrees in the event Tenant elects to make
subsequent modifications to the Premises to consider the WSJ Properties
Construction Division a preferred vendor and Tenant hereby acknowledges that it
is Landlord's strong preference to have WSJ Properties Construction Division
perform any modifications to the Premises. Although Tenant shall consider WSJ
Properties Construction Division a preferred vendor, Tenant shall be under no
obligation to select WSJ Properties and Tenant further acknowledges WSJ is a
completely separate entity from landlord and any disputes relating to
construction performed by WSJ for Tenant shall be resolved directly between WSJ
and Tenant.

Paragraph 11 (continued).  UTILITIES

        Tenant shall pay promptly, as the same become due, all charges for
water, gas, electricity, telephone, telex and other electronic communications
service, sewer service, waste pick-up and any other utilities, materials or
services furnished directly to or used by Tenant on or about the Premises during
the term of this Lease, including, without limitation, any temporary or
permanent utility surcharge or other exactions whether or not hereinafter
imposed. Landlord shall not be liable for and Tenant shall not be entitled to
any abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.

Paragraph 19 (continued). ASSIGNMENT AND SUBLETTING

        Notwithstanding the foregoing, without the prior consent of Landlord,
Tenant shall have the right (i) to assign this Lease to an affiliate or
subsidiary of Tenant or (ii) to merge with another corporation or entity or
(iii) to enter into an acquisition of another corporation or be acquired by
another corporation, in each case provided that Landlord is promptly provided
with notice thereof and Tenant remains fully liable for the full performance of
Tenant's obligation under the Lease; provided, however, that in the event Tenant
merges into another entity or is wholly acquired by another entity (in each
case, the "Successor Entity") , and provided Tenant ceases to exist and the
Successor Entity is at least as well capitalized as Tenant and has at least the
same overall financial wherewithal as Tenant had prior to such merger or
acquisition, it shall be the Successor Entity (not Tenant) who shall be fully
liable hereunder as the successor tenant.

Paragraph 24 (continued).  DESTRUCTION

        In the event the Premises are damaged or destroyed in whole or


                                       13


   14
in part from any cause, Landlord shall, within fifteen (15) days of the event of
such damage or destruction, notify Tenant in writing as to the approximate
length of time necessary for Landlord to reconstruct the Premises to
substantially its former condition. If such estimate exceeds one hundred eighty
(180) days from the date of damage or destruction, Tenant shall have the option,
within ten (10) days of receipt of Landlord's notice, to terminate this Lease.
If Tenant does not exercise its option to terminate, or if Tenant is not
entitled to terminate under this paragraph, Landlord shall promptly, at its sole
expense, rebuild or restore the Premises to substantially the condition existing
prior to the date of damage or destruction. Tenant shall be entitled to a
reduction in rent while such repair is being made in the proportion that the
area of the Premises rendered untenantable by such damage bears to the total
area of the Premises. If Landlord does not complete the rebuilding or
restoration within one hundred eighty (180) days following the date of
destruction (such period of time to be extended for delays caused by the fault
or neglect of Tenant or because of -Acts of God, acts of public agencies, labor
disputes, strikes, fires, freight embargoes, rainy or stormy weather, inability
to obtain materials, supplies or fuels), then Tenant shall have the right to
terminate this Lease by giving fifteen (15) days prior written notice to
Landlord. Notwithstanding anything herein to the contrary, Landlord's obligation
to rebuild or restore shall be limited to the building and interior improvements
constructed by Landlord as they existed as of the commencement date of the Lease
and the initial Tenant Improvements installed at the commencement of the term,
but shall not include restoration of Tenant's trade fixtures, equipment,
merchandise or any subsequent improvements, alterations or additions made by
Tenant to the Premises, which Tenant shall forthwith replace or fully repair at
Tenant's sole cost and expense provided this Lease is not canceled according to
the Provisions above. Unless this Lease is terminated pursuant to the foregoing
provisions, this Lease shall remain in full force and effect. Tenant hereby
expressly waives the provisions of Section 1932, Subdivision 2, and Section
1933, Subdivision 4 of the California Civil Code.

        Notwithstanding anything to the contrary set forth above, in the event
the damage or destruction of the Premises (i) occurs during the last two years
of the term (unless any applicable extension option has been exercised) and (ii)
has rendered at least 33% of the Premises unusable by Tenant, Landlord shall
have the option during the aforementioned fifteen (15) day period to elect not
to rebuild the Premises by so notifying Tenant or to elect to terminate this
Lease by so notifying Tenant.

Paragraph 28 (continued). HOLDING OVER

        Tenant shall have the right, upon one year prior written notice to
Landlord, to extend the lease termination date for this Lease up to six months
beyond the lease expiration date provided and only if Tenant has also agreed to
similarly and in a coterminus manner extend the lease termination date for all
the leases for Buildings leased by Tenant within the Complex. Tenant may not
exercise this right to extend the lease termination date on less than all the
Buildings leased within the Complex. The Basic Rent during this extended period
shall be 125% of the monthly Basic Rent then in affect for the month immediately
prior to the lease expiration.

Paragraph 36 (continued). DEFAULT BY LANDLORD

        Notwithstanding anything to the contrary set forth above in this
paragraph 36, Landlord and Tenant agree that under certain "emergency
circumstances", Tenant shall have the right to perform obligations otherwise
required of Landlord without the necessity of providing Landlord (and any
mortgagee) with such thirty (30) day notice and opportunity to cure. Under such
"emergency circumstances", Tenant shall use its good faith reasonable


                                       14

   15
judgment in determining a shorter notice period for response by Landlord or
determining that the matter at hand must be resolved immediately such that
notice can only be given after the fact. For the purposes hereof, "emergency
circumstances" shall mean (i) any hazardous situation that poses a threat of
damage, destruction or injury to any person or property of a material nature or
otherwise threatens the safety of employees and/or visitors to the Premises or
(ii) any other circumstance that involves a substantial interference with the
operations of Tenant's business enterprise in the Premises, including without
limitation the launching of new software products or revisions thereto
(especially to correct existing problems which must be addressed immediately) to
enable customers to perform needed financial and tax-related functions, which is
of special concern during the months preceding April 15th of each calendar year.

Paragraph 41 (continued). SIGNS

        Subject to the approval of the City of Mountain View and Landlord, whose
consent shall not be unreasonably delayed, Tenant, at Tenant's sole cost and
expense, shall have the right to install (i) a monument sign located at the main
driveway entrance to the Complex; (ii) suitable building signage adjacent to the
Premises and (iii) suitable directional signage in the common areas and within
the Premises leased hereunder. Landlord shall promptly remove all prior tenant
signage from the Premises and any common areas adjacent thereto and said removal
shall not be at Tenant's expense.

Paragraph 44 (continued). MISCELLANEOUS AND GENERAL PROVISIONS

        Landlord covenants with Tenant that upon Tenant paying the rent and all
other charges required under this Lease and performing all of Tenant's covenants
and agreements contained herein, Tenant shall peacefully have, hold and enjoy
the Premises, subject to all of the terms and conditions of this Lease.

45. OPTIONS TO EXTEND

        Provided Tenant is not in default under any of the terms, covenants or
conditions of this Lease and subject to the terms and conditions set forth
hereafter, Tenant is hereby granted the option to extend the term of Lease for
the Premises leased hereunder for two consecutive five year periods:

        a) Tenant's option to extend this Lease is contingent upon Tenant also
extending the term of lease for all the Buildings then leased within the
Complex. It is further agreed that in the event Tenant does not lease all the
buildings within the Complex, nevertheless, Tenant shall have the option to
extend the lease on the buildings so leased per the terms of this paragraph 45.

        b) Tenant shall notify Landlord in writing of Tenant's exercise of its
option to extend the Lease for each Building leased within the Complex no less
than 12 months prior to the earliest lease expiration date of any Building
leased within the Complex.

        c) The Lease for each building within The Complex shall be extended for
a period of five years commencing upon the day after the Lease termination date
for such Building within the Complex and shall terminate five years later.

        d) The monthly Basic Rent during the extended term shall be


                                       15


   16
as defined in paragraph 4A.

        e) The then current payment for Additional Rent described in paragraph 4
D of the Lease shall continue to be adjusted according to paragraph 4D of the
Lease.

        f) This option to extend can be exercised solely by Tenant for its sole
use of the Premises (including any permitted subtenants and affiliates which in
total do not exceed 25% of a Complex) and may not be transferred or assigned to
any sublessee or other party, nor may this option be exercised by Tenant if more
than 25% of a Complex is then subleased to a party other than Tenant or Tenant's
affiliates.

46. FAIR MARKET RATE

        The fair market rate shall be defined as the prevailing market rate with
interim adjustments (if any) then charged for comparable space of comparable
quality in the immediate Mountain View/Shoreline market area. For the period
January 1, 2008 and annually thereafter this Lease calls for a determination of
the fair market rate. Landlord shall promptly notify Tenant of such rate as
reasonably determined by Landlord one hundred and eighty days prior to the
beginning of each successive calendar year, beginning with calendar year 2008.
Landlord and Tenant shall attempt to agree in writing on such fair market rate.
If Landlord and Tenant do not agree on the fair market rate for the Premises by
that date which is one hundred fifty (150) days prior to the beginning of a
calendar year, then Landlord and Tenant shall each select a licensed real estate
broker (the "Brokers") with a minimum five (5) years commercial leasing
experience in the Mountain View area to determine the fair market rate for the
Premises. If the Brokers are unable to agree as to the fair market rate by that
date which is one hundred twenty (120) days prior to the end of the calendar
year in question, then the Brokers shall mutually select a third licensed real
estate broker (the "Arbitrator") who has the same minimum qualifications as the
Brokers and who has not previously represented either party. Each Broker shall
submit to the Arbitrator his or her determination of the fair market rate for
the Premises, and the support therefor, and the Arbitrator shall decide which
Broker has most accurately determined the fair market rate, which decision shall
be final and binding on both Landlord and Tenant. Landlord and Tenant shall each
pay their own Broker's fees and costs and shall each pay one-half (1/2) of the
Arbitrator's fees and costs.

47. Paragraph 47 is hereby intentionally omitted.

48. CODE COMPLIANCE

        With respect to all applicable local, state and federal regulations and
codes including without limitation the Americans with Disabilities Act and Title
XXIV of the California Energy Code, as of the commencement of lease term for the
Premises, Landlord at Landlord's sole cost and expense shall make all
modifications to the exterior of the Premises such as parking lots, stairways,
walkways, etc. to bring the exterior of the Premises leased hereunder into
compliance. Commencing as of the date Landlord offers possession of the Premises
to Tenant, Landlord shall at Landlord's sole cost and expense make any
governmentally required modifications to the restrooms to bring then into
compliance with all applicable codes. Landlord's compliance obligations with
respect to the restrooms set forth in this paragraph 48 shall also include
replacing fixtures and finishes as necessary. Landlord's sole obligation with
respect to compliance is therefore limited to any governmentally required
modifications to the Bathrooms within the Premises and any governmentally
required modifications to the exterior. All other costs and obligations with
respect to compliance shall rest solely with Tenant. All such interior
modifications shall be completed diligently prior to the Lease


                                       16


   17
Commencement Date referenced in Paragraph 2A above. All exterior modifications
to be made by Landlord shall be diligently constructed to completion.

49. ACCEPTANCE AND SURRENDER OF PREMISES AND COST OF MAJOR REPAIRS

        Notwithstanding anything in paragraphs 8 & 9 to the contrary, commencing
as of the date Landlord offers possession of the Premises to Tenant, an
independent inspection team shall be hired to make a thorough inspection of the
Premises. Tenant shall hire the inspectors subject to Landlord's reasonable
approval of the cost of the inspection and the inspector. Landlord shall pay for
the inspection. Said inspection shall be limited to and shall only include
roofs, elevators, HVAC systems, electrical systems (including lights and bulbs),
plumbing systems, locking mechanisms, exterior and roll-up doors, and glazing.
Tenant shall provide Landlord a copy of these reports. Landlord shall deliver
the buildings and all operating systems covered in the report to Tenant as of
the Lease Commencement Date referenced in Paragraph 2A above in a well
maintained condition and in good repair. Landlord shall be under no specific
obligation to upgrade any particular system and Tenant acknowledges that the
systems have been previously used. Landlord's repair of the referenced items
shall not affect the commencement date of the Lease so long as Tenant is able to
occupy and operate in the Premises without interference. Notwithstanding
anything in paragraph 7 to the contrary, Capital Expenses made by Landlord shall
not be included in the annual expenses of operation, management and maintenance
of the Building or Complex. For example, the replacement of an entire roof shall
not be deemed an expense of operation whereas the ongoing repair and maintenance
of a roof is deemed an operating expense. In addition to provisions of paragraph
4D and 7, if there is a single incident that requires a maintenance expense up
to $15,000, said expense shall be reimbursable by Tenant and shall be included
in the annual operating expenses. For single large maintenance expenses between
$15,000 and $20,000, such expense will be reimbursable by Tenant (without
interest) over three years with an equal amount charged per year. If a single
large maintenance expense is greater than $20,000, it shall be reimbursable by
Tenant over a 5 year period, in equal amounts reimbursable per year.

        Landlord shall lease the Premises to Tenant in an "as-is" condition, and
other than Landlord's repair obligation per paragraph 49 and Landlord's code
compliance obligation per paragraph 48, all cost of construction including
demolition, architectural, drawings, permitting fees, etc., shall be paid by
Tenant with Landlord's contributions limited to those described in paragraph 50.

50. LANDLORD'S CONTRIBUTION TOWARDS TENANT IMPROVEMENTS

        Landlord shall contribute $15.00 per rentable square foot towards Tenant
requested improvements to the Premises. Landlord's total tenant improvement
obligation is $15 x 41,366 s.f. = 620,490. Tenant shall be granted these tenant
improvement dollars in the form of $372,294 Basic Rent abatement and $248,196
cash allowance towards improvements. If the initial tenant improvement expense
is less than the amounts specified herein, Landlord and Tenant shall split
equally the savings after Landlord has deducted the cost of Landlord's
expenditures per paragraph 48 from the contributions towards Tenant's
Improvements. Landlord's cash contribution shall only be made available in the
event tenant improvements exceed the amount granted in the form of rent
abatement. For example, should Tenant improvements for the Premises total
$400,000 and Landlord's costs per paragraph 48 was $20,000 the savings
represented would be $620,490 -20,000 - 400,000 = $200,490. Landlord would
therefore grant Tenant a total of $500,245 calculated as follows: 200,490
[divided by] 2 = 100,245; 400,000 + 100,245 = $500,245 as Landlord's
contribution towards improvements. Landlord's rent abatement would equal
$372,294 and Landlord's cash


                                       17


   18
contribution would equal $127,951.50. Other than the cost of Landlord's
obligations under paragraphs 48 and 49, the allowance described in this
Paragraph 50 represents Landlord's only obligation toward improvements to the
Premises.


51. CONSTRUCTION SUPERVISION. Landlord, at Landlord's sole cost and expense,
shall retain WSJ Properties Construction Division to supervise the improvements
made by Tenant's Contractor (if other than WSJ Properties) for Tenant's initial
built-out. Landlord shall approve all plans in a timely manner prior to
commencement of construction and copies of all permits and final signed-off
copies of permits shall be submitted to Landlord. Landlord shall also be named
as an additional insured on all general and subcontractor insurance policies and
shall receive lien releases from all subcontractors. In general, Landlord
requires the following:

        1)      The construction area must be kept clean and neat with interior
                and exterior daily pick-up.

        2)      The construction may not unreasonably interfere with any other
                tenants in the Complex.

        3)      Landlord shall receive copies of as-built drawings for the
                improvements, including HVAC, electrical, plumbing, partitions,
                reflected ceilings, finish schedules, millwork, etc. There shall
                also be one reproducible set of drawings submitted to Landlord.

        4)      Landlord shall received a list of all finishes and suppliers.

        5)      ELECTRICAL

                a) All electrical shall be in EMT with no M.C. Cable.

                b) Any new panels and breakers to match existing and shall be
                accurately labelled.

                c) All fluorescent lighting shall be cool white or otherwise as
                reasonably agreeable to both parties.

        6)      HVAC

                a) Zone boxes and controls shall match existing if available.

                b) EMONDEMON meters shall be installed on all special air
                conditioning units.

                c) All thermostats shall be now and match existing if available.

                d) Landlord shall receive a structural report for all new units
                placed on the roof.

                e) All roof patching shall be hot mopped not cold patched.

                f) Upon completion of construction the HVAC Systems shall be air
                balanced and all filters changed.

        7)      PLUMBING

                Tenant shall not use plastic piping. All piping must be copper
                galvanized or cast iron.

        8)      KEYS

                Landlord shall be provided with the copies of any keys to
                locking mechanisms for emergency purposes. Tenant shall


                                       18


   19
                use a BEST-lock system.

        9)      Tenant shall-be responsible for meeting all applicable codes for
                earthquake, energy, and handicap requirements directly related
                to Tenant's interior improvements. Any contractor or
                subcontractor must be licensed to do business in the State of
                California. This Tenant responsibility shall be for all items
                not defined as Landlord's responsibility in paragraph 48.

        10)     The general contractor and subcontractors shall use first class
                construction practices and shall comply with reasonable
                suggestions of the WSJ Properties Construction Supervisor.


52. NON DISTURBANCE

        Landlord further represents that there are no outstanding loans on the
Premises leased hereunder. In the event Landlord borrows in the future and uses
the Premises leased hereunder as security, Landlord shall so notify Tenant.

53. MICROSOFT TO BE SUBSTITUTED AS TENANT

        Tenant warrants to Landlord that Tenant's Board of Directors has
approved this Lease transaction. Landlord and Tenant further acknowledge that
Tenant is in the process of being acquired by Microsoft, Inc, a Delaware
Corporation (hereinafter referred to as Microsoft) headquartered at One
Microsoft Way, Redmond, Washington 98052-6399. Landlord, as a material
consideration for entering into this Lease has relied on Tenant's representation
that in the event this acquisition is completed, Microsoft shall assume directly
all the obligations and liabilities of Tenant hereunder and shall be liable for
the full performance as Tenant under this Lease. Microsoft has agreed that the
assumption of this Lease by Microsoft is a condition of the acquisition of
Tenant. Tenant warrants to Landlord that Microsoft has been made aware of this
obligation and that Microsoft has agreed to assume all the obligations of this
Lease at the time the acquisition is completed.

54. CROSS DEFAULT

        It is understood that Landlord and Tenant may enter into several leases
for premises in the vicinity of the Premises leased hereunder. Exhibit "B" shows
4 additional buildings for which Tenant shall enter into leases with Landlord
(Buildings 2, 3, 4 and 5), and several additional buildings may be leased by
Tenant from Landlord at a later date. As a material part of the consideration
for the execution of this Lease by Landlord, it is agreed between Landlord and
Tenant that a default under this Lease (after any applicable notice and cure
period has expired), or a default under a lease by Tenant (after any applicable
notice and cure period has expired) for any building leased and shown on Exhibit
"B" may, at the option of Landlord, be considered a default under all leases by
and between Landlord and Tenant then in effect, in which event Landlord shall be
entitled (but in no event required) to apply all rights and remedies of Landlord
under the terms of one lease to all leases including, but not limited to, the
right to terminate one or all of said leases by reason of default under said
Lease or hereunder.



                                       19



   20
                                [MAP OF COMPLEX]


                            COMPLEX   PARCEL NUMBER
                            -------   --------------

                               1      APN 116 03 020
                               2      APN 116 03 029
                               3      APN 116 03 028
                               4      APN 116 03 027


   21
                                [MAP OF COMPLEX]


                            COMPLEX   PARCEL NUMBER
                            -------   --------------

                               1      APN 116 03 020
                               2      APN 116 03 029
                               3      APN 116 03 028
                               4      APN 116 03 027


   22
                     RULES AND REGULATIONS OF THE BUILDING

                                       1

        No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice
to and at the expense of Tenant.

        All approved signs or lettering on outside doors shall be printed,
painted, affixed or inscribed at the expense of Tenant.

        Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.


                                       2

        Tenant shall not occupy or permit any portion of the Premises to be
occupied for the manufacture or sale of liquor, narcotics or tobacco in any
form.


                                       3




                                       4

        The sidewalks, passages, exits, entrances, elevators and stairways
shall not be obstructed by Tenant or used by it for any purpose other than
ingress to and egress from its Premises. The passages, exits, entrances,
stairways, balconies and roof are not for the use of the general public and
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence in the judgment of Landlord shall be
prejudicial to the safety, character, reputation and interests of the Premises
and its tenants, provided that nothing herein contained shall be construed to
prevent such access to persons with whom Tenant normally deals in the ordinary
course of Tenant's business unless such persons are engaged in illegal
activities. Tenant, employees or invitees of Tenant shall not go upon the roof
of the Premises.


                                       5

        The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by Tenant who, or whose employees or invitees shall
have caused it.


                                       6

        Tenants shall not overload the floor of the Premises or in any way
deface the Premises or any part thereof.


                                       7

        Landlord shall have the right to prescribe the weight, size and position
of all safes and other heavy equipment brought into the Premises. Safes or other
heavy objects shall, if considered necessary by Landlord, stand on wood strips
of such thickness as is necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any such safe or property from
any cause and all damage done to the Premises by moving or maintaining any such
safe or other property shall be repaired at the expense of Tenant.


                                       8



                                       9

        Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to
be occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Premises by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds with the exception of Dog Guides for the blind, be
brought in or kept about the Premises.


                                       10

        No cooking (except microwave cooking and coffee/tea brewing) shall be
done or permitted by Tenant on the Premises, nor shall the Premises be used for
the storage of merchandise for washing clothes, for lodging, or for any
improper, objectionable or immoral purposes.


                                       11

        No boring or cutting for wires will be allowed without the consent of
Landlord. The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Landlord.


   23
                                       12

        Tenant upon the termination of the tenancy, shall deliver to Landlord
the keys of offices, rooms and toilet rooms which have been furnished the
Tenant or which Tenant shall have had made.


                                       13

        Tenant shall see that the doors of the Premises are closed and securely
locked before leaving the Premises and must observe strict care and caution that
all water faucets or water apparatus within the Premises are entirely shut off
before Tenant or Tenant's employees leave the Premises, and that all electricity
shall likewise be carefully cut off, so as to prevent waste or damage.



                                       14

        Landlord reserves the right to exclude or expel from the Premises any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any
of the rules and regulations of the Premises.


                                       15


                                       16


                                       17

        Tenant shall not disturb, solicit, or canvass any occupant of the
Premises and shall cooperate to prevent same.


                                       18

        Tenant agrees to assume responsibility for compliance by its employees
with the parking provision contained herein. Tenant hereby authorizes Landlord
at Tenant's sole expense to tow away from the Complex any vehicle belonging to
Tenant or Tenant's employees parked in violation of these provisions, or to
attach violation stickers or notices to such vehicle. Tenant shall use the
parking areas for vehicle parking only, and shall not use the parking areas for
storage.



Landlord's initials                                          Tenant's initials

   24

                                                                   EXHIBIT 10.29

                                     MAP OF

                       COMPLEX                    PARCEL NUMBER
                         1                        APN 116 03 020
                         2                        APN 116 03 029
                         3                        APN 116 03 028
                         4                        APN 116 03 027
                       

EX-10.25

   1

                                                                   EXHIBIT 10.25


                                                                        RE 18656


                         OFFER TO PURCHASE REAL ESTATE


TO:   GENERAL AMERICAN LIFE INSURANCE COMPANY, a Missouri Corporation, of St. 
      Louis, Missouri, Hereinafter referred to as SELLER.


      1.    The undersigned, INTUIT Inc., a Delaware corporation, hereinafter 
referred to as BUYER, hereby offers to purchase from SELLER, in its present 
condition "as is", the property known as Dominion Business Center containing 
approximately 9.4733 acres located at 110 Juliad Court, Stafford County, 
Virginia, and the parcels of land upon which such improvements are located, and 
any personal property associated therewith, said property being legally 
described as follows:

            SEE EXHIBIT "A"

      2.    The purchase price hereby offered for the above property is 
$1,600,000.00, payable by BUYER to SELLER as follows:

            2.1   $100,000.00 Earnest Money Deposit, to be deposited by BUYER in
                  certified funds or by electronic wire transfer of funds with
                  the Title Company (as defined in section 10 below) promptly
                  upon being furnished with a counterpart of this Offer to
                  Purchase Real Estate that has been fully executed by SELLER.
                  Said Earnest Money Deposit shall be held in accordance with a
                  separate escrow agreement as set forth in Exhibit B;

            2.2   $1,500,000.00 additional cash to be delivered by BUYER to
                  SELLER in certified funds at closing.

      3.    Promptly upon its acceptance of the Offer, BUYER shall obtain from 
a mutually acceptable title insurance company a preliminary title report for an 
owner's policy of title insurance, to be issued to BUYER upon closing, in the 
amount of $1,600,000.00, showing insurable title in SELLER to the premises 
above described, subject only to taxes and special assessments for the current 
and subsequent years, restrictions, conditions and covenants of record, rights 
of parties in possession, and easements and mineral reservations, if any, of 
record. BUYER shall obtain a currently dated survey of the subject property. 
BUYER, or their attorney, 


                                       1
   2
shall within 10 days after receiving both the preliminary title report and 
currently dated survey deliver to SELLER in writing any objections to the title 
and survey. Should any defect in title or survey objected to by BUYER not be 
removed within 30 days of such notice thereof, unless the BUYER elects to 
purchase the property notwithstanding such defect, this contract shall become 
absolutely null and void.

      4.    The deed to BUYER will be a Special Warranty Deed conveying the 
above-described premises, by way of the proper legal description thereof, 
subject to the above exceptions. SELLER shall furnish an appropriate Corporate 
Resolution authorizing the execution of such Special Warranty Deed by the 
corporate officers executing the same. SELLER agrees to execute such additional 
documents as may be necessary to effectuate this transaction including a bill 
of sale, and the assignment of any service contracts or warranties that SELLER 
is a party to.

      5.    At closing of this sale transaction, there shall be appropriately 
prorated and adjusted between SELLER and BUYER real estate taxes and special 
assessments for the present year, as well as rentals upon the subject premises.

      6.    Upon and only upon the completion of the closing of this sale 
transaction, SELLER shall pay to Cafferty Commercial Real Estate Services, a 
real estate sales brokerage commission in the amount of $ Per Separate 
Agreement. Otherwise, SELLER and BUYER each represent to one another that 
neither has knowledge of any involvement of any other such broker in connection 
with this sale and/or purchase.

      7.    BUYER is granted a Window Period (Due Diligence Period), commencing 
on the day of SELLER'S acceptance of this Offer to Purchase and terminating 
upon the close of business on the business day nearest to the 30th calendar day 
following the day of SELLER'S said acceptance, during which time SELLER shall 
reasonably cooperate in making available to BUYER access to the subject 
premises or to any records or information relative thereto in SELLER'S 
possession, without limitation access to Environmental Site Assessment and 
Soils Reports to enable such reasonable inspection, examination, investigation, 
testing, analysis or appraisal as BUYER may wish to conduct with respect to 
such premises, and during which time BUYER, in its sole and unrestricted 
discretion, may elect to terminate and rescind this contract, for any reason 
whatever, in which event BUYER shall be entitled to a full refund of its 
Earnest Money Deposit. Provided, however, it is stipulated and understood, in 
connection with the granting of such Window Period to BUYER, that (i) BUYER 
shall conduct its 


                                       2
   3

inspections, examination, investigation, testing, analysis or appraisal of the 
subject premises in a manner so as not to damage the said premises, or 
unnecessarily interfere with any business activity on the premises or with any 
business activity in SELLER'S offices; and (ii) SELLER having acquired the 
subject premises by way of foreclosure proceedings or conveyance in lieu of 
foreclosure, makes no warranties or representations of any nature as to title, 
structural soundness, condition, repair, maintenance, operation, economic 
viability, defects, drainage situation, subsidence, support, compliance with 
public laws or private restrictive covenants, toxic or radioactive materials 
or substances, tenancies, operating contracts, pending or threatened 
litigation, or otherwise; instead it is agreed that BUYER is buying the subject 
premises "as is" as to any agreed or all of such matters.

      8.    Expenses: SELLER shall be responsible for the cost of one half of
any escrow service fee charged by the designated title company for closing;
SELLER'S own attorney's fees; proratable expenses attendant to the satisfying of
any liens upon the subject premises or the perfection of title with respect
thereto; the grantor's tax; and any other incidental expenses customarily borne
by sellers of real estate in the County of Stafford, Virginia not otherwise
herein specifically provided for herein. BUYER shall be responsible for the cost
of the owner's title policy; the cost of the preliminary title report; the cost
of the survey; one-half of any escrow service fee charged by the designated
title company for closing; BUYER'S own attorney's fees; proratable items
chargeable to BUYER at closing; all recording fees; and any other incidental
expenses customarily borne by purchasers of real estate in the County of
Stafford, Virginia not otherwise herein specifically provided for herein.

      9.    Time is of the essence of this contract and of all the terms and 
conditions hereof.

      10.   Settlement shall be made and deed delivered at the offices of 
Stewart Title and Escrow, Inc., 10505 Judicial Drive, Fairfax, Virginia, 22030 
(the "Title Company") on or before the close of business of the business day 
nearest to the 30th day of November, 1997 or at such other time or place as may 
be hereafter mutually agreed upon. Possession shall be given to BUYER upon such 
closing.

      11.   The covenants and agreements herein contained shall extend to and 
obligatory upon the heirs, executors, administrators, successors and/or assigns 
of the parties hereto.


                                       3
   4

      12.   If this sales transaction should fail to close because of failure 
to perform on the part of the BUYER (other than if BUYER elects to effect a 
Window Period rescission and termination of this contract pursuant to Clause 7 
(Window Period), SELLER may at its option, declare this contract null and void 
and be entitled as its sole remedy to retain the Earnest Money Deposit 
hereunder made as liquidated damages. If this sale should fail to close because 
of SELLER'S non-performance (other than if SELLER is unable to deliver 
insurable title as called for hereunder), BUYER shall be entitled to specific 
performance, damages, and/or other appropriate remedies at law or in equity. If 
this sale should fail because BUYER elects to effect a Window Period rescission 
and termination of this contract pursuant to Clause 7 (Window Period) above, or 
because SELLER is unable to deliver insurable title as called for hereunder, 
SELLER shall refund to BUYER its Earnest Money Deposit, and this contract shall 
rescind and cease effect without further liability of any party hereto.

      13.   Nothing herein shall be construed as an offer by SELLER to convey 
the subject premises. This Offer to Purchase shall become a sales contract 
between the parties hereto according to all of the terms hereof upon SELLER'S 
acceptance of same within 10 days from the date hereof; otherwise, the same 
shall be deemed automatically withdrawn, null and void.

      14.   BUYER and SELLER agree that notices to BUYER will be sent to 
Catherine Valentine, Esq., General Counsel, INTUIT Inc., 1840 Embarcadero Road, 
Palo Alto, California 94303 and Bill Davidson, INTUIT Inc., 100 Juliad Court, 
Fredericksburg, Virginia 22406. Notices to SELLER will be sent to Steven P. 
Traynor, Esq., Counsel, General American Live Insurance Company, 700 Market 
Street, St. Louis, MO 63101 and Gary M. Burris, Field Vice President, Conning 
Asset Management Company, 44084 Riverside Partway, Suite 150, Leesburg, 
Virginia 20176-5012. Notices will be effective as follows: (i) three business 
days after sent by mail; (ii) next business day following overnight courier; 
and (iii) upon personal delivery.

      15. Casualty. SELLER assumes all risks and liability for damage to or
injury occurring to the property by fire, storm, accident, or other casualty or
cause until the closing has been consummated. If the property, or any part
thereof, suffers any damage in excess of $100,000.00 prior to the closing from
fire or other casualty which Seller, at its option, does not elect to repair,
Buyer may either at or prior to closing (a) terminate this contract, and receive
it earnest money deposit back from escrow or (b) consummate the closing, in
which latter event all of SELLER's right, title and interest in and to the
proceeds of any insurance



                                       4
   5
covering such damage, to the extent the amount of such insurance does not exceed
the purchase price, along with the amount of Seller's deductible under its
insurance policy, shall be assigned to Buyer at the closing. If the property, or
any part thereof, suffers any damage equal to or less than $100,000 prior to the
closing, Buyer agrees that it will consummate the closing and accept the
assignment of the proceeds of any insurance covering such damage plus an amount
equal to Seller's deductible under its insurance policy, and there shall be no
reduction in the purchase price.

     16.  Attorneys' Fees. In the event it becomes necessary for wither party 
hereto to file suit to enforce this Agreement or any provision contained 
herein, the party prevailing in such suit shall be entitled to recover, in 
addition to all other remedies or damages provided for herein, reasonable 
attorneys' fees incurred in such suit.

Herewith offered by BUYER as the 30th day of September, 1997.

                                   BUYER: INTUIT Inc., a Delaware corporation

                                   BY: /s/   [SIG]
                                       --------------------------------------

                                   BY: 
                                       --------------------------------------

Herewith accepted by SELLER as the ____ day of _________, 19___.


                                   SELLER:

                                   GENERAL AMERICAN LIFE INSURANCE COMPANY

                                   BY:
                                       --------------------------------------
                                                               Vice President








                                       5


   6

                                  EXHIBIT "A"

                               Legal Description

County of Stafford Tax Map #44 - 103 G containing approximately 2.1526 Acres, 
also known as Parcel A Dominion Business Center Phase I (Stafford Industrial 
Park)

                                      and

County of Stafford Tax Map #44 - 103 H containing approximately 7.3207 Acres, 
also known as Parcel C Dominion Business Center Phase I (Stafford Industrial 
Park)

Total Acreage: 9.4733 Acres








                                       6
   7

                                  EXHIBIT "B"

                                Escrow Agreement



                             S E E  A T T A C H E D











                                       7
   8

                                ESCROW AGREEMENT

     THIS AGREEMENT is made this ____ day of __________, 1997, among ___________
(the "Seller"), ________________________________________________________________
(the "Buyer"), and STEWART TITLE AND ESCROW, INC., (the "Escrow Agent").

                              W I T N E S S E T H:

     WHEREAS, the Seller and the Buyer entered into a certain Sale Agreement 
dated __________ (the "Sale Agreement") for the sale of certain real estate 
located in ____________ County, Virginia, known as: ________________________
_______________________________________________ (the "Property"), and

     WHEREAS, the Sale Agreement calls for Buyer to place an earnest money 
deposit (as defined in the Sale Agreement) with a third party Escrow Agent to 
be held pursuant to the terms of such Sale Agreement until such time and for 
such periods of time as set forth in said Sale Agreement; and

     WHEREAS, Stewart Title and Escrow, Inc. has agreed to serve as Escrow 
Agent pursuant to said Sale Agreement and in accordance with the terms of this 
Escrow Agreement;

     NOW, THEREFORE, the parties agree as follows:

1.   DEPOSIT OF FUNDS. The Escrow Agent acknowledges receipt of the sum of 
$________ representing the deposit from the Buyer pursuant to the terms of the 
Sale Agreement. The Escrow Agent agrees to cause such funds to be invested in 
an interest bearing account with interest on such funds payable to the Buyer, 
unless specified otherwise in the Sale Agreement. Any interest-bearing account 
or certificate of deposit representing the investment of said funds will be 
held by and in the name of the Escrow Agent pursuant to the terms of this 
Agreement.

2.   Interest earned on the deposit as stated above will be reported to the 
Internal Revenue Service using the following taxpayer identification number: 
__________ which is the taxpayer identification number for the following 
entity: _______________. A 1099 form will be forwarded to that entity at the 
address stated herein annually as is customary for such escrow accounts.

3.   A fully executed copy of the Sale Agreement is attached hereto as Exhibit 
"A" and made a part hereof. The deposit will be held pursuant to the terms of 
said Sale Agreement, and the actions and duties of Escrow Agent are as set 
forth therein.

4.   Should any dispute arise under this Escrow Agreement, then the Escrow 
Agent may interplead the funds held into court. Any costs and reasonable 
attorney's fees for interpleading such funds into court by the Escrow Agent 
will be borne by the Seller



                                      -1-
   9

and/or Buyer as the court directs and orders.

5.   LIMITATIONS OF LIABILITY.  The foregoing instructions are subject to the 
following provisions which are expressly approved by the Buyer and the Seller:

     5.1  DEPOSITORY DUTY.  The Escrow Agent will be liable as a depository only
and will not be responsible for the sufficiency or accuracy of the form, 
execution or validity of any document delivered to the Escrow Agent hereunder 
or any authority or rights of the persons executing or delivering or purporting
to execute or deliver any such document. The Escrow Agent's duties hereunder 
are limited to the safekeeping of the escrow money deposit and the delivery of 
the same in accordance with this Agreement.

     5.2  STANDARD OF CARE.  The Escrow Agent will not be liable for any act or 
omission done in good faith, or for any claim, demand, loss or damage made or 
suffered by any party to this Agreement, excepting such as may arise through or 
be caused by the Escrow Agent's willful misconduct or gross negligence.

     5.3  RELIANCE.  The Escrow Agent will not be liable for collection items 
until the proceeds of the same in actual cash have been received by the Escrow 
Agent. The Escrow Agent is authorized to rely or any document believed by the 
Escrow Agent to be authentic in making any delivery of funds hereunder. The 
Escrow Agent will in no way be responsible or have any duty to notify any 
person interested in the escrow money deposit of any maturity under the terms 
of this Agreement or any document deposited herewith or described herein.

     5.4  TERMINATION.  The Escrow Agent will have the right to terminate its 
duty as Escrow Agent under this Agreement by written notice of termination to 
all parties to this Escrow Agreement and delivery of the escrowed funds to a 
Substitute Escrow Agent as chosen by both Seller and Buyer hereunder. Such 
delivery will relieve the Escrow Agent from any further performance and 
liability with respect to this Agreement. Any modification of the terms of this 
Agreement may be made at any time by the Buyer and the Seller, provided that 
the same is reduced in writing, delivered to and accepted by the Escrow Agent.

     5.5  SOLE AGREEMENT.  This Agreement is the only agreement binding on the 
Escrow Agent relating to the escrowed funds and the Escrow Agent may rely 
absolutely hereon to the exclusion of any and all other agreements between the 
Buyer and the Seller.

                                      -2-
   10
6.   MISCELLANEOUS. It is further agreed as follows:

     6.1 NOTICES. All notices given hereunder will be in writing and served by
regular first-class mail, postage prepaid, to the parties at the following 
addresses:

The Seller: ___________________________________________________________________

_______________________________________________________________________________

The Buyer: ____________________________________________________________________

_______________________________________________________________________________

The Escrow Agent: Stewart Title and Escrow, Inc., 10505 Judicial Drive, #300, 
Fairfax, Virginia 22030, Attn: Lisa Overton.

     6.2 ASSIGNMENT. None of the rights of the Seller or the Buyer hereunder 
may be assigned voluntarily or by operation of law. Any such assignment by any 
party without the prior written approval of the other parties to this Agreement 
will be null and void ab initio.

     6.3 BINDING EFFECT. This Agreement will be binding on and inure to the 
benefit of the parties and their respective heirs, personal representatives, 
successors and permitted assigns.

     IN WITNESS WHEREOF, this Agreement has been executed and delivered the 
date first above written.




                                        Seller:

                                        _____________________________________


                                        Buyer:

                                        _____________________________________





                                      -3-
   11

     Receipt of these instructions and the deposit described therein is 
acknowledged and accepted this _____ day of _____________, 1997.





                                        STEWART TITLE AND ESCROW, INC.
                                          (the "Escrow Agent")



                                        By: ___________________________________
                                            Its:








                                      -4-
   12
                                 FIRST ADDENDUM

(To Offer to Purchase Real Estate between General American Life Insurance
Company as Seller, and Intuit Inc., as Buyer, relating to the property known as
Dominion Business Center located at 110 Juliad Court, Stafford County, Virginia)

Notwithstanding any provision contained in the Offer to Purchase Real Estate
(the "Contract") to which this First Addendum is attached, the Contract is
amended as follows:

     1.   Settlement shall be made and deed delivered on or before the close of
business on the business day nearest to the 15th day of December, 1997.

     2.   Buyer shall pay to Seller all rent due for the month of December 1997,
in accordance with the terms of a lease between Seller and Buyer dated June 23,
1997 (the "December Rent"). Buyer and Seller hereby agree that Buyer shall
receive a credit against the purchase price at closing for the amount of the
December Rent paid by Buyer to Seller.

     3.   In the event of any conflict or inconsistency between any provisions
in this First Addendum and in the Offer to Purchase Real Estate, the terms and
provisions in this First Addendum shall prevail and be controlling.

                         SELLER:
                         GENERAL AMERICAN LIFE INSURANCE
                         COMPANY
 

Date: 11/26/97           By: [SIG]
     ---------------       ----------------------------------------
                           Vice President/Authorized Representative

                         BUYER:
                         INTUIT INC.


Date: 12/5/97            By: /s/ GREG J. SANTORA
     ---------------        ------------------------------------------

                         Title: Greg J. Santora, Vice President of
                               ---------------------------------------
                               Finance and Corporate Services and CFO 




LCG: 1865add.doc/sales

EX-10.26

   1
                                                                  EXHIBIT 10.26


                              BUILD TO SUIT LEASE
                               DATED APRIL 8,1998
                                    between
                         TACC INVESTORS, LLC, LANDLORD
                                      and
                              INTUIT INC., TENANT.





   2
                              BUILD TO SUIT LEASE


         1. PARTIES. This lease, dated, for reference purposes only, April 8,
1998, is made by and between TACC Investors, LLC, an Arizona limited liability
company (herein called "Landlord"), and Intuit Inc., a Delaware corporation
(herein called "Tenant").

         2. PREMISES; ACCESS. Landlord hereby leases to Tenant and Tenant leases
from Landlord for the term, at the rent, and upon all of the conditions set
forth herein, the real property (consisting of approximately fifteen (15) acres
of land) shown on EXHIBIT A, together with a facility consisting of two (2)
buildings connected by a common entryway and lobby to be constructed on such
real property pursuant to this Lease, containing approximately 135,000 square
feet (the buildings and related improvements are sometimes called the
"Improvements"), all of the foregoing being called the "Premises." The
Improvements will be constructed in two (2) phases: Phase I will consist of a
65,000 square foot shell Base Building, related Tenant Improvements, a 5,000
square foot common entryway and lobby, no fewer than 650 paved parking spaces
and related site work. Phase II will consist of a 65,000 square foot shell Base
Building, related Tenant Improvements, an additional 450 paved parking spaces
and related site work.

                  Upon completion of Phase I, the Premises will have access to
and from Tucson Boulevard. It is anticipated that at some future date Tucson
Airport Commerce Center may construct road improvements connecting the Premises
to Country Club Road as part of future phases of development of Tucson Airport
Commerce Center. Landlord is making no assurances to Tenant regarding such
additional access to Country Club Road.

         3. TERM; IMPROVEMENTS; COMMENCEMENT DATE.

                  3.1. TERM. The term (the "Term") of this Lease shall be for
approximately ten (10) years commencing on the Commencement Date (as defined in
paragraph 3.3) and ending on the earlier of (a) ten (10) years following the
date Phase II is Ready for Occupancy (as defined in paragraph 3.3), or (b) July
31, 2009, unless this Lease is sooner terminated or extended, or the Premises
are expanded, pursuant to any provision hereof.

                  3.2. IMPROVEMENTS.

                          (a) The Improvements are preliminarily described in 
EXHIBIT B (the "Outline Specifications"). Tenant has previously approved the
Outline Specifications. The Outline Specifications describe certain elements of
the Tenant Improvements and certain elements of the site and the shell Base
Building for Phase I. The Improvements described in the Outline Specifications
are to be designed and constructed with provision for special improvements and
other features keyed to Tenant's particular business. The parties recognize
there will continue to occur a rapid process of



                                      -1-
   3

refinement of the Improvements and the Outline Specifications to meet Tenant's
particular needs, City of Tucson and regulatory requirements and any
contingencies that arise in achieving final plans and specifications. Landlord
and Tenant agree to act reasonably, diligently and in good faith to produce
final plans and specifications for the Improvements (which term shall include
all agreed changes). Tenant acknowledges that Tenant's timely and diligent
cooperation with Landlord is essential to timely completion. Tenant agrees to
provide Landlord and Landlord's agents with timely and thorough programs of
Tenant's requirements, reviews, comments and approvals.

                          (b) In particular, set forth in EXHIBIT C is the
critical path schedule which shall be adhered to by Landlord and Tenant in order
to develop expeditiously final plans and specifications (the "Plans") for the
Improvements and to achieve the delivery dates set forth in paragraph 3.4.
Landlord and Tenant shall use all reasonable efforts to perform their respective
obligations within the time periods set forth in EXHIBIT C. The critical path
schedule will allow insubstantial and harmless deviations from the strict
schedule but not substantial departures therefrom unless Landlord and Tenant
agree so in a writing that commensurately extends the delivery dates under
paragraph 3.4. Landlord and Tenant acknowledge that some of the approvals
required in the critical path schedule have already been given. Eric Johnson
will be Tenant's contact person for purpose of submittals and approvals.

                          (c) Any change in the Outline Specifications, the
Improvements or the other plans and specifications envisioned under this
paragraph 3.2 requested by Tenant shall (i) be reasonable, (ii) not involve
major structural changes (unless Landlord agrees), (iii) require no additional
land (unless Landlord agrees), (iv) result in no violation of any existing or
future CC&R's or applicable laws and regulations, (v) have Landlord's written
approval, which Landlord may not unreasonably withhold or delay, and (vi)
require Tenant to pay any additional cost required to implement such change. The
cost of any Tenant-requested change to the Tenant Improvements will be handled
pursuant to subparagraph (f) below. The cost of any Tenant-requested change to
the site or to the shell Base Buildings will be handled pursuant to
subparagraph (h) below. Any CC&R's not in force as of the date of execution of
this Lease shall be reasonably derivative from any draft of CC&R's delivered to
Tenant before such execution date, and in no event will any future CC&R's impair
the right of Tenant to use the Premises for the uses permitted under paragraph
8.1. No change in the Base Buildings will occur after the design process for the
Tenant Improvements has commenced, without Landlord's written approval.

                          (d) "Tenant Improvements" will consist of all fixed
Tenant improvement work shown on the Plans including but not limited to all
interior walls, heating/ventilating/air conditioning systems, architecture and
engineering fees, building permit fees and general contractor fees associated
with the Tenant Improvements. Tenant will furnish an emergency generator from
Tenant's existing facility and Tenant shall provide all fixtures, furnishings
and equipment not expressly shown as Landlord-provided on the Plans, including,
without limitation, the air conditioning for the telephone/computer room.



                                      -2-


   4

                          (e) Upon completion of the process described above,
Landlord shall submit the Plans to the City of Tucson for approval. If the City
of Tucson review process necessitates material changes in the Plans, Landlord
will notify Tenant promptly and Tenant shall deliver to Landlord Tenant's
written comments on such changes within five (5) days after Landlord has
notified Tenant. Landlord and Tenant shall have the right to approve any such
material changes in the Plans.

                          (f) Landlord shall provide Tenant with an allowance
(the "Allowance") for Tenant Improvements not to exceed $28.00 per square foot
in the Improvements as reasonably calculated by Landlord. At the very earliest
practicable date Landlord will provide Tenant with written notice of the
estimated if not final square footage of the Improvements so that Tenant has a
reasonable cost guideline to work with. If the actual cost of the Tenant
Improvements exceeds the Allowance, the excess will be amortized over the
ten-year Term of this Lease at 9% interest and shall be added to monthly Rent.
If the actual cost of the Tenant Improvements is less than the Allowance, Tenant
will receive a credit against monthly Rent equal to 60% of the actual cost
reduction.

         Example:

         If the Tenant Improvements are constructed at $30/sq. ft. over the
         70,000 sq. ft. (approx.) comprising Phase II, the rental rate will
         increase from $0.7475 to $0.7728, or an increase of $1,773.46 per month
         ($2 x 70,000 = 140,000, amortized over 10 years at 9%).

         Example:

         If the Tenant Improvements are constructed at $26/sq. ft. over the
         70,000 sq. ft (approx.) comprising Phase I, the rent credit would be
         $84,000 ($2 x 70,000 = 140,000 x 60% = 84,000), credited against the
         rent due for the first two (2) months.

                          (g) After Landlord and Tenant have completed the
foregoing process and reached agreement in writing, Landlord shall meet all
conditions of zoning and obtain the necessary permits and commence and
diligently proceed to complete at its sole cost and expense, through reputable
contractors of Landlord's choice, the construction of the Improvements in a good
and workmanlike manner substantially as described in the Plans, and provide all
necessary transportation, labor, materials, tools, implements and appliances
required to construct the Improvements. Notwithstanding the provisions of the
Outline Specifications or the Plans, Landlord may make reasonable substitutions
and other "value engineering" changes so long as the substitutions or changes
result in Improvements capable of at least equal performance. Landlord shall
promptly inform Tenant of any substitutions and changes. Tenant may protest any
proposed substitution that is likely to lower the quality of the Improvements.
Landlord and Tenant will collaborate promptly with each other to eliminate any
dispute over substitutions. Landlord will be required to provide no improvements
other than the



                                      -3-
   5

Improvements described in the Plans, subject only to those changes mutually
approved by Landlord and Tenant in writing.

                          (h) Landlord and Tenant recognize that the process of
designing and constructing the Improvements may result in additional cost to
Landlord and require an adjustment of the Rent payable by Tenant inasmuch as the
process will be devoted to Tenant's particular needs. The cost of any material
change or addition to the site or the shell Base Building components of the
Improvements described in the Outline Specifications, or any material change in
the scope or quality thereof, including the additional costs to Landlord
resulting from change orders to the general contract(s), together with the
associated costs of the contractors' general conditions, shall result in an
increase in the Rent. If such adjustment becomes necessary, Landlord will
recalculate the Rent and promptly provide Tenant with new Rent figures for the
Premises with such detail and other back-up information as may reasonably be
requested by Tenant to fairly demonstrate the basis for such an adjustment, to
which Tenant's approval shall not be unreasonably withheld. Landlord and Tenant
will collaborate promptly with each other to eliminate any dispute over
recalculation of the Rent. The adjustment sum will be amortized over the
ten-year Term of this Lease at nine percent (9%) interest and shall be added to
monthly Rent.

                          (i) Landlord is making no express or implied
warranties to Tenant regarding the condition of the Premises or the Improvements
excepting only those express warranties set forth in this Lease. Tenant
acknowledges that Landlord will be utilizing the professional services of an
architect and a general contractor and although Landlord is making no
representations or warranties other than the express warranties set forth in
this Lease, Landlord will provide Tenant with the benefits of any standard
warranty that Landlord receives on building components, as well as the ten (10)
year manufacturers' warranty/bond on the roof membrane (the cost of which Tenant
shall pay to Landlord before taking possession of the Premises). Tenant
acknowledges that some or all of these warranties require ongoing maintenance of
building components for the warranties to remain valid, and Tenant agrees to
discharge all maintenance required by the terms of any warranties and to enter
into the appropriate service agreements at Tenant's sole expense.
Notwithstanding the foregoing, Tenant shall also have the benefit of any express
or written warranty provided by any architect, contractor, subcontractor or
supplier (a "Provider") providing services, labor, materials, supplies and
equipment for the Improvements, as well as any other warranty available to
Tenant under applicable law, excepting only any implied warranty of habitability
or fitness for any particular purpose, which implied warranty, if any, Tenant
hereby disclaims as to Landlord but reserves as to all Providers.

                  Notwithstanding anything to the contrary in the preceding
paragraph, Landlord expressly warrants to Tenant that the Improvements will be
constructed in compliance with applicable laws and building codes, subject to
the time requirements for assertion of claims set forth in other paragraphs of
this Lease.



                                      -4-
   6

                  3.3. COMMENCEMENT DATE. The Term of this Lease shall commence
on the earlier of (the "Commencement Date") (i) the date on which Tenant takes
possession of the first sub-phase of Phase I of the Premises to conduct its
business (for a purpose other than fixturization or fit-up), or (ii) the day on
which a temporary certificate of occupancy (or equivalent approval of
completion) has been issued for the first sub-phase of Phase I of the Premises
by the appropriate governmental agency, whereupon such sub-phase shall be deemed
"Ready for Occupancy." The Commencement Date shall not, under any circumstances,
occur before September 1, 1998. Each of the sub-phases of Phase I and the
entirety of Phase II shall be deemed Ready for Occupancy the day on which a
temporary certificate of occupancy (or equivalent approval of completion) has
been issued for such sub-phase or Phase II by the appropriate governmental
agency. For a phase or sub-phase to be considered "Ready for Occupancy" any
required parking spaces shall then be available for Tenant's use. Each
certificate of occupancy may contain stipulations and conditions so long as it
permits Tenant to take occupancy of a given sub-phase or phase of the Premises
and use such sub-phase or phase of the Premises for all of the purposes
contemplated by this Lease. Landlord and Tenant shall execute, as soon as
determinable, a written statement specifying (a) the Commencement Date and/or
(b) the termination date of this Lease, which, when executed, will become part
of this Lease.

                  3.4. DELIVERY. Delivery of Phase I of the Premises Ready for
Occupancy will occur in three (3) successive sub-phases consisting of the
following Improvements, on the following dates:

                  First sub-phase:     a 65,000 sq. ft. shell Base Building, 650
                                       paved parking spaces, and approximately
                                       37,000 sq. ft. of contiguous Tenant
                                       Improvements, including an approximately
                                       2,000 sq. ft. computer room and
                                       approximately 500 telemarketing call
                                       stations, or such fewer number of
                                       stations as may be determined by Tenant's
                                       needs (as to which Tenant will notify
                                       Landlord on or before April 15, 1998), or
                                       by area constraints: September 1, 1998

                  Second sub-phase:    approximately 28,000 sq. ft. of Tenant
                                       Improvements: September 30, 1998

                  Third sub-phase:     5,000 sq. ft. common entryway and lobby:
                                       October 15, 1998

In addition, Landlord will make every reasonable effort to have the first
sub-phase shell (including the computer room) ready for Tenant fit-up by August
1, 1998, provided that Landlord shall have no liability to Tenant if
notwithstanding Landlord's reasonable efforts Landlord is unable to meet this
schedule.



                                      -5-
   7

                  On or before April 30, 1998, Tenant shall notify Landlord in
writing of the date by which Tenant desires Phase II of the Premises, consisting
of a 65,000 sq. ft. shell Base Building, an additional 450 paved parking spaces
and related Tenant Improvements, to be delivered to Tenant Ready for Occupancy,
which shall occur no earlier than May 1, 1999, and no later than September 1,
1999 (the "Phase II Delivery Date").

                  In addition, Landlord will make every reasonable effort to
have the Phase II shell Base Building and 450 paved parking spaces ready for
Tenant fit-up seventy-five (75) days prior to the Phase II Delivery Date,
provided that Landlord shall have no liability to Tenant if notwithstanding
Landlord's reasonable efforts Landlord is unable to meet this schedule.

                  Notwithstanding any provision in this Lease to the contrary,
each scheduled date of delivery and any other scheduled date of performance by
Landlord under this paragraph 3.4 shall be extended one (1) day for each day of
Tenant Delay and one (1) day for each day of delay caused by Force Majeure.
"Tenant Delay" shall mean any delay in Landlord's commencement or completion of
Improvements that occurs as a result of: (i) any request by Tenant either that
Landlord perform any work in addition to that required under the Plans or that
Landlord delay commencement or completion of the Improvements for any reason
including, without limitation, time for contractor, subcontractor, supplier or
materialman performance arising out of a change order or a material change in
the Plans or the Improvements requested by Tenant, (ii) any material change by
Tenant to the Plans after final approval thereof, (iii) any failure of Tenant to
respond to any request for approval required hereunder within the time period
specified for such response or, where no specific response time is specified,
within a reasonable period of time after the request, (iv) any delay in
Landlord's construction of the Improvements caused by Tenant's interference with
Landlord's work or Tenant's activities in the Premises, or (v) any other act or
omission of Tenant or an Event of Default by Tenant under this Lease that
effectively delays commencement or completion of the Improvements. If loss of
schedule time due to Tenant Delay reasonably can be avoided by Tenant's own
action within twenty-four (24) hours after receipt of notice of the problem from
Landlord, Tenant Delay in such instance will not be incurred until Landlord
gives Tenant such notice, unless an emergency or other highly compelling
circumstances obviate the necessity of notice. Force Majeure shall have the
meaning ascribed to it in paragraph 42, except that for purposes of this
paragraph, Force Majeure will not include Landlord's failure to meet applicable
zoning conditions to the development and use of the Premises as contemplated by
Landlord and Tenant. The parties acknowledge that Landlord has accrued, as of
April 7, 1998, eight (8) days of Force Majeure credit due to weather-caused
delays prior to that date, which Landlord may use, at Landlord's election, to
extend the scheduled dates of delivery and performance under this paragraph 3.4
for Phase I.

                  If any sub-phase of Phase I is not Ready for Occupancy, or if
Phase II is not Ready for Occupancy, by the respective date(s) set forth above
for any reason other than (i) Tenant Delay or (ii) Force Majeure, Tenant's sole
and exclusive



                                      -6-


   8

remedy shall be a credit against Rent next coming due under this Lease equal to
the sum of (a) any bona fide "holdover" penalty that Tenant is required to pay,
and demonstrates that it has paid, to its present landlord because of Tenant's
inability to vacate its present premises, or some portion thereof, and take
scheduled occupancy of the Improvements, and (b) any expenses or charges
actually incurred by Tenant as a result of the delayed delivery of the Premises,
excluding loss of profits and other special or consequential damages. The term
"holdover" penalty is defined as the difference between (iii) Tenant's then base
rent at its present facility and (iv) any additional rent imposed on Tenant
under its present lease due to Tenant's failure to vacate its present premises
on schedule.

                  Notwithstanding anything to the contrary in this Lease, other
than Tenant Delay, Tenant shall have the right in its sole and absolute
discretion, and for its sole and exclusive remedy, to terminate this Lease if
the first sub-phase of Phase I of the Premises is not Ready for Occupancy by
December 31, 1998.

                  3.5. EARLY ENTRY. Landlord shall permit Tenant to enter the
Premises prior to the Commencement Date for the purpose of placing on the
Premises furniture, fixtures, wire, cabling and equipment earlier approved by
Landlord in writing and any improvements and alterations permitted under
paragraph 9.5.

                  If Tenant does enter the Premises prior to the Commencement
Date, Tenant shall procure and maintain insurance policies required pursuant to
paragraph 10 and provide written indemnification to Landlord in form reasonably
acceptable to Landlord prior to such entry. Landlord and Tenant shall carefully
coordinate their respective efforts so as not to interfere with the objectives
of paragraphs 3.2 and 3.4. Entry by Tenant shall be made so as to comply in all
respects with paragraph 9.5 and the other provisions of this Lease, all
applicable ordinances, regulations and requirements of the City of Tucson, any
applicable CC&R's, and in such a manner so as not to interfere with Landlord or
Landlord's contractors in the performance of the construction work contemplated
hereby. Tenant shall not use the Premises for the storage of inventory or
otherwise commence business without the express prior written consent of
Landlord. Landlord shall not be responsible for repainting or cleaning the
Improvements as a result of any damage or wear resulting from Tenant's early
entry.

         4. RENT; OTHER CHARGES.

                  4.1. MONTHLY RENT. Subject to the qualification in the
following subparagraph, Tenant shall pay to Landlord rent ("Rent") for the
Premises monthly payments, in advance, without deduction, off-set or demand, on
the first (1st) day of each month of the Term hereof at the rates set forth
below. Rent for any period during the Term hereof which is for less than one
month shall be a pro rata portion of the monthly installment based upon a thirty
(30) day month. Rent shall be payable in lawful money of the United States to
Landlord at the address stated herein or to such other persons or at such other
places as Landlord may designate by written notice to Tenant from time to time.



                                      -7-
   9
                  Rent for each phase or sub-phase of the Premises shall
commence upon, but not before, the earlier of (a) Tenant's taking possession of
such phase or sub-phase to conduct its business (for a purpose other than
fixturization or fit-up), or (b) Landlord's delivery of such phase or sub-phase
Ready for Occupancy. If Tenant elects, pursuant to paragraph 3.4, to defer
taking possession of Phase II until a date subsequent to May 1, 1999, Tenant
shall nevertheless pay rent thereon to Landlord as compensation for Landlord's
holding the space, commencing on May 1, 1999, at a rate equal to twenty percent
(20%) of the scheduled Rent for Phase II until Tenant starts to pay Rent for
Phase II, which shall occur no later than September 1, 1999.

                  Monthly Rent payable by Tenant to Landlord for the initial ten
(10) year Term of this Lease shall be calculated as follows:

                      Months 1 - 48:    $0.7475/sq. ft. NNN
                                        ("Initial Rate")

                      Months 49 - 96:   No less than the Initial Rate, subject 
                                        to increase effective at month 49 in 
                                        accordance with paragraph 4.2 ("First
                                        Adjusted Rate")

                      Months 97 - end   No less than the First Adjusted
                      of initial Term:  Rate, subject to increase
                                        effective at month 97 in accordance
                                        with paragraph 4.3 ("Second Adjusted
                                        Rate")

For purposes of calculating Rent payable by Tenant to Landlord during the entire
Term of this Lease (including the Renewal Terms), Landlord and Tenant hereby
agree that the Premises shall be deemed to contain 135,000 square feet, subject
to increase by expansion under paragraph 47 below. Notwithstanding the
foregoing, square footage (and the resultant Rent calculations) shall be based
on the final Plans (measurements to extend to the outside of exterior walls)
once completed.

                  4.2. FIRST ADJUSTED RATE. The Rent payable by Tenant to
Landlord during months 49-96 of the Lease shall be no less than the Initial Rate
increased (but not decreased) by a factor equal to the cumulative percentage
increases in the U.S. Department of Labor, Bureau of Labor Statistics Consumer
Price Index for All Urban Consumers (Tucson, Arizona, region) (All items;
1982-84 = 100) (the "Consumer Price Index") occurring between the Commencement
Date and the forty-ninth (49th) month of this Lease, not to be less than one
percent (1%) nor to exceed four percent (4%), per year.

                  4.3. SECOND ADJUSTED RATE. The Rent payable by Tenant to
Landlord during months 97-120 of the Lease shall be no less than the First
Adjusted Rate increased (but not decreased) by a factor equal to the cumulative
percentage increases in



                                      -8-
   10
the Consumer Price Index occurring between the forty-ninth (49th) month of this
Lease and the ninety-seventh (97th) month of this Lease, not to be less than one
percent (1%) nor to exceed four percent (4%), per year.

                  4.4. RENTAL TAXES. Tenant further agrees to pay to Landlord
with Rent, or at any other time during or after the Term of this Lease within
thirty (30) days after Landlord's demand therefor, at Landlord's election, any
excise, sales or transaction privilege tax imposed or levied by any government
or governmental agency upon Landlord on account of this Lease, Rent paid
hereunder by Tenant or any other payments made or obligations discharged or
benefits conferred by Tenant hereunder, including without limitation, payments
of Tenant's Proportionate Share of the expenses, if any, under paragraph 5, Real
Property Tax under paragraph 6, and the costs of insurance under paragraph 10.
Tax calculations will be subject to applicable changes in local and state tax
ordinances.

                  4.5. PROPORTIONATE SHARE. Tenant's Proportionate Share of the
expenses under paragraph 5, if any, Real Property Tax under paragraph 6, and the
costs of insurance under paragraph 10, to be paid by Tenant to Landlord, as
additional rent, shall be one hundred percent (100%).

         5. COMMON CHARGES; LEGAL COMPLIANCE; ESTIMATED PAYMENTS. Tenant shall
pay to Landlord as additional rent, which shall be due within thirty (30) days
after demand, any fee, charge or other assessment against the Premises or any
portion thereof that is levied or assessed pursuant to any property owners'
association, CC&R's or similar authority, or any fee, charge or other assessment
against the Premises or any portion thereof that represents a fair and equitable
percentage of the cost of repair, maintenance, upkeep, and replacement
(including periodic resurfacing) of any road, street, amenity or common area
directly serving the Premises. Landlord will provide Tenant with prior notice of
the amount and due dates of potential charges under this paragraph as soon as
possible after the information is available to Landlord. Landlord will also make
every reasonable effort to provide Tenant with prior notice of the work to be
done, which shall be reasonable under the circumstances, but Landlord's good
faith failure to give this notice does not relieve Tenant of its payment
obligation for the reasonable fee, charge or other assessment due.

                  Tenant shall also pay to Landlord as additional rent, which
shall be due within thirty (30) days after demand, the yearly amortization of
capital costs incurred by Landlord for improvements or structural repairs to the
Premises required to comply with any laws, rules or regulations of any
governmental authority having jurisdiction over the Premises which are enacted
after the Commencement Date of this Lease, or with any changes in laws, rules or
regulations of any governmental authority having jurisdiction over the Premises
which existed on the Commencement Date, but which were enacted or come into
effect after the Commencement Date, or the application of either, which shall be
amortized over the useful life of such improvements or repairs, as reasonably
estimated by Landlord.



                                      -9-
   11

                  Landlord at its option may invoice Tenant on a monthly,
quarterly or other periodic basis for Tenant's Proportionate Share of the
expenses under paragraph 5, if any, Real Property Tax under paragraph 6, and the
cost of insurance under paragraph 10, based on Landlord's good faith estimate of
such charges. Tenant will pay the invoiced sum(s) to Landlord within thirty (30)
days after Tenant receives the invoice(s). Within ninety (90) days after the end
of each calendar or fiscal year, whichever period permits the greatest accuracy
in recapitulation, estimated charges will be reconciled with actual charges, and
within thirty (30) days following Landlord's delivery of a reconciliation to
Tenant, Landlord shall pay to Tenant, or Tenant to Landlord, as the case may be,
the difference between such actual and estimated charges. On reasonable prior
notice to Landlord, Tenant shall have the right to audit Landlord's books with
respect to common charges within twelve (12) months of Tenant's receipt of final
reconciliation. If the audit discloses an overcharge of five percent (5%) or
more, Landlord will pay for Tenant's reasonable audit fees and promptly refund
to Tenant any overcharge. At least thirty (30) days before Tenant takes
possession of any portion of the Premises, Landlord will deliver to Tenant a
good faith estimate prepared by Landlord of the charges Tenant will be required
to pay under this Lease and will deliver to Tenant thereafter from time to time
at periodic intervals, but no more frequently than twice per calendar year, a
revised estimate of the charges.

         6. TAXES.

                  6.1. PAYMENT OF TAXES. Within thirty (30) days after demand by
Landlord, Tenant shall pay to Landlord, as additional rent, Tenant's
Proportionate Share of the Real Property Tax, as defined in paragraph 6.2,
applicable to the Premises during the Term of this Lease. If any such taxes
shall cover any period of time prior to or after the expiration of the Term,
Tenant's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year during which this Lease shall be in
effect, and Landlord shall reimburse Tenant to the extent required.

                  6.2. DEFINITION OF "REAL PROPERTY TAX". As used herein, the
term "Real Property Tax" shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Premises by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Landlord in the
Premises, as against Landlord's right to rent or other income therefrom. The
term "Real Property Tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "Real
Property Tax," or (ii) the nature of which was hereinbefore included within the
definition of "Real Property Tax", or (iii) which is imposed by reason of this
transaction, any modifications or changes hereto or any transfers hereof. The
term "Real Property Tax" shall also include the reasonable cost to Landlord of
any tax protest conducted by Landlord that results in a decrease in the Real
Property Tax, but only to the extent that Tenant benefits from the decrease. The
term "Real Property Tax" shall not



                                      -10-
   12

include (a) inheritance or estate taxes imposed upon the Premises or any portion
thereof, (b) federal, state or local income taxes imposed upon Landlord, and (c)
late payment charges or other penalties.

                  6.3. JOINT ASSESSMENT. Until the Premises are a separately
assessed tax parcel, Tenant's liability under paragraph 6 shall be a fair and
equitable proportion of the Real Property Tax for all of the land and
improvements included within the tax parcels assessed, such proportion allocable
to the Premises to be reasonably determined by Landlord from the valuations
assigned in the assessor's work sheets or other reliable information. Landlord
will make every reasonable effort to cause the Premises to become a separately
assessed tax parcel at the earliest possible date.

                  6.4. PERSONAL PROPERTY TAXES.

                          (a) Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, furniture,
equipment and all other personal property of Tenant contained in the Premises or
elsewhere. When possible, Tenant shall cause such trade fixtures, furnishings,
furniture, equipment and all other personal property to be assessed and billed
separately from the Premises.

                          (b) If any of Tenant's personal property shall be
assessed with the Premises, Tenant shall pay Landlord the taxes attributable to
Tenant within thirty (30) days after receipt of a written statement from
Landlord setting forth the taxes applicable to Tenant's property, accompanied by
reasonable supportive documentation of the taxes.

                  6.5. TAX PROTEST. If Tenant desires to have the Real Property
Tax protested, Tenant shall notify Landlord at least sixty (60) days prior to
any deadline to protest the Real Property Tax. At Landlord's option Landlord may
elect to protest the Real Property Tax itself, in which event Landlord shall
diligently pursue such protest, the reasonable cost of which shall be charged to
Tenant and payable to Landlord within thirty (30) days after Landlord's demand
therefor, or Landlord may elect to permit Tenant to protest the Real Property
tax at Tenant's sole expense. If required by law, the Real Property Tax shall be
paid under protest and in the lawfully prescribed manner to preserve the right
of protest. Landlord and Tenant shall cooperate one with the other in
conjunction with any protest of the Real Property Tax. Nothing in this paragraph
shall relieve Tenant of its obligation to pay to Landlord the Real Property Tax
required under this Lease when due. In any event, Landlord shall always have the
right to protest the Real Property Tax at its sole expense.

         7. INTENTIONAL DELETION

         8. USE; COMPLIANCE WITH LAW; ENVIRONMENTAL; CONDITION.

                  8.1. USE. The Premises shall be used and occupied only for (a)
general office and telemarketing purposes (and related activities) and (b) such
other


                                      -11-


   13

similar purposes as may be approved by Landlord in writing, which approval shall
not be unreasonably withheld; provided, however, that all uses of the Premises
must be lawful, shall be in compliance with all applicable zoning regulations,
codes, stipulations and conditions, as well as any CC&R's, shall be compatible
with Landlord's overall development, of which the Premises are a part, and shall
not result in, nor have a reasonable likelihood of resulting in, the release or
discharge of contaminants, pollutants or hazardous substances or wastes or give
rise to cleanup or other liabilities or obligations under the environmental
laws. The Premises shall not, however, be used for manufacturing purposes
without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion for any reason. It is Tenant's responsibility to
comply with all applicable zoning ordinances or other ordinances, regulations,
requirements, stipulations, covenants and restrictions affecting Tenant's use or
occupation of the Premises.

                  8.2. COMPLIANCE WITH LAW.

                          (a) Landlord warrants to Tenant that the Premises, in
their state existing on the Commencement Date, but without regard to the
specific use for which Tenant will use the Premises, does not materially violate
any covenants or restrictions of record, or any applicable zoning or building
code in effect on the Commencement Date. In the event it is determined that this
warranty has been materially violated and such violation will adversely affect
Tenant's actual use and enjoyment of the Premises, or put Tenant to expense, of
which Tenant must give Landlord written notice within one (1) year after the
Commencement Date, then it shall be the obligation of Landlord, after written
notice from Tenant, to promptly, at Landlord's sole cost and expense, rectify
any such violation to the extent necessary to facilitate Tenant's use and
enjoyment of the Premises.

                          (b) Except as provided in paragraph 8.2(a), Tenant
shall, at Tenant's expense, comply promptly with all applicable laws, statutes,
ordinances, rules, regulations, orders, covenants, restrictions of record,
insurance underwriters' requirements, and all other requirements in effect
during the Term or any part of the Term, present or future, regulating Tenant's
operation on and occupancy and use of the Premises. Tenant shall not use the
Premises, including placing loads upon any floor or wall, in a manner for which
the Premises were not designed, engineered or constructed. Tenant shall not
place a load upon any floor or wall exceeding the load per square foot (or other
applicable unit) area which such floor or wall was designed to carry and/or
which is prescribed by any law or regulation in existence during the Term of
this Lease. Tenant shall not use nor permit the use of the Premises in any
manner that will tend to create waste or a nuisance or, if there shall be more
than one tenant in the building containing the Premises, shall offend, annoy or
disturb such other tenants. Tenant shall not cause the Premises to fall out of
compliance with the Americans with Disabilities Act (the Premises at Landlord's
expense shall be in compliance with the Americans with Disabilities Act at the
Commencement Date excepting only any noncompliance resulting from design or
other error caused by Tenant or its own agents or consultants). The Premises,
this Lease and Tenant's use of the Premises shall at all times during this Lease
be subject to and in full compliance with any CC&R's now or later in force
against the Premises.



                                      -12-
   14

                 8.3. ENVIRONMENTAL.

                          (a) The terms "Environmental Law" and "Environmental
Laws" include all current and future federal, state and local environmental
laws, statutes, rules, regulations and ordinances, as the same may be amended
and modified from time to time, including but not limited to, common law, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
the Resource Conservation and Recovery Act ("RCRA"), the Toxic Substances
Control Act ("TSCA"), and also including, but not limited to, any current or
future law, statute, rule, regulation or ordinance (whether federal, state or
local) regulating, protecting, preserving, or concerning the environment
(including air, soil, subsoil, water, ground water, land use or operations).

                          (b) The terms "Hazardous Substance" and "Hazardous
Substances" include any and all hazardous substances, hazardous wastes,
hazardous materials, regulated substances, toxic substances, pesticides,
fungicides, rodenticides, petroleum products, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, urea formaldehyde foam
insulation, flammable items, explosives, radioactive materials, paints,
solvents, lead, cyanide, DDT, printing inks, acids, ammonia compounds and other
chemical products, PCBs and similar compounds, and any other products or
materials which may have adverse effects on the environment or the health and
safety of persons, and any and all other substances, wastes, pollutants,
contaminants and materials regulated or controlled in any manner by any
Environmental Law.

                          (c) Tenant shall not cause or permit any Hazardous
Substance to be generated, produced, brought upon, transported to or from, used,
stored, recycled, treated or disposed of in or about the Premises by Tenant, its
agents, employees, contractors, sublessees or invitees without the prior written
consent of Landlord, except for reasonable amounts of standard office products
(e.g., toner) and cleaning materials used in the ordinary course by Tenant, in
all events in full compliance with applicable Environmental Laws. Landlord shall
be entitled to take into account such factors as Landlord may reasonably
determine to be relevant in determining whether to grant or withhold consent to
Tenant's proposed activity with respect to Hazardous Substances, and to require
appropriate safeguards and other protection. Landlord shall not unreasonably
withhold its written consent to Tenant's use of substances which may qualify as
Hazardous Substances but which are incidental to Tenant's use of the Premises
and which can be used safely without risk to the environment and which shall be
used in full compliance with applicable Environmental Laws. Notwithstanding any
provision herein to the contrary, Tenant may use and operate the emergency
generator referred to in paragraph 3.2(d) and the associated diesel engine and
diesel tank so long as such use and operation are in full compliance with any
applicable Environmental Laws. In no event, however, shall Landlord be required
to consent to the installation or use of any storage tanks or containers on the
Premises, or to any use, activity, or practice which may pose an environmental
risk to, and/or result in the release, spill, discharge, or disposal of
Hazardous Substances in, upon, under, or about the Premises, or adjacent
property (including but not limited to the air or the ground water). Tenant
shall not, and Tenant shall



                                      -13-
   15

ensure that Tenant's agents, employees, contractors, sublessees and invitees
shall not, release, spill, discharge, or dispose of any Hazardous Substance in,
upon, under, or about the Premises, or adjacent property (including but not
limited to the air or the ground water). Tenant shall not install nor permit to
be installed on or in the Premises any substance containing asbestos and
determined to be hazardous by any governmental authority or any friable
asbestos. If any such substance or any friable asbestos is determined to be in
or on the Premises as a result of the actions of Tenant, Tenant shall promptly
comply with any applicable Environmental Laws (which may or may not require
removal of the material), at Tenant's expense, and Landlord shall have the same
obligation if asbestos is in or on the Premises as a result of the actions of
Landlord including without limitation construction of the Improvements.

                          (d) Tenant shall fully comply with, and cause its
agents, employees, contractors, sublessees, and invitees to fully comply with
all Environmental Laws with respect to their use of the Premises. Tenant shall
obtain, comply with, and provide Landlord with copies of all permits required in
connection with Tenant's use of the Premises or by any Environmental Law, if
any.

                          (e) Landlord or its agents may enter the Premises at
all reasonable times upon not less than forty-eight (48) hours advance notice to
inspect and conduct tests in order to monitor Tenant's compliance with all
applicable Environmental Laws and the provisions of this paragraph 8.3. In the
absence of an emergency Landlord and its agents shall schedule any inspection or
testing of the Premises in a way to minimize interference with Tenant's
operations on the Premises.

                          (f) Tenant shall promptly notify Landlord of any of
the following:

                                   (i) Any emission, spill, release, or
discharge into the environment of any Hazardous Substances.

                                   (ii) Any correspondence or communication to
Tenant or its agents from any governmental agency or board regarding the
presence or suspected presence of Hazardous Substances on the Premises or
regarding the application of the Environmental Laws to the Premises or Tenant's
activities on the Premises.

                                   (iii) Tenant's knowledge of any circumstances
reasonably likely to give rise to a claim that Tenant, Landlord, or the Premises
may be in violation of the Environmental Laws.

                                   (iv) Any change in Tenant's activities on the
Premises that will change or is reasonably likely to change Tenant's or
Landlord's obligations or liabilities under the Environmental Laws.



                                      -14-
   16

                          (g) Tenant shall indemnify, defend and hold Landlord
and Landlord's shareholders, directors, officers, partners, members, agents,
employees, and affiliates, and their respective successors and assigns,
harmless, through counsel reasonably acceptable to Landlord, for, from, and
against all costs, expenses, claims (including, without limitation, toxic-tort
or third-party claims), damages, actions, liabilities, suits, investigations,
judgments, impositions, clean-up and remediation costs (including without
limitation, costs of removing transformers or other equipment which contain
polychlorinated biphenyls, underground storage tanks and asbestos or
asbestos-containing materials and the costs of cleaning any contaminated
drywells), "super priority" liens, fines (civil or criminal) and penalties of
every nature, whatsoever, including without limitation, related attorneys' fees
and expenses incurred by Landlord and Landlord's shareholders, directors,
officers, partners, members, agents, employees, and affiliates, and their
respective successors and assigns, directly or indirectly, by reason of Tenant's
breach of any provision of this paragraph 8.3, or by reason of any violation of,
or noncompliance with, or the application of, any Environmental Law, by, or by
reason of the acts or omissions of, Tenant or its agents, employees,
contractors, sublessees, or invitees, or the use and occupation of the Premises
by any of them (but excluding the acts and omissions of Landlord or its agents,
employees, contractors, sublessees, or invitees) in, upon, about, or under the
Premises, including but not limited to a release, spill, discharge or disposal
of a Hazardous Substance. This indemnification by Tenant shall include, without
limitation, all costs of any investigation, monitoring, removal, restoration,
abatement, repair, clean up, detoxification or other ameliorative work required
by any governmental agency or Environmental Law. The provisions of this
paragraph 8.3 shall survive the expiration or termination of this Lease,
termination of Tenant's occupancy of the Premises, or Tenant's abandonment or
vacation of the Premises.

                          (h) Landlord shall indemnify, defend and hold Tenant
and Tenant's shareholders, directors, officers, partners, members, agents,
employees, and affiliates, and their respective successors and assigns,
harmless, through counsel reasonably acceptable to Tenant, for, from, and
against all costs, expenses, claims (including, without limitation, toxic-tort
or third-party claims), damages, actions, liabilities, suits, investigations,
judgments, impositions, clean-up and remediation costs (including without
limitation, costs of removing transformers or other equipment which contain
polychlorinated biphenyls, underground storage tanks and asbestos or
asbestos-containing materials and the costs of cleaning any contaminated
drywells), "super priority" liens, fines (civil or criminal) and penalties of
every nature, whatsoever, including without limitation, related attorneys' fees
and expenses incurred by Tenant and Tenant's shareholders, directors, officers,
partners, members, agents, employees, and affiliates, and their respective
successors and assigns, directly or indirectly, by reason of a release, spill,
discharge, or disposal of a Hazardous Substance by Landlord or its agents,
employees, subcontractors, or invitees, in, upon, about, or under the Premises
which occurs prior to the Commencement Date, or by reason of Landlord's own
storage or treatment of a Hazardous Substance in, upon, about, or under the
Premises or violation of, or noncompliance with, any Environmental Law, but
excluding the acts and omissions of Tenant or its agents, employees,
contractors, sublessees, or invitees including, without limitation, any release,
spill, discharge or disposal of a Hazardous Substance by Tenant or



                                      -15-
   17

its agents, employees, contractors, sublessees, or invitees. This
indemnification by Landlord shall include, without limitation, all costs of any
investigation, monitoring, removal, restoration, abatement, repair, clean up,
detoxification or other ameliorative work required by any governmental agency or
Environmental Law. The provisions of this paragraph 8.3(h) shall survive the
expiration or termination of this Lease.

                          (i) Landlord is currently updating a Phase One
Environmental Site Assessment on the Premises and will deliver a copy of the
updated assessment to Tenant once the assessment is available.

                 8.4. CONDITION OF PREMISES.

                          (a) Landlord shall deliver the Premises to Tenant
clean and free of debris on the Commencement Date (subject to any damage caused
by Tenant during any early entry under paragraph 3.5) and Landlord further
warrants to Tenant that the plumbing, lighting, electrical, mechanical and life
safety systems, air conditioning, heating and loading doors in the Premises
shall be in good operating condition on the Commencement Date. In the event that
it is determined that this warranty has been violated, unless Tenant has caused
the problem, then it shall be the obligation of Landlord, after receipt of
written notice from Tenant setting forth with specificity the nature of the
violation, which Landlord must receive within one (1) year after the
Commencement Date, to promptly, at Landlord's sole cost, rectify such violation.
Tenant's failure to give such written notice to Landlord within such one-year
period shall cause the conclusive presumption that Landlord has complied with
all of Landlord's obligations hereunder.

                          (b) Except as otherwise provided in this Lease, Tenant
hereby accepts the Premises in the condition existing as of the Commencement
Date subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises and
any CC&R's, and accepts this Lease subject thereto and to all matters disclosed
thereby. Tenant acknowledges that neither Landlord nor Landlord's agent has made
any representation or warranty or other promise as to the suitability of the
Premises for the conduct of Tenant's business other than as set forth in the
express provisions of this Lease.

                          (c) Notwithstanding any provision in this Lease to the
contrary, all punchlist items will be rectified by Landlord within thirty (30)
days after Tenant takes possession of the particular sub-phase or phase in
question, provided that if Landlord requires additional time to rectify any item
that cannot be rectified within thirty (30) days, notwithstanding Landlord's
reasonable diligence, Landlord shall have a reasonable period of time thereafter
to rectify such item. Notwithstanding any provision in this Lease to the
contrary, Tenant will not be liable for material structural latent defects,
which will remain the obligation of Landlord at Landlord's expense during the
Term.



                                      -16-
   18

         9. MAINTENANCE, REPAIRS AND ALTERATIONS.

                  9.1. TENANT'S OBLIGATIONS. Excepting only Landlord's
obligations under paragraph 9.4, Tenant shall maintain, replace, and keep in
good order, condition and repair, the interior and exterior of the Premises, and
every part thereof, (whether or not the need for such repairs occurs as a result
of Tenant's use, the elements or the age of such portion of the Premises)
including, without limiting the generality of the foregoing, the maintenance,
repair and replacement of all plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities and equipment within the Premises, fixtures,
walls (interior), ceilings, floors, windows, doors, plate glass and skylights
located within the Premises, and all loading docks and areas, landscaping,
driveways and parking lots (including periodic resurfacing), fences and signs
located on the Premises. Tenant shall also be responsible for regular painting
of the exterior and the interior of the Improvements. Tenant shall, at all times
throughout the Term, including all renewals and extensions, and at its sole
expense, subject to paragraph 9.4 below and the second paragraph of paragraph 5
above, keep and maintain the interior and the exterior of the Premises in a
clean, safe, orderly, sanitary and first class condition in compliance with all
applicable laws, codes, ordinances, rules and regulations, free of any
accumulation of dirt and rubbish, and Tenant shall arrange its own trash
removal. Tenant shall also be responsible for the routine and ordinary service
and maintenance of the roof (including reasonable preventive care, but excluding
capital repairs/replacements). Tenant is free to use its own professional
management or facilities management in its maintenance of the Premises so long
as the quality thereof is in keeping with Tenant's obligations to Landlord under
this Lease.

                  9.2. SURRENDER. On the last day of the Term hereof, or on any
sooner termination, Tenant shall surrender the Premises to Landlord in the same
condition as when received, ordinary wear and tear, nonstructural alterations,
approved structural alterations and damage which is Landlord's obligation to
repair excepted, clean and free of damage or debris. Tenant shall repair any
damage to the Premises occasioned by the installation or removal of Tenant's
trade fixtures, furnishings and equipment. Notwithstanding anything to the
contrary otherwise stated in this Lease, Tenant shall leave the air lines, power
panels, electrical distribution systems, lighting fixtures, space heaters, air
conditioning, plumbing, loading doors and fencing on the Premises in good
operating condition.

                  9.3. LANDLORD'S RIGHTS. If Tenant fails to perform Tenant's
obligations under this paragraph, or under any other paragraph of this Lease,
Landlord may at its option (but shall not be required to) enter upon the
Premises or take other appropriate action after fifteen (15) days prior written
notice to Tenant and Tenant's failure to cure (except in the case of urgency, in
which case no notice shall be required), perform such obligations on Tenant's
behalf and put the same in good order, condition and repair, or take other
appropriate action, and the cost thereof, together with interest thereon at two
points over the Bank of America prime rate announced from time to time, shall
become due and payable on demand as additional rental to Landlord.



                                      -17-
   19

                  9.4. LANDLORD'S OBLIGATIONS. Notwithstanding paragraph 9.1,
Landlord shall, at its sole cost and expense, repair and maintain only the roof
structure, the structural floor and foundations, and the exterior structural
walls (excluding painting) in good order and repair, except that Tenant shall
repair and pay for any damage thereto caused by Tenant or Tenant's employees,
agents or invitees, or by Tenant's default hereunder. Tenant shall immediately
give Landlord written notice of any defect or need of repair after which
Landlord shall have reasonable opportunity to repair same or cure such defect.
Landlord's liability hereunder shall be limited to the cost of such repairs or
curing such defect. Landlord shall not be liable for damage to Tenant's
improvements, fixtures, inventory and equipment within the Premises. In the
event of failure by Landlord to perform its covenants and obligations to repair
and maintain the Premises under this paragraph 9.4, Tenant may, at its option,
after ten (10) days written notice, or in an emergency, any other notice (verbal
or written) that is reasonable under the circumstances, proceed to make such
repairs or perform such maintenance and be reimbursed by Landlord ten (10) days
after demand by Tenant. If Landlord fails to pay Tenant when due any sum owing
hereunder interest at two points over the Bank of America prime rate announced
from time to time shall accrue on such sum.

                  Except for the obligations, if any, of Landlord under
paragraph 8.2(a), paragraph 8.3(h) and 8.4(a) (relating to Landlord's warranty),
this paragraph 9.4 and paragraph 11 (relating to destruction of the Premises),
Landlord shall have no obligation, in any manner whatsoever, to repair, replace
and maintain the Premises or the Improvements located thereon or the equipment
therein, whether structural or nonstructural, all of which obligations are
intended to be that of the Tenant under paragraph 9.1 hereof. Tenant expressly
waives the benefit of any statute or law now or hereinafter in effect which
would otherwise afford Tenant the right to make repairs at Landlord's expense or
to terminate this Lease because of Landlord's failure to keep the Premises in
good order, condition and repair, but Tenant's waiver shall not relieve Landlord
of any express contractual repair obligations placed on Landlord by this Lease.
Notwithstanding the foregoing, should Landlord receive any warranties or
guaranties of any materials, equipment or workmanship and such warranty or
guaranty is applicable to portions of the Premises for which Tenant is liable to
repair and maintain as required hereunder, Landlord shall enforce such
warranties to the fullest possible extent.

                  9.5. ALTERATIONS AND ADDITIONS.

                          (a) Tenant shall not, without Landlord's prior written
consent, which shall not unreasonably be withheld or delayed, make any
alterations, improvements, additions or Utility Installations in, on or about
the Premises, except for nonstructural alterations not exceeding $50,000 per
alteration and $250,000 in cumulative costs during each year of the Term of this
Lease. In any event, Tenant shall make no change or alteration to the exterior
of the Premises (including without limitation expansion of the building) or to
the structural or mechanical elements of the Premises or add a mezzanine or
increase the useable floor area in the Premises without Landlord's prior written
consent. Such alterations and additions shall not decrease the value of the
Premises, or impair the structural integrity of the Premises. As used in this
paragraph 9.5



                                      -18-
   20

the term "Utility Installation" shall mean air lines, power panels, electrical
distribution systems, space heaters, air conditioning and plumbing. Landlord may
require that Tenant remove any or all of said alterations, improvements,
additions or Utility Installations at the expiration of the Term, and restore
the Premises to their prior condition or, at Landlord's election, reimburse
Landlord for the cost of such restoration. Landlord may require Tenant to
provide Landlord, at Tenant's sole cost and expense, a lien and completion bond
in an amount equal to one and one-half times the estimated cost of any
improvements having a projected cost of $250,000 or more, to insure Landlord
against any liability for mechanic's and materialmen's liens and to insure
completion of the work. Landlord may impose reasonable conditions from time to
time with respect to the improvements to which Landlord may consent, including
without limitation, compliance with all laws, rules, Environmental Laws,
regulations, ordinances and requirements of governments or governmental
agencies, and the time and manner in which such work shall be accomplished.
Should Tenant make any alterations, improvements, additions or Utility
Installations without the prior approval of Landlord, Landlord may require that
Tenant remove any or all of the same. Landlord shall have the right, when
Landlord's consent is required, to approve Tenant's contractor(s), which
approval shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, Tenant may relocate cubicles within the Improvements without
Landlord's prior consent.

                          Notwithstanding the foregoing, Tenant may add Tenant's
communications equipment to the roof of the Premises so long as all roof-mounted
equipment strictly complies with applicable CC&R's, laws and building codes.
Tenant will be solely responsible for all structural and non-structural
modifications required to install or remove its roof-mounted equipment. All work
will be done at Tenant's expense in strict compliance with the provisions of
this paragraph 9.5. Landlord shall have the right to have a representative of
Landlord present at all times during such installation or removal. Landlord will
have no responsibility whatsoever for the safety or well being of Tenant's
roof-mounted equipment. Tenant will repair immediately any damage caused to the
roof or other parts of the Premises by virtue of Tenant's installation,
maintenance or removal of its roof-mounted equipment, or Tenant's other acts.

                          Prior to the commencement of any alterations,
improvements, additions or Utility Installations on the Premises, Tenant shall
inquire of Landlord whether Landlord will require Tenant to remove such
alterations, improvements, additions or Utility Installations at the end of the
Term. Landlord shall promptly advise Tenant whether or not Landlord will require
removal, and if Landlord's advice to Tenant is affirmative, then Tenant shall
remove the alterations, improvements, additions or Utility Installations in
question at the end of the Term at Tenant's sole expense in a manner that does
not damage or destroy the Premises, or if reasonable damage to the Premises is
inevitable, Tenant will take all practicable steps to minimize the damage and,
in any event, will restore the Premises to the condition they were in prior to
removal to the degree feasible.

                          (b) Any alterations, improvements, additions, or
Utility Installations in, or about the Premises that Tenant shall desire to make
and which requires the consent of the Landlord shall be presented to Landlord in
written form, with proposed


                                      -19-

   21

detailed plans. Landlord shall have thirty (30) days to review the proposed
alterations, improvements, additions or Utility Installations and related
detailed plans. If Landlord shall give its consent, the consent shall be deemed
conditioned upon Tenant acquiring a permit to do so from appropriate
governmental agencies (if legally required), the furnishing of a copy thereof to
Landlord prior to the commencement of the work and the compliance by Tenant of
all conditions of the permit in a prompt and expeditious manner and compliance
by Tenant with all laws, rules, regulations, recommendations and/or requirements
of any government or governmental agency. In no event shall Tenant cause the
Premises to fall out of compliance with such laws, rules, regulations,
recommendations or requirements by virtue of Tenant's alterations, improvements,
additions or Utility Installations.

                          (c) Tenant shall pay, when due, all claims for labor,
professional services and materials furnished to or for Tenant at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Tenant shall
give Landlord not less than ten (10) days' notice prior to the commencement of
any work in the Premises, and Landlord shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Tenant shall, in
good faith, contest the validity of any such lien, claim or demand, then Tenant
shall, at its sole expense defend itself and Landlord against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against Landlord or the Premises, upon the condition
that if Landlord shall require (but only for disputed claims in excess of
$100,000), Tenant shall furnish to Landlord a surety bond satisfactory to
Landlord in an amount equal to one hundred fifty percent (150%) of such
contested lien claim or demand indemnifying Landlord against liability for the
same and holding the Premises free from the effect of such lien or claim.

                          (d) Unless Landlord requires their removal, as set
forth in paragraph 9.5(a), all alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Tenant), which may be made on the Premises, shall become the
property of Landlord and remain upon and be surrendered with the Premises at the
expiration of the Term. Notwithstanding the provisions of this paragraph 9.5
(d), Tenant's machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to the Premises,
shall remain the property of Tenant and may be removed by Tenant subject to the
provisions of paragraph 9.2, and subject to Landlord's statutory landlord's lien
rights in the event of Tenant's uncured default under this Lease.

         10. INSURANCE AND INDEMNITY.

                 10.1. LIABILITY INSURANCE.

                          (a) Tenant shall, at Tenant's expense, obtain and keep
in force during the Term of this Lease and during Tenant's occupancy of the
Premises a policy of comprehensive (broad form) general liability insurance with
a $3,000,000 combined single limit for bodily injury, including death, and
property damage, including but not limited to, contractual liability under this
Lease and personal injury, covering the



                                      -20-

   22
Premises and Tenant's use and occupancy thereof against all claims on account of
bodily injury or death and property damage occurring upon, in or about the
Premises or in connection with the ownership, maintenance use and/or occupancy
of the Premises and all appurtenant areas. Landlord and at Landlord's option any
mortgagee of Landlord shall be named as additional insureds under the policy.
The policy shall insure performance by Tenant of its indemnity provisions
contained in this Lease. The limits of said insurance shall not, however, limit
the liability of Tenant hereunder. Tenant shall comply with all rules, orders,
directions, regulations, requirements and recommendations of the Insurance
Services Office or any similar bodies and shall not do or permit anything to be
done in or upon the Premises or bring upon or keep anything therein which shall
increase the rates of any insurance on the Premises.

                          (b) Landlord shall, at Landlord's expense, obtain and
keep in force during the Term of this Lease and during Tenant's occupancy of the
Premises a policy of general liability insurance tailored to "lessor's risk" in
such form as may be underwritten in the Tucson-Arizona area with a $3,000,000
combined single limit for bodily injury, including death, and property damage.

                 10.2. PROPERTY INSURANCE.

                          (a) Landlord shall obtain and keep in force during the
Term of this Lease a policy or policies of insurance covering loss or damage to
the Premises (including the Tenant Improvements) in the amount of the full
replacement value thereof, excluding foundation, grading and excavation costs,
as the same may exist from time to time, against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, flood
(in the event same is required by a lender having a lien on the Premises), and
special extended coverage ("all risk"), but expressly excluding earthquake
coverage. Said insurance shall provide for payment of loss thereunder to
Landlord or to the holders of mortgages or deeds of trust on the Premises.
Landlord shall, in addition, obtain and keep in force during the Term of this
Lease a policy of rental value insurance covering all of Tenant's rent and
additional rent obligations under this Lease for a period of one year, with loss
payable to Landlord. A stipulated value or agreed amount endorsement deleting
the coinsurance provision of the policy shall be procured with said insurance.
If such insurance coverage has a deductible clause, Tenant shall be liable for
such deductible amount up to a maximum of $10,000. Tenant shall pay to Landlord,
as additional rent, Tenant's Proportionate Share of the costs of all insurance
and/or deductible required hereunder within thirty (30) days after demand by
Landlord. Alternatively, Tenant shall have the option of maintaining the "all
risk" insurance described in this paragraph, at Tenant's sole expense, provided
all requirements in this paragraph are met. Tenant shall give Landlord at least
thirty (30) days notice of its intention to do so.

                          (b) Landlord shall provide Tenant on request, with a
certificate of the property insurance coverages. If Tenant carries the insurance
as permitted under paragraph (a) above, Tenant shall provide certificates of
insurance to Landlord on an annual basis.



                                      -21-

   23

                          (c) Landlord will not insure Tenant's fixtures or
equipment, or insure Tenant's alterations or improvements and other property
unless such alterations or improvements have become a part of the Premises under
paragraph 9 hereof. Subject to the foregoing, Tenant shall insure its own
fixtures, equipment, alterations and improvements and other property.

                 10.3. INSURANCE POLICIES. Insurance required hereunder shall be
in companies holding a "General Policyholders Rating" of at least A-, or such
other rating as may reasonably be required by a lender having a lien on the
Premises, as set forth in the most current issue of "Best's Key Rating Guide".
Tenant shall provide to Landlord copies of insurance certificates evidencing the
existence and the amounts of insurance required in paragraph 10.1 upon Tenant's
execution of this Lease. Landlord shall provide to Tenant copies of insurance
certificates evidencing the existence and the amounts of insurance required in
paragraph 10.1.(b) upon Landlord's execution of this Lease and thereafter
provide Tenant with renewal certificates at least thirty (30) days prior to the
expiration of such policy. Landlord shall not do or permit to be done anything
which shall invalidate such insurance policy. No such policy shall be cancelable
or subject to reduction of coverage or scope of coverage except after sixty (60)
days prior written notice to Landlord (or such other amount of notice as shall
be required from time to time by applicable law). Tenant shall, at least thirty
(30) days prior to the expiration of such policies, furnish Landlord and any
mortgagee of Landlord named as an insured with renewal certificates, or Landlord
may, in such event, or in any other event when Tenant has failed to provide
insurance coverage as required hereunder after three (3) business days' notice
thereof to Tenant, at its option, order such insurance and charge the cost
thereof to Tenant, which amount shall be payable by Tenant upon demand. Tenant
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in this paragraph 10. If Tenant does or permits to be
done anything which shall increase the costs of the insurance policies referred
to in paragraph 10.2, then Tenant shall forthwith upon Landlord's demand
reimburse Landlord for any additional premiums attributable to any act or
omission or operation of Tenant causing such increase in the cost of insurance.
Any insurance maintained by Tenant under this Lease shall be primary and
non-contributory with any insurance coverage separately maintained by Landlord.

                          Any of Tenant's policies required hereunder may be in
the nature of a "blanket policy" which specifically provides that the amount of
insurance shall not be prejudiced by other losses covered by the policy.

                          Notwithstanding the provisions of this paragraph 10,
Tenant may elect to self-insure against the types of losses which are required
to be insured against hereunder, excepting the property insurance under
paragraph 10.2.(a); provided that, during any period of such self-insurance
Tenant shall, at all times, maintain a net worth of no less than One Hundred
Million Dollars ($100,000,000). Tenant shall provide Landlord, as well as any
lender, with written notice of Tenant's election to self-insure no less than
sixty (60) days prior to terminating Tenant's third-party insurance and
commencing self-insurance, together with its most recent annual and/or quarterly
report(s), showing that Tenant satisfies the financial threshold set forth in
the preceding sentence,



                                      -22-
   24

and certified by Tenant's chief financial officer (or other officer with
equivalent knowledge and authority) to be a materially accurate reflection of
Tenant's net worth and financial condition as of the date of presentation of
such report(s) to Landlord.

                  10.4. WAIVER OF SUBROGATION. Tenant and Landlord each hereby
release and relieve the other, and waive their entire right of recovery against
the other for loss or damage arising out of or incident to the perils insured
against under paragraph 10 which perils occur in, on or about the Premises,
whether due to the negligence of Landlord or Tenant or their agents, employees,
contractors and/or invitees but only to the extent that insurance policies then
in effect permit such waiver without impairing coverage and only to the extent
of the coverage provided by such insurance policies. Tenant and Landlord shall,
upon obtaining the policies of insurance required hereunder, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.

                  10.5. TENANT'S INDEMNITY OF LANDLORD. Tenant shall indemnify,
defend, and hold harmless Landlord for, from and against any and all claims
arising from Tenant's or Tenant's sublessee's or assignee's (or their respective
agents, servants, employees or contractors) use or occupancy of the Premises,
or from the conduct of Tenant's business or from any activity, work or things
done, permitted or suffered by Tenant or Tenant's sublessee or assignee (or
their respective agents, servants, employees or contractors) in or about the
Premises unless caused by Landlord's negligence or intentional wrongs or
Landlord's breach of this Lease, and shall further indemnify, defend and hold
harmless Landlord for, from and against any and all claims arising from any
breach or default in the performance of any obligation on Tenant's part to be
performed under the terms of this Lease, including, without limitation, the
provisions of paragraph 8.2, or arising from any negligence of Tenant, or any of
Tenant's agents, contractors or employees, and from and against all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon; and in case any action or
proceeding be brought against Landlord by reason of such claim, Tenant upon
notice from Landlord shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in, upon or about the Premises arising from any cause,
excepting Landlord's negligence or intentional wrongs, or Landlord's breach of
this Lease, and Tenant hereby waives all claims in respect thereof against
Landlord. Tenant's obligations and liabilities under this paragraph 10.5 shall
survive the expiration or earlier termination of this Lease or termination of
Tenant's occupancy of the Premises. Notwithstanding the foregoing, Tenant shall
have no liability hereunder on account of defects in the Premises not caused by
Tenant or the agents, employees, contractors or invitees of Tenant.

                  10.6. EXEMPTION OF LANDLORD LIABILITY. Except as expressly
provided to the contrary in Paragraph 10.7, and excepting loss or damage caused
by the negligence of Landlord, Landlord's intentional acts, or Landlord's breach
of this Lease, Tenant hereby agrees that Landlord shall not be liable for injury
to Tenant's business or for any loss of income therefrom or for damage to the
goods, wares, merchandise or other




                                      -23-
   25
property of Tenant, Tenant's employees, invitees, customers or any other person
in or about the Premises; nor shall Landlord be liable for injury to the person
of Tenant, Tenant's employees, agents or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether damage or injury results from conditions
arising upon the Premises, or from other sources or places.

                  10.7. LANDLORD'S INDEMNITY OF TENANT. Landlord shall
indemnify, defend, and hold harmless Tenant for, from and against any and all
claims arising from the conduct of Landlord's business or from any activity,
work or things done, permitted or suffered by Landlord (or Landlord's agents,
servants, employees or contractors) in or about the Premises and shall further
indemnify, defend and hold harmless Tenant for, from and against any and all
claims arising from any breach or default in the performance of any obligation
on Landlord's part to be performed under the terms of this Lease, or arising
from any negligence of the Landlord, or any of Landlord's agents, contractors or
employees, and from and against all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Tenant by reason of such claim, Landlord upon notice from Tenant shall
defend the same at Landlord's expense by counsel reasonably satisfactory to
Tenant. Landlord's obligations and liabilities under this paragraph 10.7 shall
survive the termination of this Lease. Notwithstanding the foregoing, Landlord
shall have no liability hereunder on account of defects in the Premises not
caused by Landlord or the agents, employees, contractors or invitees of
Landlord.

         11. DAMAGE OR DESTRUCTION.

                  11.1. DEFINITIONS.

                          (a) "Premises Partial Damage" shall mean damage or
destruction to one of the buildings constituting the Improvements to the extent
that the cost of repair is less than 33% of the then replacement cost of such
building.

                          (b) "Premises Total Destruction" shall herein mean
damage or destruction to one of the buildings constituting the Improvements to
the extent that the cost of repair is 33% or more of the then replacement cost
of such building.

                          (c) "Insured Loss" shall herein mean damage or
destruction which was caused by an event required to be covered by the insurance
described in paragraph 10, and sufficient insurance proceeds are available for
repairs and restoration free of any claim of the holder of a mortgage or deed of
trust on the Premises.

                 11.2. PARTIAL DAMAGE - INSURED LOSS. Subject to the provisions
of paragraphs 11.4, 11.5 and 11.6, if at any time during the Term of this Lease
there is damage which is an Insured Loss and which falls into the classification
of Premises Partial Damage, then Landlord shall, unless Landlord's mortgagee or
lender requires otherwise,



                                      -24-
   26
at Landlord's expense, repair such damage (but not Tenant's fixtures, equipment,
alterations or improvements unless the same have become a part of the Premises
pursuant to paragraph 9.5 and Landlord has not advised Tenant that Landlord will
require the removal thereof at the end of the Term) as soon as reasonably
possible and this Lease shall continue in full force and effect. If the
insurance proceeds received by Landlord are not sufficient to effect such
repair, Landlord shall contribute the short-fall and shall make such repairs as
soon as reasonably possible and this Lease shall continue in full force and
effect.

                  11.3. PARTIAL DAMAGE - UNINSURED LOSS. Subject to the
provisions of paragraphs 11.4, 11.5, and 11.6, if at any time during the Term of
this Lease there is damage which is not an Insured Loss and which falls within
the classification of Premises Partial Damage, unless caused by Tenant's breach
of this Lease or by any other act of Tenant (in which event Tenant shall make
the repairs at Tenant's expense), Landlord may at Landlord's option either (i)
repair such damage as soon as reasonably possible at Landlord's expense, in
which event this Lease shall continue in full force and effect, or (ii) give
written notice to Tenant within thirty (30) days after the date of the
occurrence of such damage of Landlord's intention to cancel and terminate this
Lease, as of the date of the occurrence of such damage. In the event Landlord
elects to give such notice of Landlord's intention to cancel and terminate this
Lease, Tenant shall have the right within ten (10) days after the receipt of
such notice to give written notice to Landlord of Tenant's intention to repair
such damage at Tenant's expense, without reimbursement from Landlord, in which
event this Lease shall continue in full force and effect, and Tenant shall
proceed to make such repairs as soon as reasonably possible. If Tenant does not
give such notice within such ten (10) day period, this Lease shall be canceled
and terminated as of the date of the occurrence of such damage.

                  11.4. TOTAL DESTRUCTION. If at any time during the Term of
this Lease there is damage, whether or not an Insured Loss (including
destruction required by any authorized public authority), which falls into the
classification of Premises Total Destruction, this Lease shall automatically
terminate as of the date of such total destruction as follows: if the Premises
Total Destruction involves both buildings, this Lease shall terminate entirely;
if the Premises Total Destruction involves only one of the buildings, this Lease
shall terminate only as to the destroyed building and not as to both, in which
event Rent will be reduced in proportion to the square footages of the two
buildings.

                  11.5. DAMAGE NEAR END OF TERM. If at any time during the last
nine (9) months of the Term of this Lease there is damage, whether or not an
Insured Loss, which falls within the classification of Premises Partial Damage,
Landlord or Tenant may terminate this Lease as of the date of occurrence of such
damage by giving written notice to the other party of the first party's election
to do so within thirty (30) days after the date of occurrence of such damage.

                  11.6. RECONSTRUCTION. Whether Landlord is required or elects
to repair the damage, Landlord will move as expeditiously as possible to settle
the insurance loss, re-design the damaged Improvements, obtain required permits
and complete the



                                      -25-
   27

repairs. In the event of non-structural damage to the Tenant Improvements,
Landlord shall, within forty-five (45) days after the damage, give Tenant a
tentative schedule of the time required to repair the damaged Improvements and,
within one hundred sixty (160) days after the damage, subject only to Force
Majeure or to Tenant Delay, complete the repairs and deliver the repaired
Improvements to Tenant Ready for Occupancy. In the event of damage to the roof
or structural damage to any of the Improvements, Landlord shall, within
seventy-five (75) days after the damage, give Tenant a tentative schedule of the
time required to repair the damaged Improvements and, within two hundred forty
(240) days after the damage, subject only to Force Majeure or to Tenant Delay,
complete the repairs and deliver the repaired Improvements to Tenant Ready for
Occupancy. Tenant's sole and exclusive remedy, given Landlord's failure to
complete repairs within such time periods, will be termination of this Lease as
to the damaged building in question but not as to the other undamaged (if
applicable) building.

                  11.7. ABATEMENT OF RENT; TENANT'S REMEDIES.

                          (a) In the event of damage described in paragraphs 
11.2 or 11.3, and Landlord or Tenant repairs or restores the Premises pursuant
to the provisions of this paragraph 11, Rent payable hereunder for the period
during which such damage, repair or restoration continues shall be equitably
abated on the damaged building in proportion to the degree to which Tenant's use
of the building is prevented, except that if seventy-five percent (75%) or more
of a building is damaged, Rent on the entire building shall be abated unless
Tenant elects, in its sole and absolute discretion, to continue to use the
building, in which event Rent shall be equitably abated as otherwise provided
herein. Except for abatement of Rent, if any, Tenant shall have no claim against
Landlord for any loss or damage (unless intentionally caused by Landlord)
including, without limitation, loss of business suffered by reason of any such
damage, destruction, repair or restoration.

                          (b) If Landlord shall be obligated, or otherwise 
elects, to repair or restore the Premises under the provisions of this paragraph
11 and shall not commence such repair or restoration within a reasonable period
of time after the casualty, with due consideration given to adjustment of loss,
plans and governmental approvals, subject to reasonable extension for Tenant
Delay or Force Majeure, or because it is otherwise impracticable for Landlord to
commence repairs within such time period, Tenant may at Tenant's option cancel
and terminate this Lease (but only as to the damaged building at issue) by
giving Landlord written notice of Tenant's election to do so at any time prior
to the commencement of such repair or restoration. In such event this Lease
shall partially terminate as of the date of such notice.

                  11.8. TERMINATION - ADVANCE PAYMENTS. Upon termination of this
Lease pursuant to this paragraph 11, an equitable adjustment shall be made
concerning advance Rent and any advance payments made by Tenant to Landlord.

                  11.9. WAIVER. Tenant waives the provisions of any statutes
which relate to termination of leases when leased property is damaged, injured
or destroyed and agrees that such event shall be governed by the terms of this
Lease.



                                      -26-
   28

         12. UTILITIES. Tenant shall pay for all water, sewer, gas, heat, light,
power, electricity, telecommunications including telephone and other utilities
and services supplied to the Premises, together with any taxes thereon. If any
such services are not separately metered to Tenant, Tenant shall pay a
reasonable proportion to be determined by Landlord in its reasonable discretion
of all charges jointly metered with other premises. Tenant is solely responsible
for all service deposits required by utilities and providers and if Landlord has
advanced any service deposit (with no obligation to do so) on behalf of Tenant,
Tenant will reimburse Landlord on demand.

         13. ASSIGNMENT AND SUBLETTING.

                  13.1. LANDLORD'S CONSENT REQUIRED. Tenant shall not
voluntarily or by operation of law assign, transfer, mortgage, sublet or
otherwise transfer or encumber all or any part of Tenant's interest in this
Lease or in the Premises, without Landlord's prior written consent, which shall
not be unreasonably withheld or delayed. Landlord and Tenant agree that the
following factors may be considered by Landlord in any reasonable determination
of the appropriateness of Tenant's request to assign or sublet the Premises:

                          (a) The financial strength of the proposed
subtenant/assignee must demonstrate an ability on the part of the
subtenant/assignee to discharge the Tenant's obligations under this Lease;

                          (b) The business reputation of the proposed
subtenant/assignee shall not be detrimental to Landlord's development;

                          (c) The use of the Premises by the proposed
subtenant/assignee must be expressly authorized under paragraph 8 and will not
be more environmentally sensitive than the use thereof by the existing Tenant.

Landlord shall respond to Tenant's request for consent hereunder within ten (10)
days of Tenant's request therefor, and any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be void, and
shall constitute a breach of this Lease. Any assignee or sublessee (including
without limitation an assignee or surviving entity under the following
subparagraph) must assume and agree to comply with and be bound by all of the
obligations of Tenant under this Lease and under any other written agreement now
or hereafter existing between Landlord and Tenant, such assumption to be in a
form reasonably satisfactory to Landlord. Landlord agrees that it shall not
intentionally and advertently release from liability any assignee or sublessee
who has assumed and agreed to comply with and be bound by all of the provisions
of this Lease.

                  Notwithstanding the foregoing, Tenant may assign its rights
under this Lease to an affiliate or to an entity into which Tenant may merge,
without Landlord's consent, so long as either (i) Tenant remains liable to
Landlord under this Lease or (ii) the creditworthiness of the affiliate or the
surviving entity, as applicable, is at least equal to that of Tenant in
Landlord's reasonable judgment. An "affiliate" is an entity that controls, is



                                      -27-
   29

controlled by or is under common control with Tenant. Landlord shall have the
right to approve the creditworthiness of the affiliate or the surviving entity,
as applicable, as a condition to any release of Tenant from liability to
Landlord under this Lease, Landlord's approval not to be unreasonably withheld.
Any release of Tenant will be prospective only and will not relieve Tenant from
any liability to Landlord for acts or omissions occurring prior to the date on
which Tenant qualifies for release.

                  13.2. NO RELEASE OF TENANT. Regardless of Landlord's consent,
no subletting or assignment shall release Tenant from Tenant's obligations past,
present or future, or alter the primary liability of Tenant to pay Rent and to
perform all other obligations to be performed by Tenant hereunder unless Tenant
has expressly been released by Landlord under the terms of paragraph 13.1. The
acceptance of Rent by Landlord from any other person shall not be deemed to be a
waiver by Landlord of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by any assignee of Tenant or any successor
of Tenant, in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
said assignee. Landlord may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to this Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto and such action shall not relieve Tenant
of liability under this Lease, provided, however, that no such amendment or
modification to this Lease shall increase the Rent or other monetary obligations
required hereunder without the prior written consent of Tenant.

                  13.3. PROFITS. In the event Landlord consents to any such
assignment or subletting, and as a condition thereto, Tenant shall pay to
Landlord fifty percent (50%) of all net profit derived by Tenant from such
assignment or subletting, after first deducting Tenant's reasonable subleasing
expenses including without limitation brokerage commission and alteration
expenses necessary for the assignee's or sublessee's occupancy. For purposes of
the foregoing, profit shall be deemed to include, but shall not be limited to,
the amount of all rent and additional rent payable by such assignee or subtenant
in excess of the Rent set forth in this Lease, and rent adjustments, payable by
Tenant under this Lease. If a part of the consideration for such assignment or
subletting shall be payable other than in cash, the payment to Landlord shall be
in cash or its share of any non-cash consideration based upon the fair market
value thereof. Tenant shall and hereby agrees that it will furnish to Landlord
upon request from Landlord a complete statement, certified by Tenant, setting
forth in detail the computation of all profit derived and to be derived from
such assignment or subletting, such computation to be made in accordance with
generally accepted accounting principles. Tenant agrees that Landlord or its
authorized representatives shall be given access at all reasonable times and
upon not less than two (2) business days' notice to the books, records and
papers of Tenant relating to any such assignment or subletting, and Landlord
shall have the right to make copies thereof. The percentage of Tenant's profit
due Landlord hereunder shall be paid to Landlord within five (5) days of receipt
by Tenant of all payments made from time



                                      -28-
   30

to time by such assignee or subtenant to Tenant. This paragraph 13.3 shall not
apply to assignments or subleases to affiliates.

                  13.4. ATTORNEY'S FEES. In the event Tenant shall assign or
sublet the Premises or request the consent of Landlord to any assignment or
subletting, then Tenant shall pay Landlord's reasonable attorneys' fees incurred
in connection therewith.

                  13.5. RECAPTURE. Notwithstanding the foregoing, if Tenant
proposes to assign the Lease or sublet one (1) entire building, Landlord shall
have the right, to be exercised by giving written notice to Tenant within ten
(10) days after receipt of Tenant's request to assign or sublet all or part of
the Premises, to recapture the space described in Tenant's request and such
recapture notice shall, if given, terminate this Lease with respect to the space
described as of the date stated in Tenant's request. Tenant's request shall
state the name and address of the proposed assignee or subtenant and a true and
complete copy of the proposed assignment or sublease shall be delivered to
Landlord with Tenant's request. This paragraph 13.5 shall not apply to
assignments or subleases to affiliates. Rent shall be pro rated if Landlord
recaptures only a portion of the Premises.

         14. DEFAULTS; REMEDIES.

                  14.1. DEFAULTS. The occurrence of any one or more of the
following events shall constitute a material default and breach of this Lease
(an "Event of Default") by Tenant:

                           (a) The failure by Tenant to make any payment of Rent
or any other payment required to be made by Tenant hereunder, as and when due,
where such failure shall continue for a period of ten (10) days after Tenant's
receipt of written notice of Tenant's failure to make such payment.

                           (b) The failure by Tenant to observe or perform any
of the covenants, conditions or provisions of this Lease to be observed or
performed by Tenant, other than described in paragraph (a) above or in
paragraphs (c) through (e) below, where such failure shall continue for a period
of thirty (30) days after written notice thereof from Landlord to Tenant;
provided, however, that if the nature of Tenant's default is such that more than
thirty (30) days are reasonably required for its cure, then Tenant shall not be
deemed to be in default if Tenant commenced such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.

                           (c) (i) The making by Tenant of any general
arrangement or assignment for the benefit of creditors; (ii) Tenant becomes a
"debtor" as defined in 11 U.S.C. Paragraph 101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within sixty (60) days; or (iv) the attachment, execution or other judicial
seizure of



                                      -29-


   31

substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within sixty (60)
days; provided, however, in the event that any provision of this paragraph
14.1(d) is contrary to any applicable law, such provision shall be enforceable
only to the fullest extent permitted by law.

                           (d) The discovery by Landlord that any financial
statement or other financial information given to Landlord by Tenant, any
assignee of Tenant, any successor in interest of Tenant (including without
limitation an entity surviving a merger with Tenant) or any guarantor of
Tenant's obligation hereunder, and any of them, was materially false or
materially misrepresented any item or condition.

                           (e) Tenant shall do or permit anything to be done
which creates a lien upon the Premises which is not paid, discharged or bonded
around within thirty (30) days after such lien is created or recorded.

                 14.2. REMEDIES. In the event of any such Event of Default by 
Tenant, Landlord may at any time thereafter, with or without further notice or
demand or termination of this Lease, and without waiving or limiting Landlord in
the exercise of any right or remedy which Landlord may have under this Lease or
otherwise at law or in equity by reason of such Event of Default exercise any
one or more of the following remedies:

                           (a) Re-enter the Premises and eject all persons
therefrom. Retain or take possession of any property belonging to Tenant upon
the Premises pursuant to Landlord's statutory landlord lien rights. Such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Tenant, and Landlord shall (unless negligent) in
no event be liable for any damage or loss thereto; or

                           (b) Lock the doors to and otherwise secure the
Premises and exclude Tenant and all other persons therefrom (except those
authorized by Landlord in its sole and absolute discretion); or

                           (c) Institute suit against Tenant to collect each
installment of rent or other sum as it becomes due or to enforce any other
obligation under this Lease; or

                           (d) With or without terminating the Lease, terminate
Tenant's right to possession of the Premises by any lawful means, judicially or
nonjudicially, in which case Tenant shall immediately surrender possession of
the Premises to Landlord and Landlord shall have the right to reenter the
Premises and remove all persons and property therefrom using all force
reasonably necessary for this purpose. In such event, or in the event of
Landlord's pursuit of its other rights and remedies, Landlord shall be entitled
to recover from Tenant all damages incurred by Landlord by reason of Tenant's
default including, but not limited to, the cost of recovering possession of the
Premises; the cost to Landlord of designing, engineering and constructing for
Tenant any tenant improvements or other features of the Improvements



                                      -30-
   32

that are of a specialized or non-general nature not ordinarily included in a
general-use building; expenses of reletting, including necessary renovation and
alteration of the Premises and the removal of special improvements made for
Tenant, reasonable attorney's fees, advertising expenses, the costs of
protecting and caring for the Premises while vacant, the cost of removing and
storing Tenant's property; any real estate commission actually paid; the worth
at the time of award by the court having jurisdiction thereof of the amount by
which the unpaid Rent for the balance of the Term after the time of such award
exceeds the amount of such rental loss for the same period that Tenant proves
could be reasonably avoided; and that portion of any leasing commission paid by
Landlord pursuant to paragraph 16 applicable to the unexpired Term of this
Lease. The foregoing amounts shall be and become immediately due and payable
from Tenant to Landlord upon the occurrence of an Event of Default, at
Landlord's election, which may be exercised, upon two (2) business days notice
to Tenant, but this sentence shall not operate to relieve Landlord from the
giving of any notice required under paragraph 14.1.

                           (e) Maintain Tenant's right to possession in which
case this Lease shall continue in effect whether or not Tenant shall have
abandoned the Premises. In such event Landlord shall be entitled to enforce all
of Landlord's rights and remedies under this Lease, including, without
limitation, the right to recover Rent as it becomes due hereunder and any other
damages incurred by Landlord from time to time. Notwithstanding that Landlord
shall have maintained Tenant's right to possession or shall not have terminated
the Lease for an Event of Default, Landlord may at any time thereafter, upon
notice to Tenant, terminate the Lease and/or Tenant's right to possession for
such prior Event of Default.

                           (f) Pursue any other remedy now or hereafter
available to Landlord under the laws or judicial decisions of the state wherein
the Premises are located. Unpaid installments of Rent and other unpaid monetary
obligations of Tenant under the terms of this Lease shall bear interest from the
date due at the rate of two (2) points over the announced prime rate of Bank of
America in existence from time to time.

                           (g) No such re-entry or taking of possession or other
remedial action by Landlord shall be construed as an election on Landlord's part
to terminate or surrender this Lease unless a written notice of such intention
is then or thereafter served on Tenant.

                           (h) No failure by Landlord to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease or to
exercise any right or remedy consequent upon a breach thereof, and no acceptance
of full or partial Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement, term or
condition. No covenant, agreement, term or condition of this Lease to be
performed or complied with by Tenant, and no breach thereof, shall be waived,
altered, modified or terminated except by written instrument executed by
Landlord. No waiver of any breach shall affect or alter this Lease, but each and
every covenant, agreement, term and condition of this Lease shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof.



                                      -31-
   33

                           (i) If Tenant breaches any of the covenants,
agreements, terms or conditions contained in this Lease, Landlord shall be
entitled to enjoin such breach or threatened breach, and to invoke any right and
remedy allowed at law or in equity or by statute or otherwise as though
re-entry, summary proceedings and other remedies were not provided for in this
Lease.

                 14.3. DEFAULT BY LANDLORD.

                           (a) Landlord shall not be in default under this Lease
unless Landlord fails to perform obligations required of Landlord within a
reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligation; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance
then Landlord shall not be in default if Landlord commences performance within
such thirty (30) day period and thereafter diligently prosecutes the same to
completion. Subject to Tenant's rights under paragraph 9.4, which shall be
unaffected by the terms of this paragraph 14.3, Tenant shall have the right as
its sole and exclusive remedy to seek specific performance of this Lease and sue
for any direct out-of-pocket expenses it incurs as a result of Landlord's
material default in the event Landlord and the holder of any first mortgage or
deed of trust covering the Premises fail to cure within the grace periods
allotted hereunder a material default of Landlord under this Lease.

                           (b) LANDLORD AND TENANT, EACH BEING FULLY INFORMED BY
THEIR RESPECTIVE COUNSEL OF THE LEGAL CONSEQUENCES, WAIVE THE RIGHT TO TRIAL BY
JURY.

                 14.4. LATE CHARGES. Tenant hereby acknowledges that late
payment by Tenant to Landlord of Rent and other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of Rent or any other sum due from
Tenant shall not be received by Landlord or Landlord's designee within fifteen
(15) days after such amount shall be due, then, without any requirement for
notice to Tenant, Tenant shall pay to Landlord a late charge equal to five
percent (5%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of Rent, then Rent shall automatically become due and payable



                                      -32-
   34

quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any
other provision of this Lease to the contrary.

                           Notwithstanding the foregoing, no late charge will be
assessed against Tenant the first three times any payment is late so long as the
payments are received by Landlord within five (5) business days after Landlord's
notice to Tenant of Tenant's late payment(s).

                 14.6. IMPOUNDS. In the event that a late charge is payable 
hereunder, whether or not collected, three or more times during a given twelve
(12) month period under the terms of this Lease, Tenant shall pay to Landlord,
if Landlord shall so request, in addition to any other payments required under
this Lease, a monthly advance installment, payable at the same time as the
monthly Rent, as estimated by Landlord, for Real Property Tax and insurance
expenses on the Premises which are payable by Tenant under the terms of this
Lease. Such fund shall be established to insure payment when due, before
delinquency, of any or all such Real Property Taxes and insurance premiums. If
the amount paid to Landlord by Tenant under the provisions of this paragraph are
insufficient to discharge the obligations of Tenant to pay such Real Property
Taxes and insurance premiums as the same become due, Tenant shall pay to
Landlord, upon Landlord's demand, such additional sums necessary to pay such
obligations. All moneys paid to Landlord under this paragraph may be
intermingled with other moneys of Landlord and shall not bear interest. In the
event of a default in the obligations of Tenant to perform under this Lease,
then any balance remaining from funds paid to Landlord under the provisions of
this paragraph may, at the option of Landlord, be applied to the payment of any
monetary default of Tenant in lieu of being applied to the payment of Real
Property Tax and insurance premiums and Tenant shall still be liable for and pay
promptly upon demand the Real Property Tax and insurance premiums required under
this Lease.

                  14.6. DISPUTE RESOLUTION. Any dispute, controversy or claim
arising out of or relating to this Lease, or the breach thereof, including, but
not limited to, any action sounding in tort or breach of any duty or obligation,
but excluding any claim or remedy for equitable relief and excluding any claim
or remedy for Rent or additional rent or other monetary sums owed, will be
resolved by arbitration. The arbitration will be conducted under the auspices of
the American Arbitration Association in accordance with the Federal Arbitration
Act (9 U.S.C. Section 1 et seq.). The arbitrators will conduct the hearing and
determine the matter in accordance with the Commercial Rules of the American
Arbitration Association. Any controversy in interpretation or enforcement, or
whether an issue is arbitrable, must be determined by the arbitrators. Each
party is entitled to present evidence and argument to the arbitrators, and to be
represented by counsel. Anything in this Section to the contrary
notwithstanding, the arbitrators have the right only to interpret and apply the
terms, covenants, agreements, provisions, conditions or limitations of this
Lease, and may not change any such terms, covenants, agreements, provisions,
conditions or limitations or deprive any party to this Lease of any right or
remedy expressly or impliedly provided in this Lease or by law or equity.



                                      -33-
   35

         15. CONDEMNATION. If the Premises or any portion is taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If only one of the buildings is taken by
condemnation, this Lease shall terminate only as to the building taken and not
as to both, in which event Rent will be reduced in proportion to the square
footages of the two buildings. If 33% or more of the floor area of either
building is taken by condemnation, either Landlord or Tenant shall have the
right to terminate this Lease as to such building but not as to the other as of
the date the condemning authority takes title or possession, whichever first
occurs, upon giving written notice of such election within ten (10) days after
Landlord shall have given Tenant written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken title or possession, whichever first occurs). In the event of a
termination resulting from such a taking, both Landlord and Tenant shall be
released from further liability under the Lease as to the building involved. If
Landlord or Tenant do not terminate this Lease in accordance with the foregoing,
this Lease shall remain in full force and effect as to the portion of the
building remaining, except that Rent shall be reduced in the proportion that the
floor area taken bears to the total floor area of the building in question. If
the nature, location or extent of any proposed taking or appropriation affecting
the Premises is such that Landlord elects in good faith to demolish all or
substantially all of either building, then Landlord shall have the right to
terminate this Lease as to the affected building upon giving notice of
termination to Tenant at any time after such condemnation. In the event of such
termination, both Landlord and Tenant shall be released from any further
liability under this Lease as to the building or buildings, as applicable, that
is (are) terminated.

                  Any award for the condemnation of all or any part of the
Premises (including all Tenant Improvements) shall be the property of Landlord,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Tenant shall be entitled to pursue against the condemning
authority but not against Landlord any award to which Tenant may be entitled
from such condemning authority for loss of or damage to Tenant's trade fixtures,
removable personal property and alterations and improvements paid for by Tenant.
If this Lease is terminated, an equitable adjustment shall be made within a
reasonable period of time concerning advance rent and any advance payments made
by Tenant to Landlord. In the event that this Lease is not terminated by reason
of such condemnation, Landlord shall to the extent of severance damages received
by Landlord, free of any claim of the holder of a mortgage or deed of trust on
the Premises, in connection with such condemnation, repair any damage to the
Premises caused by such condemnation except to the extent that Tenant has been
reimbursed therefor by the condemning authority. Tenant hereby waives any
statutory rights of termination which may arise by reason of any partial taking
of the Premises by condemnation.



                                      -34-
   36

         16. BROKER'S FEE.

                  (a) DMI Estate Properties, Inc. ("DMI"), a licensed real
estate broker in the State of Arizona, represents Landlord with respect to this
Lease transaction. DMI, on behalf of Landlord, will enter (or has entered) into
a commission agreement with PICOR and CB Commercial. Landlord shall pay to PICOR
and to CB Commercial a real estate brokerage fee per the terms of such
commission agreement. Neither the broker named above nor any other real estate
agent, salesperson, finder or broker shall be deemed or considered as a third
party beneficiary of this paragraph. Landlord and Tenant may alter, amend or
modify this Lease or any related document without the consent of any such
broker, salesperson, agent or finder. Excepting Landlord's obligation to PICOR
and to CB Commercial, Landlord and Tenant each hereby agree to indemnify and
defend the other from and against any claim for commission or brokerage or
finders fees from any party claiming all or part of same arising out of a
relationship with or through the indemnifying party and the indemnifying party
shall defend any claim or action for a commission or fee by counsel acceptable
to the indemnified party promptly upon notice from the indemnified party.

         17. ESTOPPEL CERTIFICATE; COOPERATION WITH LANDLORD'S LENDERS;
FINANCIAL INFORMATION.

                  (a) Tenant shall at any time upon not less than fifteen (15)
days prior written notice from Landlord execute, acknowledge and deliver to
Landlord a statement in writing (i) certifying, if true, that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modifications and certifying that this Lease, as so modified, is in full
force and effect) and the date to which Rent and other charges are paid in
advance, if any; (ii) acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed; (iii) acknowledging that the Premises are in the
condition called for in the Lease and the Improvements have been satisfactorily
completed, or if not, then specifying why they are not; (iv) acknowledging that
Tenant has unconditionally accepted the Premises, is in possession thereof, and
no defense to the Lease enforcement exists, or if such is not the case, then
specifying why; and (v) agreeing to provide any Landlord mortgagee or lender
with reasonable opportunity to cure defaults by the Landlord, Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrancer of
the Premises, who, at Landlord's request, shall be co-addressees of the
statement.

                  (b) At Landlord's option, Tenant's failure to deliver such
statement within such time shall be a material breach of this Lease or shall be
conclusive upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, (iii) that not more than one month's
rent has been paid in advance; (iv) that the Premises have been satisfactorily
completed by Landlord and that Tenant is in possession thereof; (v) that no
defenses exist to the enforcement of the Lease; and (vi) that Tenant agrees to
be bound by provision (v) in paragraph 17(a) above.



                                      -35-

                                       
   37

                  (c) if Landlord desires to finance, refinance or sell the
Premises, or any part thereof, or if Landlord's lender requires financial
information on Tenant, Tenant hereby agrees to deliver to any lender or
purchaser designated by Landlord such financial statements of Tenant as may be
reasonably required by such lender or purchaser. Such statements shall be
limited to Tenants past three (3) year's annual reports and/or any quarterly
reports (unaudited) issued during such period. All such financial statements
shall be received by Landlord and such lender or purchaser in confidence and
shall be used only for the purposes herein set forth.

                  (d) Tenant hereby represents and warrants to Landlord that all
balance sheets, statements of profit and loss and other financial data furnished
by Tenant and any guarantor to Landlord (the "Financial Information") prior to
the execution of this Lease fairly present the financial condition of Tenant and
such guarantor as of the dates thereof, and the results of its operations for
the periods for which the same are furnished; and there has been no change in
the assets, liabilities or financial condition of Tenant and such guarantor from
that set forth in the Financial Information, other than changes in the ordinary
course of business, none of which changes has been materially adverse to Tenant
and such guarantor. The foregoing representations and warranties shall apply
equally to all financial information furnished by Tenant and any guarantor to
Landlord after the execution of this Lease.

                  Tenant hereby acknowledges that the Financial Information is a
material inducement to Landlord's entering into this Lease with Tenant.

         18. LANDLORD'S LIABILITY. The term "Landlord" as used herein shall mean
only the owner or owners at the time in question of the fee title or a Tenant's
interest in a ground lease of the Premises. In the event of any transfer of such
title or interest, Landlord herein named (and in case of any subsequent
transfers then the grantor) shall be relieved from and after the date of such
transfer of all liability as respects Landlord's obligations thereafter to be
performed, provided that any funds in the hands of Landlord or the then grantor
at the time of such transfer, in which Tenant has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Landlord shall, subject as aforesaid, be binding on Landlord's
successors and assigns only during their respective periods of ownership.

                  Tenant agrees to look solely to Landlord's interest in the
Premises and the proceeds thereof for the recovery of any judgment from Landlord
or the payment of any obligation, liability or claim under, arising out of or
relating to this Lease, it being hereby agreed that except to the extent of
Landlord's interest in the Premises and the proceeds thereof, Landlord, any
assets of Landlord, or if Landlord is a partnership, its partners whether
general or limited, or if Landlord is a corporation, Landlord, its directors,
officers or shareholders, or if Landlord is a limited liability company,
Landlord and its members shall never be liable for any judgments, claims,
obligations or liabilities under, arising out of, or relating to this Lease.



                                      -36-

                                       
   38

         19. SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

         20. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein
provided, any amount due to Landlord not paid when due shall bear interest from
the date due at the rate of two points over the prime rate of Bank of America
announced from time to time. Payment of such interest shall not excuse or cure
any default by Tenant under this Lease, provided, however, that interest shall
not be payable on late charges incurred by Tenant nor on any amounts upon which
late charges are paid by Tenant. If Tenant's default is subject to late charge,
Landlord may charge interest or impose the late charge as it sees fit, but may
not impose both on the same defaulted obligation. The reciprocal is true: Any
amount Landlord owes to Tenant if not paid when due shall bear interest from the
date due at the rate of two points over the prime rate of Bank of America
announced from time to time.

         21. TIME OF ESSENCE. Time is of the essence of each and every
obligation and duty under this Lease.

         22. ADDITIONAL RENT. Any monetary obligation of Tenant to Landlord
under the terms of this Lease shall be deemed to be additional rent and shall be
collectible as such.

         23. INCORPORATION OF PRIOR AGREEMENTS; DISCLAIMER OF REPRESENTATIONS
AND WARRANTIES; AMENDMENTS. This Lease contains all agreements of the parties
with respect to the Premises. No prior agreement, representation or
understanding, whether oral or written, pertaining to any such matter shall be
effective. Landlord hereby disclaims all representations and warranties, express
or implied, and all covenants, promises, and understandings, concerning the
condition, suitability, or habitability of the Premises, excepting only those
which are set forth in this Lease explicitly. This Lease may be modified in
writing only, signed by the parties in interest at the time of modification.
Tenant hereby acknowledges that no real estate broker or agent or any agent or
employee of Landlord made any oral or written warranties or representations to
Tenant relative to the condition or use by Tenant of the Premises.

         24. NOTICES. Any notice or demand required or permitted to be given
hereunder shall be in writing and may be given by personal delivery (which may
include overnight courier, and facsimile transmission followed by a mailed copy)
or by certified mail, postage prepaid, return receipt requested, and if given
personally or by mail, shall be deemed sufficiently given if addressed to Tenant
or to Landlord at the address noted below the signature of the respective
parties, as the case may be. Either party may by notice to the other specify a
different address for notice purposes. Any notice shall be deemed received upon
personal delivery or three (3) days after deposit into U.S. Mail.

         25. WAIVERS. No waiver by Landlord of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Tenant of



                                      -37-

   39

the same or any other provision. Landlord's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Landlord's consent to
or approval of any subsequent act by Tenant. The acceptance of rent hereunder by
Landlord shall not be a waiver of any preceding breach by Tenant of any
provision hereof, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent. The reciprocal is true: No waiver by Tenant of
any provision hereof shall be deemed a waiver of any other provision hereof or
of any subsequent breach by Landlord of the same or any other provision.

         26. RECORDING; CONFIDENTIALITY. If Tenant requests, the parties shall
execute a short-form memorandum of lease in recordable form setting forth the
date of the Lease, the names of the parties, a description of the premises, the
length of the term (and any renewal provisions), but in no event shall such
short-form memorandum of lease set forth the rental rate or any other
"Proprietary" information belonging to Landlord.

                  Landlord and Tenant agree to maintain to the greatest degree
practicable the confidentiality of this transaction. Tenant shall control the
communication process relative to communications to the community and the press
including press releases. Tenant will coordinate these communications with
Landlord.

         27. HOLDING OVER. If Tenant, with Landlord's consent, remains in
possession of the Premises or any part thereof after the expiration of the Term
hereof and without executing a new lease therefor, such occupancy shall be a
tenancy from month to month at a rental in the amount of 125% of the rent paid
or payable during the last month of the Term of this Lease plus all other
charges payable hereunder and upon all the other provisions of this Lease
pertaining to the obligations of Tenant, but all options and rights of first
refusal, if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during such month-to-month tenancy. If
Tenant, without Landlord's express written consent, remains in possession of the
Premises or any part thereof after expiration of the Term hereof, Landlord may
re-enter and take possession of the Premises and have all other remedies set
forth in Paragraph 14.2, provided that in addition to such remedies (and not in
lieu thereof), Tenant shall pay for each day of occupancy after expiration of
the Term hereof a sum equal to 150% of the monthly rent for the last month of
the Term prorated on a daily basis based upon a thirty day month.

                  Notwithstanding the foregoing, if Landlord and Tenant are
involved after the end of the Term in good faith negotiations that ultimately
result in an extension of the Term, the Rent payable during the period of
negotiation shall be at the rate payable during the last month of the Term
without increase during the period of good faith negotiation.

         28. CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies hereunder or at law or in equity.



                                      -38-
   40

         29. COVENANTS AND CONDITIONS. Each provision of this Lease performable
by Tenant shall be deemed both a covenant and a condition.

         30. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Tenant and subject to the provisions of
paragraph 18, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State of
Arizona.

         31. SUBORDINATION.

                  (a) This Lease, at Landlord's option, shall be subordinate to
any ground lease, mortgage, deed of trust, or any other hypothecation or
security hereafter placed upon the Premises and to any and all advances made on
the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. If any mortgagee, deed of trust beneficiary
or trustee, or ground lessor shall elect to have this Lease prior to the lien of
its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of
trust, or ground lease, whether this Lease is dated prior or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.

                  (b) Tenant agrees to execute any documents reasonably required
to effectuate an attornment, a subordination or to make this Lease prior to the
lien of any mortgage or deed of trust covering the Premises, provided that
Tenant shall concurrently receive a nondisturbance agreement from such lender in
form reasonably acceptable to Tenant. Tenant's failure to execute such documents
within fifteen (15) days after written demand shall constitute an Event of
Default by Tenant hereunder.

         32. ATTORNEY'S FEES. If either party named herein brings an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
such action, on trial or appeal, shall be entitled to its reasonable attorneys'
fees to be paid by the losing party as fixed by the court.

         33. LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the
right to enter the Premises at all reasonable times and (unless an emergency)
upon not less than forty-eight (48) hours' notice and from time to time for the
purpose of inspecting the same, showing the same to prospective purchasers,
lenders, or tenants (only during the last one hundred eighty (180) days of the
Term), and making such alterations, repairs, improvements or additions to the
Premises as Landlord may deem necessary or desirable. Landlord may at any time
place on or about the Premises any ordinary "For Sale" signs and Landlord may at
any time during the last one hundred eighty (180) days of the Term hereof place
on or about the Premises any ordinary "For Lease" signs, all without rebate of
rent or liability to Tenant. If Landlord is placing "For Sale" signs on or about
the Premises, Landlord will consult with Tenant in good faith to find a
reasonable way to avoid giving the impression that Tenant is selling its
business or going out of business.



                                      -39-
   41

         34. AUCTIONS. Tenant shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without first
having obtained Landlord's prior written consent.

         35. SIGNS. Tenant shall not place any sign upon the exterior of the
Premises without Landlord's prior written consent, which shall not be
unreasonably withheld or delayed. Tenant's signs must comply with applicable
CC&R's and sign regulations. Entry monumentation will be constructed along
Tucson Boulevard providing Tenant with identification. It is expected that
Country Club Commerce Center will also provide Tenant with signage on the entry
monument. Tenant will also be provided additional signage at the entry to the
Premises off the planned private roadway that will connect the Premises with
Tucson Boulevard. All signage and monumentation shall comply with applicable
CC&R's and sign regulations.

         36. MERGER. The voluntary or other surrender of this Lease by Tenant,
or a mutual cancellation thereof, or a termination by Landlord, shall not work a
merger, and shall, at the option of Landlord, terminate all or any existing
subtenancies or may, at the option of Landlord, operate as an assignment to
Landlord of any or all of such subtenancies.

         37. INTENTIONAL DELETION

         38. QUIET POSSESSION. Upon Tenant paying Rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire Term hereof against the acts of
Landlord, subject to all of the provisions of this Lease. The individuals
executing this Lease on behalf of Landlord represent and warrant to Tenant
that they are fully authorized and legally capable of executing this Lease on
behalf of Landlord and that such execution is binding upon all parties holding
an ownership interest in the Premises.

         39. OPTIONS.

                  39.1. DEFINITION. If Landlord has granted Tenant any option or
right of first refusal in the Addendum, as used in this paragraph the word
"Option(s)" shall have the meanings set forth in the Addendum.

                  39.2. OPTIONS PERSONAL. Each Option granted to Tenant in this
Lease is personal to Tenant and any affiliate of Tenant (as defined in paragraph
13.1) and any entity into which Tenant may merge, and may not be exercised or be
assigned, voluntarily or involuntarily, by or to any other person or entity. No
assignee or sublessee of Tenant's rights under this Lease shall have the right
to exercise any Option granted under this Lease. The Options granted to Tenant
are not assignable separate and apart from this Lease. Options granted to
Tenant, if any, shall be granted only in the Addendum. Notwithstanding anything
in paragraph 39 to the contrary, nothing in paragraph 39 is intended to or shall
be deemed to grant to Tenant any Options.



                                      -40-
   42

                  39.3. MULTIPLE OPTIONS. In the event that Tenant has any
multiple options to extend or renew this Lease a later Option cannot be
exercised unless the prior Option to extend or renew this Lease has been so
exercised.

                  39.4. EFFECT OF DEFAULT ON OPTIONS.

                           (a) Tenant shall have no right to exercise an
Option, notwithstanding any provision in the grant of Option to the contrary,
(i) during the time commencing from the date Landlord gives to Tenant a notice
of default pursuant to paragraph 14.1 and continuing until the default alleged
in such notice of default is cured, or (ii) at any time after any other Event of
Default described in paragraph 14.1, or (iii) in the event that Landlord has
given to Tenant three or more notices of default under paragraph 14.1, or Tenant
has committed an Event of Default three or more times under paragraph 14.1,
whether or not the Events of Default are cured, in each case during the twelve
(12) month period prior to the time that Tenant intends to exercise the Option.

                           (b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Tenant's inability to
exercise an Option because of the provisions of the foregoing paragraph. An
Option and all rights of Tenant thereunder shall terminate upon the termination
or expiration of this Lease or upon the termination of Tenant's right of
occupancy under this Lease.

                           (c) All rights of Tenant under the provisions of an
Option shall terminate and be of no further force or effect, notwithstanding
Tenant's due and timely exercise of the Option, if, after such exercise and
during the Term of this Lease, Tenant commits an Event of Default which has not
been cured or an Event of Default which by its nature cannot be cured under
paragraph 14.1.

         40. SECURITY MEASURES. Tenant hereby acknowledges that Rent payable to
Landlord hereunder does not include the cost of guard service or other security
measures and that Landlord shall have no obligation whatsoever to provide same.
Tenant assumes all responsibility for the protection of Tenant, its agents, its
employees and servants, its invitees and its property from acts of third
parties.

         41. EASEMENTS; RULES AND REGULATIONS; ETC. Landlord reserves to itself
the right, from time to time, to grant such easements, rights, dedications,
plats and replats that Landlord reasonably deems necessary or desirable, and to
cause the recordation of same, so long as such do not unreasonably interfere
with the use of or access to the Premises by Tenant. Tenant shall sign any of
the aforementioned documents upon request of Landlord.

                  Landlord may establish from time to time reasonable rules and
regulations applicable to the Premises for the benefit, care, management and
operation of the Premises. Landlord shall provide Tenant with reasonable notice
of all rules and



                                      -41-
   43

regulations. Tenant agrees to faithfully observe and comply with all such
reasonable rules and regulations.

         42. FORCE MAJEURE. Neither party shall be responsible for any delay or
failure in the observance or performance of any term or condition of this Lease
to be observed or performed by it other than payment of Rent, payment of any
other monetary obligation or discharge of an insurance obligation to the extent
that such delay or failure results from action, omission, or order of, or
failure or refusal to grant approvals by, governmental authorities; unexpected
or uncommon delays in the issuance of building or other permits; civil
commotions; strikes, fires, acts of God or the public enemy; inability to
procure labor, material, fuel, electricity, or other forms of energy; any
weather-caused delay or any other cause beyond the reasonable control of a
party, whether or not similar to the matters herein specifically enumerated.
Notwithstanding the foregoing, Force Majeure shall not include Landlord's
failure to satisfy any applicable zoning conditions to the development or use of
the Premises. Any such delay or failure shall extend by like time any period of
performance by Landlord or Tenant and shall not be deemed a breach of or failure
to perform this Lease or any provisions hereof, and the foregoing provision
shall take precedence over any other provision in this Lease to the contrary.

         43. AUTHORITY. If Tenant is a corporation, trust, general or limited
partnership, or limited liability company, each individual executing this Lease
on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of said entity.

         44. CONFLICT. Any conflict between the printed provisions of this Lease
and any typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions. The Addendum shall be controlling over
the foregoing provisions of this Lease.

         45. ADDENDUM. Attached hereto is the Addendum which constitutes an
integral part of this Lease.



                                      -42-
   44
         The parties hereto have executed this Lease on the dates specified
immediately next to their respective signatures.

LANDLORD:                              TENANT:


TACC INVESTORS, LLC                    INTUIT INC., a Delaware corporation


By: DIAMOND VENTURES, Inc.
    Its: Manager


    By /s/ [SIG]                       By /s/ [SIG]
       -------------------------          --------------------------------------
       Its   President                    Its Chief Financial Officer & Vice
                                              President of Finance & Corporate 
                                              Services
                                              ----------------------------------
Executed on: 4/22/98                   Executed on:   April 15, 1998
             -------------------                    ----------------------------


Address:                               Address:

2200 East River Road                   Intuit Inc.
Tucson, AZ 85718                       ________ Tucson   Blvd.
Attn: Diamond Ventures, Inc.,          Tucson, Arizona _________
      Manager                          Attn: Real Estate Manager
Fax: 520-299-5602

                                       With a copy to:
                                       Intuit Inc.
                                       2550 Garcia Avenue, 2nd Floor
                                       Mountain View, CA 94043
                                       Attn: Vice President of Finance
                                             And Corporate Services
                                       Fax: 650-944-5499

                                       And with a copy to:
                                       Intuit Inc.
                                       2550 Garcia Avenue, 2nd Floor
                                       Mountain View, CA 94043
                                       Attn: General Counsel
                                       Fax: 650-944-6622



                                      -43-
   45

                                                                     EXHIBIT A

                                     MAP OF

                           Intuit Teleservice Center
                         Tucson Airport Commerce Center
   46
                        ADDENDUM TO BUILD TO SUIT LEASE
                              Dated APRIL 8, 1998
                        between TACC INVESTORS, LLC and
                                  INTUIT INC.


        THIS ADDENDUM TO BUILD TO SUIT LEASE ("Addendum") is attached to and 
made a part of the attached Build to Suit Lease between TACC Investors, LLC, 
an  Arizona limited liability company, as Landlord, and Intuit Inc., a Delaware 
corporation, as Tenant. In the event of any conflict between the terms of this 
Addendum and the terms of the attached Build to Suit Lease, the terms of this 
Addendum shall govern. This Addendum and the attached Build to Suit Lease are 
collectively called the "Lease".

        46.   OPTIONS TO EXTEND. Subject to the terms and conditions of 
paragraph 39, Tenant shall have the right to extend the Term of this Lease for 
two (2) successive periods of five (5) years each (the "Renewal Terms"), by 
giving written notice of exercise of these options to Landlord at least six (6) 
months before expiration of the Initial Term and the First Renewal Term, as 
applicable. Each Renewal Term shall be on the same terms and conditions of this 
Lease (unless patently inapplicable) except that Rent payable by Tenant to 
Landlord during each of the Renewal Terms shall be calculated as follows:

              (a)  The monthly Rent rate per square foot for each Renewal Term 
shall be increased (but not decreased) by a factor equal to the cumulative 
percentage increases in the Consumer Price Index occurring since the last 
preceding adjustment in Rent, such increase not to be less than one percent 
(1%) nor to exceed four percent (4%), per year. Such increase shall be 
effective as of the first day of the First Renewal Term and the first day of 
the Second Renewal Term, respectively.

              (b)  During each Renewal Term the monthly Rent rate shall be 
further increased (but not decreased) every other year based on the cumulative 
percentage increase in the Consumer Price Index during the preceding year, not 
to be less than one percent (1%) nor to exceed four percent (4%), per year.

              (c)  Whenever this Lease requires an adjustment of the Rent 
payable by Tenant to Landlord based on Consumer Price Index Increases, the 
final Consumer Price Index published nearest the adjustment date shall apply. 
If the Consumer Price Index is changed so that the "base year" differs from 
that used herein, the Consumer Price index shall be converted in accordance 
with the conversion factor published by the United States Department of Labor, 
Bureau of Labor Statistics. If the Consumer Price Index is discontinued or 
revised during the Term of this Lease, such other government index or 
computation with which it is replaced shall be used in order to obtain 
substantially the same result as would be obtained if the Consumer Price Index 
had not been discontinued or revised. On any adjustment of Rent based on the 
Consumer Price Index (or its replacement) Landlord and Tenant shall immediately 
execute an amendment to this Lease reflecting the new Rent.

                                      -1-
   47

        47.  EXPANSION. Landlord and Tenant have identified the eight-acre
vacant parcel of land (the "Expansion Area") situated adjacent to and west of
the Premises, as shown on Exhibit A, as a site suitable for Tenant's future
expansion plans (the "Expansion"). (Within thirty (30) days after the date of
this Lease Landlord will provide in the form of Exhibit D, which shall be
attached to this Lease, an accurate legal description of the Expansion Area
prepared by a reputable and licensed civil engineer or surveyor.) Two Expansion
scenarios are possible. Scenario One would involve an expansion of the
then-existing Improvements to add a minimum of an additional thirty thousand
(30,000) square feet and a maximum of an additional one hundred thousand
(100,000) square feet of building space and a proportionate amount of additional
parking spaces. Scenario One may or may not involve the Expansion Area. Scenario
Two would involve development of an entirely new building or buildings on the
Expansion Area. Any expansion under Scenario One or Scenario Two must move in an
east-to-west direction and not west-to-east.

             Accordingly, if Landlord desires to sell, lease, or otherwise use 
all or any part of the Expansion Area for a purpose inconsistent with Tenant's 
Expansion ("Landlord's Alternate Use"), Landlord shall promptly give Tenant 
written notice of Landlord's proposed Alternate Use, whereupon Tenant shall have
fifteen (15) days following Tenant's receipt of Landlord's notice to advise 
Landlord of Tenant's election to negotiate with Landlord for an Expansion. If 
Tenant does not so elect, or if after good faith negotiations Landlord and 
Tenant fail for any reason to sign an agreement for Tenant's Expansion within 
thirty (30) days after Landlord's receipt of Tenant's reply (either event being 
considered a "Waiver"), Landlord may thereafter proceed with the Alternate Use 
free of any right or claim of Tenant. If the Alternate Use involves only a 
portion of the Expansion Area, Tenant's rights under this paragraph will 
continue in the remainder of the Expansion Area, except that Tenant's right to 
expand into the Expansion Area will cease should the Expansion Area be fewer 
than two (2) acres in size due to previous Waiver(s) or for any other reason, 
and no expansion in the Expansion Area shall leave Landlord with fewer than 
two (2) undeveloped acres. Tenant shall be deemed to have exercised its rights 
hereunder when Tenant shall have advised Landlord of Tenant's election to 
negotiate with Landlord for an Expansion.

             If Tenant has exercised its rights hereunder, the following terms 
and conditions will apply:

             (a)    Scenario One. All terms and conditions of an Expansion 
under Scenario One including, without limitation, shell Base Building, Tenant 
Improvements, time for buildout, Tenant improvement allowance and all other 
economic factors will be the product of good faith negotiation between the 
parties since these terms and conditions are not inferable from the terms of 
this Lease due to the nature of development and changing economic conditions, 
except for the following terms and conditions, and no agreement regarding an 
Expansion under Scenario One shall be binding upon either party until a 
mutually acceptable amendment to this Lease has been executed by Landlord and 
Tenant with the approval of their respective counsel:

                                      -2-
   48
               (i)  The Term of this Lease for the entire Premises, including
the Expansion, will be adjusted and extended for a term of ten (10) years
commencing on the date the Expansion Area is Ready for Occupancy, subject to
further extension(s) under paragraph 46, except that the total Term of this
Lease shall in no event exceed thirty (30) years, which shall end no later than
twenty (20) years after the end of the initial Term calculated under paragraph
3.1.

               (ii) The rental rate setting the Rent for the new square footage
in the Expansion (the "New Space") (but not the original Premises) shall be
based initially on the then-prevailing Market Rental Rate for a comparable
building improvement in the vicinity of the Premises as reasonably determined by
Landlord and Tenant. If Landlord and Tenant are unable to agree on the Market
Rental Rate, Landlord and Tenant shall select a highly qualified and reputable
real estate professional with at least ten (10) years of experience in the
relevant leasing market (the "Arbiter") to determine the Market Rental Rate. If
Landlord and Tenant are unable to agree on the Arbiter, the resident manager of
the largest commercial real estate brokerage firm in Tucson will select the
Arbiter from a major brokerage firm other than the resident manager's own firm.
The term "largest"  means the brokerage firm with the largest sales volume in
the preceding calendar year. The term "major" means a brokerage firm ranking in
the top four in sales volume in Tucson. the terms "largest" and "major" shall
exclude (1) CB Commercial; (2) Picor; and (3) DMI Estate Properties, Inc.

                    The initial rental rate setting the Rent for the New Space
will be periodically adjusted based on the formulas in paragraphs 4.1 and 46
that determine the Rent for the original Premises.

          (b)  Scenario Two.  All terms and conditions of an Expansion under
Scenario Two including, without limitation, shell Base Building, Tenant
Improvements, time for buildout, Tenant Improvement allowance, rental rate and
all other economic factors will also be the product of good faith negotiation
between the parties since these terms and conditions are not inferable from the
terms of this Lease due to the nature of development and changing economic
conditions, and no agreement regarding an Expansion under Scenario Two shall be
binding upon either party until a mutually acceptable final lease agreement has
been executed by Landlord and Tenant with the approval of their respective
counsel.

          (c)  Development of any Expansion shall be in strict compliance with
applicable law and regulations, CC&R's and, to the extent applicable, the
provisions of this Lease.

          (d)  If any dispute should arise under this paragraph 47, either party
shall have the right to resolve the dispute through an action for declaratory
judgment or for specific performance, but neither party shall have, and hereby
waives, the right to terminate this Lease over such dispute.



                                      -3-

   49
               (e)  The obligations of Landlord under this paragraph 47 shall be
binding on any successor of Landlord, except any institutional lender entity who
is the successor to Landlord as the result of foreclosure of a mortgage or deed
of trust, exercise of the trustee's power of sale under a deed of trust
encumbering any such interest of Landlord, or any conveyance in lieu of
foreclosure ("Successor Through Foreclosure"). If any Successor Through
Foreclosure does not elect in its sole and absolute discretion to undertake the
Expansion pursuant to this paragraph 47, Tenant may do so itself through a
licensed contractor in strict compliance with the terms and conditions of
paragraph 9.5, except that the cost limitations therein shall not apply to the
Expansion. If the Expansion is built by Tenant under this paragraph, a condition
precedent thereto shall be Tenant's purchase of the Expansion Area at its then
fair market value. If Tenant and the then fee owner of the Expansion Area are
unable to agree on the fair market value of the Expansion Area, fair market
value shall be determined by the same procedure that determines the Market
Rental Rate under this paragraph 47.

          48.  Day Care Center.    Landlord acknowledges Tenant's desire to
incorporate a day care center into Tenant's "Campus" at Country Club Commerce
Center. Landlord is prepared to establish a "pad" for the desired day care
center and to explore with Tenant and operators of day care centers a center at
Country Club Commerce Center that would serve the needs of Tenant's employees
and the employees of other employers and residents in the Tucson International
Airport area. Neither party is required to establish a day care center at
Country Club Commerce Center but if either party desires to pursue discussions,
the other party will participate in the discussions in good faith. If any
dispute should arise under this paragraph 48, either party shall have the right
to resolve the dispute through an action for declaratory judgment or for
specific performance, but neither party shall have, and hereby waives, the right
to terminate this Lease over such dispute.



                                      -4-

EX-10.27

   1
                                                                  EXHIBIT 10.27


                               AMENDMENT TO LEASE

     This Amendment to Lease ("Amendment") is entered into effective April 14, 
1998, by and between KILROY REALTY, L.P., a Delaware limited partnership 
("LANDLORD"), and INTUIT INC., a Delaware corporation ("TENANT"), with 
reference to that certain Lease dated as of June 9, 1995, by and between 
Landlord (as successor to UTC Greenwich Partners, L.P., a California limited 
partnership) and Tenant ("LEASE"). Certain defined terms used in this Amendment 
not defined herein shall have the same meaning as ascribed to those terms in 
the Lease.

                                    RECITALS

     A.   Section 4.5 of the Lease contemplates that Landlord will construct an 
additional office building or buildings on the Land, refers to such additional 
building or buildings as "Additional Improvements," and describes the terms and 
conditions under which Tenant may elect to lease some or all of any such 
Additional Improvements.

     B.   Landlord has decided to construct on the Land a three (3)-story 
concrete tilt-up office building totaling 71,000 square feet of Gross Area and 
tenant has elected to lease the entirety of such building (the "Additional 
Premises") on the terms and conditions described in this Amendment.

     NOW, THEREFORE, for good and valuable consideration, the receipt and 
sufficiency of which is hereby acknowledged, Landlord and Tenant agree to amend 
the Lease as follows:

                                   AGREEMENT

     1.   Design and Construction of Additional Premises.  Landlord shall 
construct the Additional Premises, including the Building and associated 
Improvements and the Tenant Improvements, (i) in conformance with the site 
plan, elevations and outline specifications for the Building site and shell 
attached hereto as Exhibit "A," and (ii) consistent with the terms of the Lease 
to the extent logically applicable to the Additional Premises. The improvement 
plans for the Tenant Improvements shall be prepared by Tenant and Tenant's 
architect and constructed by Landlord. Upon Substantial Completion of the 
Additional Improvements, the Additional Premises shall be measured to determine 
the exact square footage of Gross Area they contain. There shall be no change 
regarding any matter contained in this Amendment which is calculated based on 
the square footage of Gross Area contained in the Additional Premises (e.g. 
Annual Rent, allowances) unless the final measurement reveals that the final 
square footage of the Gross Area of the Additional Premises is less than 70,290 
(1% discrepancy), in which case such items shall be adjusted based on the 
actual square footage of Gross Area.

     2.    Term Commencement Date.  The Term Commencement Date for the
Additional Premises (the "New Term Commencement Date") shall be upon 
Substantial Completion of the Additional Premises. It is anticipated that the 
New Term Commencement Date for the Additional Premises will be April 1, 1999. 
Landlord shall use reasonable diligence to complete all construction prior to 
April 1, 1999.

          2.1     Delay.  If the New Term Commencement Date has not occurred by 
July 1, 1999 (subject to Sections 27 and 3.2.5 of the Lease), Tenant can 
terminate this Amendment under the terms of Section 3.2.2 of the Lease. 
Further, if the New Term Commencement Date has not occurred by July 1, 1999 
(plus up to 30 days for Force Majeure Delay), and Tenant has not otherwise 
terminated this Amendment, Landlord shall pay a daily penalty to Tenant in 
accordance with Section 3.2.3 of the Lease as liquidated damages.

          2.2     Occupancy of Additional Premises.  Tenant shall be entitled 
to the 30-day notice provided under Section 5.2.1 of the Lease, as well as the 
rights granted to Tenant under Sections 5.2.3 and 5.3, in each case with 
respect to the Additional Premises. To the extent logically applicable, 
effective as of the New Term Commencement Date, all provisions of the Lease 
shall apply to the Additional Premises as well as the existing Demised Premises.

                                                                  April 14, 1998

                                      -1-
   2
     3.   Extension of Term. Upon the New Term Commencement Date, the Term of 
the entire Lease, including the existing Demised Premises and the Additional 
Premises (together the "Combined Demised Premises") shall continue until eight 
(8) years from the New Term Commencement Date.

     4.   Option to Extend. Tenant shall continue to be entitled to the
Extension Options granted in Section 4.3 of the Lease, with the Option Term
Annual Rent an amount equal to the greater of (i) ninety-five percent (95%) of
the then Fair Market Value of the Combined Demised Premises, as stated on an
annual basis and determined pursuant to Section 4.3.3 of the Lease, and (ii) the
Annual Rent for the Combined Demised Premises which was in effect immediately
prior to the commencement of the Option Term in question, times 1.075.

     5.   Tenant Improvements Allowances. Landlord shall provide a base 
allowance to be applied toward the portion of the Total Project Costs which are 
incurred in connection with the construction of the Tenant Improvements 
(including design, engineering, permits and fees) in the amount of One Million 
Five Hundred Sixty Two Thousand Dollars ($1,562,000) ($22.00 per square foot of 
Gross Area) (the "Base Allowance"). Landlord shall also provide an additional 
allowance to be applied, at Tenant's request, toward the portion of the Total 
Project Costs which are incurred in connection with the construction of the 
Tenant Improvements not funded by the Base Allowance in the amount of One 
Million Two Hundred Seventy Eight Thousand Dollars ($1,278,000) ($18.00 per 
square foot of Gross Area) (the "Excess Allowance"). Tenant will not require 
any additional refurbishment allowances during the Initial Term, as modified 
hereby, and any improvements made to the Demised Premises shall be solely at 
Tenant's expense and subject to the provisions of Section 15 of the Lease.

     6.   Annual Rent.

          6.1  Demised Premises. The Annual Rent for the Demised Premises shall 
not increase until the New Term Commencement Date, at which time it shall 
increase to One Million Nine Hundred Eighty Two Thousand Six Hundred Forty-Five 
Dollars ($1,982,645) (based on the product of $1.17 per square foot per month 
and the 141,214 square feet of Gross Area in the Demised Premises).

          6.2  Combined Demised Premises. The Annual Rent for the Combined 
Demised Premises, as of the New Term Commencement Date, shall equal the sum of 
(i) the Annual Rent for the Demised Premises pursuant to Section 6.1, above, 
plus, (ii) Nine Hundred Fifty Four Thousand Two Hundred Forty Dollars 
($954,240) (based on the product of $1.12 per square foot per month and 71,000 
square feet of Gross Area in the Additional Premises), a total of Two Million 
Nine Hundred Thirty Six Thousand Eight Hundred Eighty Five Dollars ($2,936,885) 
(the "Combined Annual Rent"). From and after the New Term Commencement Date, 
the term "Annual Rent" wherever it appears in the Lease shall be read as 
"Combined Annual Rent."

          6.3  Annual Rent Escalations. The Combined Annual Rent shall be 
increased on the thirty-first (31st), sixty-first (61st) and ninety-first 
(91st) monthly anniversary of the New Term Commencement Date to an amount equal 
to the product of (i) the Combined Annual Rent then payable, and (ii) 1.075.

          6.4  Amortization of Excess Allowance. Tenant shall also pay to 
Landlord, as Additional Rent, on a monthly basis, an amount sufficient to fully 
amortize and repay the Excess Allowance in ninety-six (96) equal monthly 
payments over the Initial Term at an interest rate of nine percent (9%) per 
annum. If Tenant uses the entire Excess Allowance, such Additional Rent amount 
shall be an annual amount of Two Hundred Twenty Four Thousand Six Hundred 
Seventy Six Dollars ($224,676).

     7.   Contingency. Landlord's obligations under this Amendment are 
contingent upon the purchase by Landlord of the SDG&E Land, which is 
anticipated to be completed by June 30, 1998, and the substantial conformance 
review approval by the City of San Diego of the construction of the Additional 
Improvements, which is anticipated to be obtained by April 30, 1998.



                                      -2-                      April 14, 1998
   3
     8.   Commissions. Tenant and Landlord represent and warrant that there are 
no commissions, fees and sums which are now or in the future may be due and 
payable with regard to leasing, acquisition or other such matters related to 
the Demised Premises or the Additional Demised Premises, other than those owed 
to Colliers Illif Thorn and The Staubach Company, pursuant to separate written 
agreements, for which Landlord shall be solely responsible. Landlord and Tenant 
agree to indemnify and hold each other harmless from any and all liability for 
the payment of commissions, fees and other sums other than those specifically 
enumerated above.

     9.   Ratification of Lease; No Other Modifications. Except as expressly 
amended and modified by this Amendment, Landlord and Tenant hereby ratify and 
affirm the terms and provisions of the Lease in its entirety. Except as 
otherwise amended by this Amendment, all other provisions of the Lease are 
unmodified hereby.

     10.  Governing Law. This Amendment shall be governed by and construed in 
accordance with the laws of the State of California.

     IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment 
to Lease to be duly executed as of the day and year first above written.

LANDLORD:                                    TENANT:

KILROY REALTY, L.P.                          INTUIT INC.,
a Delaware limited partnership               a Delaware corporation

By: Kilroy Realty Corporation,               By: /s/ GREG SANTORA
    a Maryland corporation                   Name: Greg Santora
    Its General Partner                      Its: Chief Financial Officer &
                                                  Vice President of Finance & 
                                                  Corporate Services

By: [SIG]
    -------------------------
Name:
    -------------------------
Its:
    ------------------------- 



                                      -3-
   4

                                                                     EXHIBIT A

                                    [DIAGRAM]
                           [ ] WEST ELEVATION (ENTRY)




                                    [DIAGRAM]
                           [ ] EAST ELEVATION (FREEWAY)


                                    [DIAGRAM]
                              [ ] NORTH ELEVATION



                                    [DIAGRAM]
                              [ ] SOUTH ELEVATION

   5
                                     [MAP]

                                 SITE PLAN "A"
                                INTUIT PHASE II
   6
                             OUTLINE SPECIFICATIONS

                                INTUIT EXPANSION
                                       AT
                              6220 GREENWICH DRIVE
                             SAN DIEGO, CALIFORNIA

                           SHELL BUILDING & SITEWORK














                                 MARCH 27, 1997

                           KILROY REALTY CORPORATION
                        4365 Executive Drive, Suite 850
                          San Diego, California 92121
   7
                                  PROJECT DATA

PROJECT:            INTUIT, INC.

LOCATION:           6220 Greenwich Drive
                    San Diego, California

DATE:               March 27, 1997

 1.  Construction Type        V 1 Hour - Tilt Up Concrete with Glass Curtainwall

 2.  Number of Buildings      One (1)

 3.  Number of Stories        Three (3)

 4.  Use                      Office, Data Center

 5.  Use Zone                 M-IP #87-0765

 6.  Square Footage           1st Floor      24,500
     (Approx)                 2nd Floor      23,000
                              3rd Floor      23,500
                              ---------------------
                              Total          71,000

 7.  Estimated Site Area      11.63 acres (506,646 sq. ft.) incl. SDG&E easement

 8.  Estimated Site Coverage  41.8% (Both Phases)

 9.  Parking Provided         Per plans

10.  Trash Dumpsters          Provide (1) trash enclosure for two standard
                              (4' x 7') trash bins.

11.  Mechanical Enclosure     Expand existing enclosure to house total of (2)
                              generators.

12.  Floor-to-Floor Height    15'-0"

13.  Ceiling Height           9'-0" office area
                              8'-0" office area
14.  Panel Height             48' to parapet

15.  Drive Aisle Widths       24' Minimum, 26' Fire Lanes

16.  Fire Sprinkling          Fully Fire Sprinklered to density of .15 over the
                              most remote 1,500 s.f. of office area. Data Center
                              fire suppression by Tenant. 



                                       1
   8
17. Skylights            Provide total of four (4) 8' x 8' acrylic dome
                         Skylights. Any additional skylights shall be included
                         within the Tenant Improvement Allowance.

18. Electrical           277/480 Volt, 2500 AMP, 3 phase, 4 wire

DESCRIPTION:   The project consists of (1) three-story office building totaling
               71,000 gross square feet. All site improvements, shell building, 
               etc. shall be part of this package.

SCOPE:         All building and site improvements shall be complete in every 
               respect as defined by, but not limited to, the content of the 
               schematic drawings and outline specifications.

CODES:         The building shall be Type V, 1 hour-rated, B occupancy. All 
               construction shall conform to local and state codes and 
               regulations in effect at the time of construction. All placement 
               of concrete, reinforcing steel in masonry units and/or concrete 
               and all field weld plates and field welding shall be inspected 
               by an independent testing laboratory.

DIVISION 1 GENERAL REQUIREMENTS

               All work shall be in conformance with all applicable codes and 
               regulations. Contractor shall be responsible for coordination of 
               all work to be performed and for conformance to the contract 
               documents.

DIVISION 2 SITEWORK

Demolition     Demo and remove existing paving and landscape improvements as 
               required for the new development.

Earthwork      Provide all grading and reshaping of existing site as required 
               to achieve conformance with new finish grade elevations.

Site Utilities Provide all sewer, gas, water, storm drain, electrical, 
               telephone and cable television services as required stubbed 
               inside building.

Irrigation     All landscaped areas to be fully irrigated and operated by a 
               central automatic controller. Provide planter drainage to comply 
               per minimum City of San Diego design guideline standards.

Landscaping    Provide plant material and soil amendments per City of San Diego 
               guideline standards and in accordance with the landscape site 
               plan and enhanced landscape plan (revised 1/28/98) approved by 
               the University Community Planning Group.

Enhanced       Provide 5,000 sf integral color, 7" nominal thickness, 
Concrete       un-reinforced, 3,250 psi concrete slab over 8 1/2" Class II base 
Paving         at drive aisle between building entrances.

                                       2
   9
Enhanced            Provide 4,000 sf integral color, 4" nominal thickness 
Architectural       enhanced paving over natural grade with combination of 
Paving              broom finish and slate tile insets at main building 
                    entrance to match existing building. All other walkways to 
                    be natural color concrete with broom finish. All enhanced 
                    paving to be sealed.

Asphalt Concrete    Asphalt concrete paving over Class II crushed aggregate 
Paving              base minimum thickness to be 2 1/2" A.C. over 6" base at 
                    parking; 2 1/2" A.C. over 8 1/2" base at drives as 
                    specified per soils report. Provide sand seal finish.

Curb & Mow          All curb and gutters shall be constructed in accordance to 
Strips              City of San Diego Standards.

Seatwalls           Provide two cast-in-place concrete seatwalls to match 
                    existing at main entrance.

Flag Poles          Provide two (2) 40' tall flagpoles complete with flags.

DIVISION 3 CONCRETE

Foundations         Continuous grade beam and pad footings of reinforced 
                    concrete below grade for columns and concrete panels in 
                    accordance with the soils report.

First Floor         Slab-on-grade minimum 4 1/2" thick 3000 p.s.i. concrete 
                    slab on grade, reinforced with #3 bars at 18" o.c., over 2" 
                    sand. Include 6 mil visqueen under slab areas.

Second/Third        2" thick lightweight structural concrete over metal decking.
Slab

Walls               Natural color, 7 1/2" minimum thickness reinforced concrete 
                    tilt-up panels with 3/4" deep recesses and reveals. 
                    Thickness as determined by the structural engineer. All 
                    exterior surfaces to be painted to match existing building.

Trash Enclosures    6'-0" high tilt-up concrete with finish to match building. 
                    Enclosure will provide for a total of 2 trash bins located 
                    per plan.

DIVISION 4 MASONRY

Screen Walls        Construct 675' long x 6' high non-load bearing masonry 
                    screen wall along south property line. Provide two coat 
                    plaster finish on both sides. Color by Architect.

Mechanical          Expand existing 9' high mechanical enclosure to house 
Enclosure           additional generator. Construct enclosure with 8x8x16 
                    masonry block with plaster finish. Paint to match.

DIVISION 5 METALS   

Columns             8" steel columns, (26'x28' bay spacing) base plates and 
                    connections as determined by the structural engineer.

                                       3
   10
Roof Framing        All major roof framing to consist of wide flange steel
                    girders (52' x 56' bay spacing) and open web steel bar 
                    joists over 20 gauge metal decking. Provide 1 hour rating.

                    Provide $25,000 allowance for structural roof framing to 
                    support (2) 80 ton VAV rooftop units. Additional support 
                    framing and headouts for mechanical included in Tenant 
                    Improvement Allowance.

Second Floor        Second floor framing to consist of open web steel bar 
Framing             joists over 20 gauge metal decking. Provide 1 hour 
                    rating. Floor loading provided as follows:

                           80 psf live load
                           20 psf partition loan

                    Additional live loading will be included in Tenant 
                    Improvement Allowance.

Exit Stairs         Provide two (2) steel stairs with concrete poured pan 
                    treads. Use 1 1/2" dia. Pipe handrails on both sides of 
                    stairs.

Lobby Stairs        Provide allowance for one (1) steel poured pan monument 
                    stair extending from 1st floor to 2nd floor in main lobby 
                    complete with cable handrails (millwork included within 
                    Tenant Improvement Allowance).

Miscellaneous       Concrete panels embeds, mechanical screen posts, steel 
                    roof access ladder and trash enclosures hardware will be 
                    provided under this section of work.

Architectural       Included in Tenant Improvement Allowance.
Railings

Wrought Iron        Provide (1) 20' wide manually rolling and (1) 3' man gate 
Fencing             at emergency access drive to Maynard Street.

Pre-formed Metal    Provide 22 gauge galvanized steel siding with ribbed patter 
Siding              P-13 by Curoco or equal for enclosure gate covering.

Mechanical
Roof Screen         Utilize main entrance barrel vault as mechanical enclosure 
                    to house (2) 80 ton VAV units. Screen to be finished with 
                    pre-finished 24 gauge standing seam metal panels with 
                    custom Xynar finish.

DIVISION 6 WOOD AND PLASTICS

Rough Carpentry     All wood-framing and bracing shall conform to applicable 
                    requirements for lumber grading as specified in West Coast 
                    Lumber Inspection Bureau Grading and Dressing Rule No. 16, 
                    the Western Wood Products Association, and the American 
                    Plywood Association. In addition to complying with 
                    applicable codes and regulation, comply with pertinent 
                    recommendations contained in 1994 Edition UBC Chapter 25. 



                                       4
   11
Finish Carpentry    All finish carpentry shall conform to the applicable 
                    requirements for "Custom Grade" of the Manual of Millwork 
                    of the Woodwork Institute of California, the West Coast 
                    Lumberman's Association Grading and Dressing Rules No. 16 
                    the Western Wood Products Association, The National 
                    Hardwood Lumber Association and The American Plywood 
                    Association.

                    All casework and millwork within the facility is included 
                    in Tenant improvement Allowance.

DIVISION 7 MOISTURE AND THERMAL PROTECTION

Membrane            Roof shall have a four-ply fiberglass built-up roofing 
Roofing             system with capsheet (i.e., Manville specification 4 GLC) 
                    over perlite board over rigid foam insulation. Provide 10 
                    year bond.

Building/           Included in Tenant Improvement Allowance.
Sounding &
Thermal Insulation

Roof Drainage       Provide internal PVC roof and overflow drains. Roof drains 
                    to connect to below grade storm drain where accessible or 
                    daylight at face of curb or building wall in loading areas. 
                    Minimum roof slope to be 1/4" per foot.

Sealants            Utilize silicone base sealant at all glazing conditions. 
                    Concrete panel joints are to receive polyurethane sealant 
                    with 1" polyurethane backer rod. Sealants used in walking 
                    surfaces shall be polyurethane type. Colors to be selected 
                    by Architect.

Sheet Metal         Provide all sheet metal work for the building, complete; 
                    including reglets, and counter flashing for roofing. 
                    Materials to be galvanized sheet metal, 24 gauge minimum 
                    thickness. Provide (2) stainless steel column cover at main 
                    entrance.

Skylights           Provide total of four 8'-0" x 8' 0" acrylic pyramid dome 
                    skylights by Bristol Fiberlite Industries. AL-CM dual 
                    glazed, curb mounted type. All additional skylights 
                    included within the Tenant Improvement Allowance.

Entry Awning        Provide one (1) pre-finished aluminum entrance awning at 
                    secondary entry (freeway side).

DIVISION 8 DOORS AND WINDOWS

Interior Doors      Included in Tenant Improvement Allowance.

Main Entrance       Provide 72 l.f. of "Herculite" storefront system including
Storefront/Doors    four pair 3'-0" x 8'-10" x 1/2" doors.
 
                                       5
   12
Second         Provide a total of (6) single & (2) pair - 3' - 0" x 8' x 10" 
Entrance       x 1-3/4" narrow stile aluminum glass doors. Frame finish to be 
Doors          as specified in "Aluminum Framing" below.

Steel Roll-up  See entrance doors above.
Doors

Hollow Metal   None Provided
Doors

Hardware       Hardware for exterior doors included in shell building. All 
               hardware for interior doors, security, etc. included in Tenant 
               Improvement Allowance.

Aluminum       All extruded aluminum sections shall be 2" x 4-1/2" off-set 
               flush glazed with captured horizontal and vertical mullions. 
               Framing system. Interior finish to be clear anodized finish. 
               Exterior color finish to be factory applied, oven baked Duranar 
               XL. Color to match existing building. Provide gyp. Bd. Caps where
               applicable to match existing building.

Glass &        Glass to be provided as follows:
Glazing   
               CurtainWall Glass above Entries; 1/4" High Performance Silver
               Window Wall Glass; 1/4" High Performance Green
               Lobby/Secondary Entry Glass: 1/2" clear "Herculite" system

               Note: Provide laminated glazing along north, south and east 
               (freeway) elevations as apart of shell building. West elevation 
               and secondary entry is single-glazed.

DIVISION 9 FINISHES

Carpeting      Included in Tenant Improvement Allowance.

Vinyl Flooring/
ESD            Included in Tenant Improvement Allowance.

Ceramic Tile   Included in Tenant Improvement Allowance.

Stone Veneer   Provide "Arizona Flagstone" stone veneer at main entrance 
Insets         pilasters to match Existing building. Provide slate insets in 
               hardscape at main entrance and driveway.

Painting       Provide elastomeric paint on all portions of exterior concrete 
               walls as indicated on the drawings; enamel paint on exterior 
               steel surfaces, metal doors and frames to receive paint; Primer 
               + costs at exterior. Color to match existing building. All 
               interior painting included in Tenant Improvement Allowance.

Meta Framing   Steel studs shall be 16, 20 and 25 gauge as indicated on 
& Furring      drawings or required. Drywall fuming channels shall be 25 gauge 
               "hat" sections. Backing plates shall be 1/8" steel of proper 
               size to accommodate fastenings and shall be welded to 20 gauge 
               steel studs. See drawings for specific size and locations.


                                       6
   13
               All restrooms, shafts and lobby core improvements included in 
               Tenant Improvement Allowance.

Gypsum &       Provide gypsum wallboard at designated locations shown. Board 
Drywall        thickness to be 1/2" at vertical and 1/2" at horizontal surface 
               applications. In areas requiring fire ratings, wall board shall 
               be 5/8" "Type X". In areas subject to moisture, use water 
               resistant (WR) gypsum board.

               Elevator shaft, pump room and electrical/tel. Rooms included in 
               shell building. Stair and mechanical shafts/enclosures included 
               in Tenant Improvement Allowance.

Exterior       Exterior soffits at main and secondary entrances to be 
Soffits        constructed of pre-finished aluminum panels (see Division 7 
               "Awnings")

Acoustical     Included in Tenant Improvement Allowance.
Ceilings


DIVISION 10 SPECIALTIES

Toilet         Included in Tenant Improvement Allowance.
Accessories

Toilet         Included in Tenant Improvement Allowance.
Partitions

Computer
Raised         Provided by Tenant
Flooring

Interior
Signage        Provided by Tenant

Exterior
Signage        Provide allowance of $20,000 for monument sign and lighting.

Fire           Provide as required by code for shell building. All others 
Extinguishers  included in Tenant Improvement Allowance.


DIVISION 11 EQUIPMENT

Kitchen        All kitchen equipment and related food preparation appliances 
Equipment      required to be provided by the Tenant.

Athletic       All athletic and recreational equipment to be provided by the 
Equipment      Tenant


                                       7
   14
Projection        Included in Tenant Improvement Allowance.
Screens

Playground        (If any) Provided by Tenant.


DIVISION 12 FURNISHINGS

Window            Included in Tenant Improvement Allowance.
Coverings

Furnishings       All lab work stations, desks, tables, chairs, whiteboards,
                  etc. and all other F, F & E to be provided by the Tenant.


DIVISION 13 SPECIAL CONSTRUCTION

                  Not Applicable



DIVISION 14 CONVEYING SYSTEMS

Elevators         Provide total of one (1) 2500 lb. capacity, 2-stop hydraulic
                  passenger elevator located in main lobby, complete with
                  standard cab finishes. Upgraded cab finishes included in
                  Tenant Improvement Allowance.


DIVISION 15 MECHANICAL

Shell Plumbing    Provide water stubbed to within five (5) feet of building and 
                  one sewer lateral extending below entire length of building 
                  slab as a part of the Shell building.

T.I. Plumbing     Included in Tenant Improvement Allowance.

Fire Protection   Provide on-site hydrants as required by local fire 
System            jurisdiction. Entire building to be fully Fire Sprinklered to 
                  density of .15 over the most remote 1,500 s.f. of office area.

Gas Service       Provide gas service stub to building.

Heating,          Entire HVAC system for building and data center included 
Ventilating &     within the Tenant Improvement Allowance. The mechanical 
Air Conditioning  system proposed is a rooftop package VAV system complete with 
                  ducted supply and return air plenum for the entire office 
                  Area. The Data Center will be conditioned via a split system 
                  by "Data-Air", "Leibert" or equivalent.
  
DIVISION 16 ELECTRICAL


                                       8
   15
Main Service      Main service to each building to be 277/480 volt, 3 phase 4 
                  wire (2500A) including underground pull and meter section 
                  located within an electric room as a part of the 
                  Shell Building.

Cable Trays       Cable Trays for date and communication routing to be included 
                  within the Tenant Improvement Allowance.

Telephone &       All telephone and data communication cabling to be provided 
Data Comm.        by the Tenant. Two (2) 4" conduit has been installed between 
                  buildings.

Installation      All shell electrical work to be in accordance with applicable
                  codes. All necessary outlets, conduit, wiring, trenching and 
                  concrete encasing shall be provided as required.

Interior          Included in Tenant Improvement Allowance.
Lighting  

UPS System        A UPS system (if required) to be provided by the Tenant or 
                  included in the Tenant Improvement Allowance.

Security System   Tenant to provide all necessary devices, conduit, wiring, 
                  access door hardware, etc. for installation, operation and 
                  monitoring of a security system.

Fire Suppression  Special fire suppression system (i.e., Energen, etc.) to 
@Computer Room    be provided by the Tenant.

Exterior          Provide low pressure sodium pole mounted light fixtures on 
Lighting          24" diameter concrete bases as required throughout surface 
                  parking areas within the SDG&E easement and surrounding the 
                  proposed building. Provide bollard-type lighting within 
                  parking areas along the south property line adjacent to the 
                  residences as needed to provide one foot candle average 
                  illumination as required by City ordinance. Bollard lighting 
                  to be shielded from residences.


                  Provide uplight/downlight fixtures at walkways and landscape 
                  areas adjacent to entries. Provide total of (4) concrete 
                  light bollard fixtures at main entrance to match existing.



                         END OF OUTLINE SPECIFICATIONS


                                       9

EX-12.01

   1
                                                                   EXHIBIT 12.01


                                  INTUIT INC.
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                          IN THOUSANDS, EXCEPT RATIOS



                                                                TEN                                                            
                                                   YEAR        MONTHS                                                            
                                                  ENDED         ENDED                            YEAR ENDED JULY 31,     
                                                SEPT. 30,      JULY 31,      -----------------------------------------------------
                                                   1993          1994           1995           1996           1997         1998
                                                ---------     ---------      ---------      ---------      ---------     --------
                                                                                                             
Earnings:
   Income (loss) from continuing operations
     before income taxes                        $  14,770     $(181,493)     $ (20,000)     $   1,870      $   9,809     $(19,823)
   Fixed charges                                    1,056           934          3,278          4,828          5,395        5,315 
                                                ---------     ---------      ---------      ---------      ---------     --------

     Total                                      $  15,826     $(180,559)     $ (16,722)     $   6,698      $  15,204     $(14,508)
                                                =========     =========      =========      =========      =========     ======== 
Fixed Charges:
   Interest expense                             $      79     $       8      $     232      $     305      $     652     $    432 

   Portion of rent deemed to be interest              977           926          3,046          4,523          4,743        4,883
                                                ---------     ---------      ---------      ---------      ---------     --------

     Total                                      $   1,056     $     934      $   3,278      $   4,828      $   5,395     $  5,315
                                                =========     =========      =========      =========      =========     ========

Ratio of earnings to fixed charges                  14.99            (1)            (2)            (3)          2.82           (4)
                                                =========     =========      =========      =========      =========     ======== 



(1)     Earnings were inadequate to cover fixed charges by $181,493.

(2)     Earnings were inadequate to cover fixed charges by $20,000.

(3)     Earnings were inadequate to cover fixed charges by $1,870.

(4)     Earnings were inadequate to cover fixed charges by $19,823.

EX-21.01

   1

                                                                   EXHIBIT 21.01

                        LIST OF REGISTRANT'S SUBSIDIARIES





         Entity                                   State/Country of Incorporation
         ------                                   ------------------------------
                                               
Greenco Subsidiary Corporation                             Delaware
Intuit Insurance Services Inc.                             Virginia
Intuit Lender Services, Inc.                               Delaware
Lacerte Educational Services, Inc.                         Delaware
Lacerte Software Corporation                               Delaware
Quicken Investment Services, Inc.                          Delaware
Intuit Canada Limited                                      Canada
Intuit Deutschland GmbH                                    Germany
Intuit Ltd.                                                United Kingdom
Intuit K.K.                                                Japan
Intuit France S.A.                                         France
Intuit (AUS) Pty. Ltd.                                     Australia




                                       68

EX-23.01

   1
                                                                   EXHIBIT 23.01


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-59458, 33-73222, 33-95040, 333-06889, 333-14715, 333-16827,
333-16829, 333-20361, 333-45287, 333-45285 and 333-45277; Form S-3 Nos. 33-50417
and 333-63739; and Form S-4 No. 33-99644) pertaining to the Intuit Inc. 1993
Equity Incentive Plan, the 1996 Directors Stock Option Plan, the 1996 Employee
Stock Purchase Plan, other Intuit Inc. equity compensation plans and the Common
Stock, Preferred Stock and/or Debt Securities of Intuit Inc., of our report
dated August 19, 1998, with respect to the consolidated financial statements and
schedule of Intuit Inc. included in this Annual Report (Form 10-K) for the year
ended July 31, 1998.




Palo Alto, California
October 5, 1998

EX-27.01

 

<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUL-31-1998
<PERIOD-START>                             AUG-01-1997
<PERIOD-END>                               JUL-31-1998
<EXCHANGE-RATE>                                      1
<CASH>                                         138,133
<SECURITIES>                                   743,984
<RECEIVABLES>                                   64,752
<ALLOWANCES>                                   (5,335)
<INVENTORY>                                      3,695
<CURRENT-ASSETS>                               980,125
<PP&E>                                         135,528
<DEPRECIATION>                                (66,115)
<TOTAL-ASSETS>                               1,498,596
<CURRENT-LIABILITIES>                          374,669
<BONDS>                                         35,566
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           593
<OTHER-SE>                                   1,087,768
<TOTAL-LIABILITY-AND-EQUITY>                 1,498,596
<SALES>                                        592,736
<TOTAL-REVENUES>                               592,736
<CGS>                                          120,538
<TOTAL-COSTS>                                  123,443
<OTHER-EXPENSES>                               505,875
<LOSS-PROVISION>                                 3,380
<INTEREST-EXPENSE>                                 432
<INCOME-PRETAX>                               (19,823)
<INCOME-TAX>                                   (7,666)
<INCOME-CONTINUING>                           (12,157)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (12,157)
<EPS-PRIMARY>                                   (0.24)
<EPS-DILUTED>                                   (0.24)

<F1>BASIC EPS AS DEFINED BY FAS 128.
<F2>DILUTED EPS AS DEFINED BY FAS 128.