VENTURE BANKING GROUP



                        LOAN AND SECURITY AGREEMENT


                         DATED AS OF July 24, 1998


AGREEMENT

This Loan and Security Agreement ("Agreement") is made and 
entered into as of July 24, 1998, by and between VENTURE BANKING GROUP, A 
DIVISION OF CUPERTINO NATIONAL BANK ("Bank") and CONSILIUM, INC. ("Borrower").
RECITALS
        Borrower wishes to obtain credit from time to time from Bank, and 
Bank desires to extend credit to Borrower.  This Agreement sets forth 
the terms on which Bank will advance credit to Borrower, and Borrower 
will repay the amounts owing to Bank.
AGREEMENT
        The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions.  As used in this Agreement, the 
following terms shall have the following definitions:
        "Accounts" means all presently existing and hereafter 
arising accounts, contract rights, and all other forms of obligations 
owing to Borrower arising out of the sale or lease of goods (including, 
without limitation, the licensing of software and other technology) or 
the rendering of services by Borrower, whether or not earned by 
performance, and any and all credit insurance, guaranties, and other 
security therefor, as well as all merchandise returned to or reclaimed 
by Borrower and Borrower's Books relating to any of the foregoing.
        "Advance" or "Advances" means an Advance under the 
Revolving Facility.
        "Affiliate" means, with respect to any Person, any Person 
that owns or controls directly or indirectly such Person, any Person 
that controls or is controlled by or is under common control with such 
Person, and each of such Person's senior executive officers, directors, 
and partners.
        "Approved Foreign Accounts" means Accounts with respect to 
which the account debtor does not have its principal place of business 
in the United States and that are (1) approved by Bank on a case-by-
case basis; or (2) not excluded by any of clauses (a) through (k)) 
under the defined term, "Eligible Accounts." 
        "Bank Expenses" means all reasonable costs or expenses 
(including reasonable attorneys' fees and expenses) incurred, subject 
to Section 2.6(c), in connection with the preparation, negotiation, 
administration, and enforcement of the Loan Documents; and Bank's 
reasonable attorneys' fees and expenses incurred in amending, enforcing 
or defending the Loan Documents, whether or not suit is brought.
        "Borrower's Books" means all of Borrower's books and 
records including ledgers; records concerning Borrower's assets or 
liabilities, the Collateral, business operations or financial 
condition; and all computer programs, or tape files, and the equipment 
containing such information.
        "Borrowing Base" has the meaning set forth in Section 2.1 
hereof.
        "Business Day" means any day that is not a Saturday, 
Sunday, or other day on which banks in the State of California are 
authorized or required to close.
        "Change in Control" means the occurrence of:  (i) any 
Person, or two or more Persons acting in concert, acquiring beneficial 
ownership (within the meaning of Rule 13d-3 of the Securities and 
Exchange Commission under the Securities Exchange Act of 1934, as 
amended), directly or indirectly, of securities of Borrower (or other 
securities convertible into such securities) representing greater than 
50% of the combined voting power of all securities of  Borrower 
entitled to vote in the election of directors; (ii) any Person, or two 
or more Persons acting in concert, acquiring by contract or otherwise, 
or entering into a contract or arrangement which, upon consummation, 
will result in its or their acquisition of, or control over, securities 
of Borrower (or other securities convertible into such securities) 
representing greater than 50% of the combined voting power of all 
securities of Borrower entitled to vote in the election of directors; 
or (iii) a material change in Borrower's chief executive officer, chief 
financial officer or chief administrative officer.
        "Closing Date" means the date of this Agreement.
        "Code" means the California Uniform Commercial Code.
        "Collateral" means the property described on Exhibit A 
attached hereto.
        "Contingent Obligation" means, as applied to any Person, 
any direct or indirect liability, contingent or otherwise, of that 
Person with respect to (i) any indebtedness, lease, dividend, letter of 
credit or other obligation of another, including, without limitation, 
any such obligation directly or indirectly guaranteed, endorsed, 
co-made or discounted or sold with recourse by that Person, or in 
respect of which that Person is otherwise directly or indirectly 
liable; (ii) any obligations with respect to undrawn letters of credit 
issued for the account of that Person; and (iii) all obligations 
arising under any interest rate, currency or commodity swap agreement, 
interest rate cap agreement, interest rate collar agreement, or other 
agreement or arrangement designated to protect a Person against 
fluctuation in interest rates, currency exchange rates or commodity 
prices; provided, however, that the term "Contingent Obligation" shall 
not include endorsements for collection or deposit in the ordinary 
course of business.  The amount of any Contingent Obligation shall be 
deemed to be an amount equal to the stated or determined amount of the 
primary obligation in respect of which such Contingent Obligation is 
made or, if not stated or determinable, the maximum reasonably 
anticipated liability in respect thereof as determined by such Person 
in good faith; provided, however, that such amount shall not in any 
event exceed the maximum amount of the obligations under the guarantee 
or other support arrangement.
        "Current Assets" means, as of any applicable date, all 
amounts that should, in accordance with GAAP, be included as current 
assets on the consolidated balance sheet of Borrower and its 
Subsidiaries as at such date.
        "Current Liabilities" means, as of any applicable date, all 
amounts that should, in accordance with GAAP, be included as current 
liabilities on the consolidated balance sheet of Borrower and its 
Subsidiaries, as at such date, plus, to the extent not already included 
therein, all outstanding Advances made under this Agreement, including 
all Indebtedness that is payable upon demand or within one year from 
the date of determination thereof unless such Indebtedness is renewable 
or extendable at the option of Borrower or any Subsidiary to a date 
more than one year from the date of determination, but excluding 
Subordinated Debt.
        "Daily Balance" means the amount of the Obligations owed at 
the end of a given day.
        "Eligible Accounts" means those Accounts that arise in the 
ordinary course of Borrower's business that comply with all of 
Borrower's representations and warranties to Bank set forth in 
Section 5.4; provided, that upon an Event of Default, standards of 
eligibility may be fixed and revised from time to time by Bank in 
Bank's reasonable judgment and upon notification thereof to Borrower in 
accordance with the provisions hereof.  Eligible Accounts shall also 
include Accounts of Borrower's wholly owned subsidiaries domiciled in 
Taiwan and Germany not otherwise ineligible hereunder.  Unless 
otherwise agreed to by Bank, Eligible Accounts shall not include the 
following:
(a) Accounts that the account debtor has failed to 
pay within ninety (90) days of invoice date; provided, however, that 
Approved Foreign Accounts shall be deemed Eligible Accounts so long as 
the account debtor has not failed to pay within one hundred and twenty 
(120) days of the invoice date;
(b) Accounts with respect to an account debtor 
twenty-five percent (25%) of whose Accounts the account debtor has 
failed to pay within ninety (90) days of invoice date;
(c) Accounts with respect to which the account 
debtor is an officer, employee, or agent of Borrower;
(d) Accounts with respect to which goods are placed 
on consignment, guaranteed sale, sale or return, sale on approval, bill 
and hold, or other terms by reason of which the payment by the account 
debtor may be conditional;
(e) Accounts with respect to which the account 
debtor is an Affiliate of Borrower;
(f) Accounts with respect to which the account 
debtor is a federal, state, or local governmental entity or any 
department, agency, or instrumentality thereof.
(g) Accounts with respect to which Borrower is 
liable to the account debtor for goods sold or services rendered by the 
account debtor to Borrower, but only to the extent of any amounts owing 
to the account debtor against amounts owed to Borrower;
(h) Accounts with respect to an account debtor, 
including Subsidiaries and Affiliates, whose total obligations to 
Borrower exceed twenty-five percent (25%) of all Accounts, to the 
extent such obligations exceed the aforementioned percentage, except as 
approved in writing by Bank;
(i) Accounts with respect to which the account 
debtor disputes liability or makes any claim with respect thereto as to 
which Bank believes, in its sole discretion, that there may be a basis 
for dispute (but only to the extent of the amount subject to such 
dispute or claim), or is subject to any Insolvency Proceeding, or 
becomes insolvent, or goes out of business;
(j) Accounts with respect to which the account 
debtor is a distributor, unless pre-approved by Bank in writing; and
(k) Accounts the collection of which Bank, in its 
commercially reasonable discretion, determines to be doubtful.
        "Equipment" means all present and future machinery, 
equipment, tenant improvements, furniture, fixtures, vehicles, tools, 
parts and attachments in which Borrower has any interest.
        "ERISA" means the Employment Retirement Income Security Act 
of 1974, as amended, and the regulations thereunder.
        "GAAP" means generally accepted accounting principles as in 
effect from time to time.
        "Indebtedness" means (a) all indebtedness for borrowed 
money or the deferred purchase price of property or services, including 
without limitation reimbursement and other obligations with respect to 
surety bonds and letters of credit, (b) all obligations evidenced by 
notes, bonds, debentures or similar instruments, (c) all capital lease 
obligations and (d) all Contingent Obligations.
        "Insolvency Proceeding" means any proceeding commenced by 
or against any person or entity under any provision of the United 
States Bankruptcy Code, as amended, or under any other bankruptcy or 
insolvency law, including assignments for the benefit of creditors, 
formal or informal moratoria, compositions, extension generally with 
its creditors, or proceedings seeking reorganization, arrangement, or 
other relief.
        "Inventory" means all present and future inventory in which 
Borrower has any interest, including merchandise, raw materials, parts, 
supplies, packing and shipping materials, work in process and finished 
products intended for sale or lease or to be furnished under a contract 
of service, of every kind and description now or at any time hereafter 
owned by or in the custody or possession, actual or constructive, of 
Borrower, including such inventory as is temporarily out of its custody 
or possession or in transit and including any returns upon any accounts 
or other proceeds, including insurance proceeds, resulting from the 
sale or disposition of any of the foregoing and any documents of title 
representing any of the above.
        "Investment" means any beneficial ownership of (including 
stock, partnership interest or other securities) any Person, or any 
loan, advance or capital contribution to any Person.
        "IRC" means the Internal Revenue Code of 1986, as amended, 
and the regulations thereunder.
        "Lien" means any mortgage, lien, deed of trust, charge, 
pledge, security interest or other encumbrance.
        "Loan Documents" means, collectively, this Agreement, any 
note or notes executed by Borrower, and any other agreement entered 
into between Borrower and Bank in connection with this Agreement, all 
as amended or extended from time to time.
        "material," "Material Adverse Change," and/or "Material 
Adverse Effect" as each of those terms may appear in the Loan 
Documents, shall mean, each in context, a negative result or potential 
result arising directly or indirectly from facts that, in the totality 
of the circumstances, Bank considers substantive and germane to (a) the 
business, assets, operations, financial or other condition of Borrower 
and its Subsidiaries, taken as a whole; (b) the ability of Borrower to 
pay or perform in accordance with the terms of this Agreement or any 
other Loan Document; or (c) the rights and remedies of Bank under this 
Agreement or any of the Loan Documents.
        "Maturity Date" means the later to occur of (i) the 
Revolving Maturity Date; or (ii) the Term Loan Maturity Date.
        "Negotiable Collateral" means all of Borrower's present and 
future letters of credit of which it is a beneficiary, notes, drafts, 
instruments, securities, documents of title, and chattel paper.
        "Obligations" means all debt, principal, interest, Bank 
Expenses and other amounts owed to Bank by Borrower pursuant to the 
this Agreement or any other Agreement, whether absolute or contingent, 
due or to become due, now existing or hereafter arising, including any 
interest that accrues after the commencement of an Insolvency 
Proceeding and including any debt, liability, or obligation owing from 
Borrower to others that Bank my have obtained by assignment or 
otherwise.
        "Payment Date" means the last calendar day of each month.
        "Periodic Payments" means all installments or similar 
recurring payments that Borrower may now or hereafter become obligated 
to pay to Bank pursuant to the terms and provisions of any instrument, 
or agreement now or hereafter in existence between Borrower and Bank.
        "Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank 
arising under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and 
disclosed in the Schedule;
(c) Subordinated Debt; and
(d) Indebtedness to trade creditors incurred in the 
ordinary course of business.
        "Permitted Investment" means:
(a) Investments existing on the Closing Date 
disclosed in the Schedule;
(b)  (i) marketable direct obligations issued or 
unconditionally guaranteed by the United States of America or any 
agency or any State thereof maturing within one (1) year from the date 
of acquisition thereof, (ii) commercial paper maturing no more than one 
(1) year from the date of creation thereof and currently having the 
highest rating obtainable from either Standard & Poor's Corporation or 
Moody's Investors Service, Inc., and (iii) certificates of deposit 
maturing no more than one (1) year from the date of investment therein 
issued by Bank; and
(c) acquisitions permitted pursuant to Section 7.3.
        "Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and 
disclosed in the Schedule or arising under this Agreement or the other 
Loan Documents;
(b) Liens for taxes, fees, assessments or other 
governmental charges or levies, either not delinquent or being 
contested in good faith by appropriate proceedings, provided the same 
have no priority over any of Bank's security interests;
(c) Liens (i) upon or in any equipment acquired or 
held by Borrower or any of its Subsidiaries to secure the purchase 
price of such equipment or indebtedness incurred solely for the purpose 
of financing the acquisition of such equipment, or (ii) existing on 
such equipment at the time of its acquisition, provided that the Lien 
is confined solely to the property so acquired and improvements 
thereon, and the proceeds of such equipment;
(d) Liens incurred in connection with the 
extension, renewal or refinancing of the indebtedness secured by Liens 
of the type described in clauses (a) and (c) above, provided that any 
extension, renewal or replacement Lien shall be limited to the property 
encumbered by the existing Lien and the principal amount of the 
indebtedness being extended, renewed or refinanced does not increase.
        "Person" means any individual, sole proprietorship, 
partnership, limited liability company, joint venture, trust, 
unincorporated organization, association, corporation, institution, 
public benefit corporation, firm, joint stock company, estate, entity 
or governmental agency.
        "Prime Rate" means the variable rate of interest, per 
annum, most recently published in the Money Rate Section of the West 
Coast Edition of the Wall Street Journal, as the "prime rate," whether 
or not such published rate is the lowest rate available from Bank.  
When a range of rates is published, the higher of the rates shall apply 
at the time the rate is changed.
        "Quick Assets" means, at any date as of which the amount 
thereof shall be determined, the consolidated cash, cash equivalents, 
accounts receivable and investments, with maturities not to exceed 90 
days, of Borrower determined in accordance with GAAP.
        "Responsible Officer" means each of the Chief Executive 
Officer, the Chief Financial Officer and the Controller of Borrower.
        "Revolving Facility" means Three Million Seven Hundred 
Fifty Thousand Dollars ($3,750,000).
        "Revolving Facility Availability" means the difference 
between the maximum availability and the principal amount of 
outstanding Advances.
        "Revolving Facility Obligations" means all debt, principal, 
interest, Bank Expenses and other amounts owed to Bank by Borrower 
pursuant to the Revolving Facility, whether absolute or contingent, due 
or to become due, now existing or hereafter arising, including any 
interest that accrues after the commencement of an Insolvency 
Proceeding.
        "Revolving Maturity Date" means July 24, 1999. 
        "Schedule" means the schedule of exceptions attached 
hereto, if any.
        "Subordinated Debt" means any debt incurred by Borrower 
that is subordinated to the debt owing by Borrower to Bank on terms 
acceptable to Bank (and identified as being such by Borrower and Bank).
        "Subsidiary" means any corporation or partnership in which 
(i) any general partnership interest or (ii) more than 50% of the stock 
of which by the terms thereof ordinary voting power to elect the Board 
of Directors, managers or trustees of the entity shall, at the time as 
of which any determination is being made, be owned by Borrower, either 
directly or through an Affiliate.
        "Tangible Net Worth" means at any date as of which the 
amount thereof shall be determined, the consolidated total assets of 
Borrower and its Subsidiaries minus, without duplication, (i) the sum 
of any amounts attributable to (a) goodwill, (b) intangible items such 
as unamortized debt discount and expense, patents, trade and service 
marks and names, copyrights and research and development expenses 
except prepaid expenses, and (c) all reserves not already deducted from 
assets, and (ii) Total Liabilities.
        "Total Liabilities" means at any date as of which the 
amount thereof shall be determined, all obligations that should, in 
accordance with GAAP be classified as liabilities on the consolidated 
balance sheet of Borrower, including in any event all Indebtedness, but 
specifically excluding Subordinated Debt.
1.2 Accounting Terms.  All accounting terms not 
specifically defined herein shall be construed in accordance with GAAP 
and all calculations made hereunder shall be made in accordance with 
GAAP.  When used herein, the terms "financial statements" shall include 
the notes and schedules thereto.
2. Loan and Terms of Payment
2.1 Advances.  Subject to and upon the terms and 
conditions of this Agreement, Bank agrees to make Advances to Borrower 
in an aggregate amount not to exceed the Revolving Facility or the 
Borrowing Base, whichever is less (the "Maximum Availability").  For 
purposes of this Agreement and subject to the Advance Limit (as defined 
below), "Borrowing Base" shall mean an amount equal to eighty percent 
(80%) of Eligible Accounts.  Subject to the terms and conditions of 
this Agreement, amounts borrowed pursuant to this Section 2.1 
("Borrowings") may be repaid and reborrowed at any time during the term 
of this Agreement.
(a) Notwithstanding any of the foregoing provisions 
contained in this Agreement, with respect to Eligible Accounts which 
arise from invoices issued by Borrower's wholly-owned Subsidiaries in 
Taiwan and Germany, Bank shall make Advances to Borrower only to the 
extent that such Advances do not exceed Seven Hundred Fifty Thousand 
Dollars ($750,000) (the "Advance Limit"); provided, the Bank and 
Borrower shall review the Advance Limit within ninety (90) days from 
the date hereof and Bank shall make appropriate adjustments to the 
Advance Limit as Bank shall in its sole and commercially reasonable 
discretion deem appropriate, but in no event shall the Advance Limit be 
less than $750,000.
(b) Whenever Borrower desires an Advance, Borrower 
will notify Bank by facsimile transmission or telephone no later than 
3:00 p.m. Pacific time, on the Business Day that the Advance is to be 
made.  Each such notification shall be promptly confirmed by a 
Payment/Advance Form in substantially the form of Exhibit B hereto.  
Bank is authorized to make Advances under this Agreement, based upon 
instructions received from a Responsible Officer, or without 
instructions if in Bank's discretion such Advances are necessary to 
meet Obligations which have become due and remain unpaid.  Bank shall 
be entitled to rely on any telephonic notice given by a person who Bank 
reasonably believes to be a Responsible Officer, and Borrower shall 
indemnify and hold Bank harmless for any damages or loss suffered by 
Bank as a result of such reliance.  Bank will credit the amount of 
Advances made under this Section 2.1 to Borrower's deposit account. 
(c) The Revolving Facility shall terminate on the 
Revolving Maturity Date, at which time all Advances under this 
Section 2.1 and other amounts due under this Agreement (except as 
otherwise expressly specified herein) shall be immediately due and 
payable.
2.2 Term Loan. 
(a) In order to repay all existing loans and 
related indebtedness owed by Borrower to Imperial Bank, and 
miscellaneous capital acquisitions, Bank hereby agrees to make a term 
loan to Borrower on the Closing Date in an aggregate principal amount 
of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) (the 
"Term Loan").
(b) Borrower shall pay thirty-six equal amortized 
installments of principal plus interest in the amount of [payment 
amount] (the "Term Loan Payment").  Each Term Loan Payment shall be due 
and payable on the Payment Date during the term hereof.  Borrower's 
final Term Loan Payment, due on July 24, 2001 (the "Term Loan Maturity 
Date"), shall include all outstanding Term Loan principal plus all 
accrued interest not yet paid (the "Term Loan Balance"). 
(c) The Term Loan shall bear interest at a rate 
equal to one (1.0) percentage point above the Prime Rate. 
2.3 Overadvances.  If, at any time during which Borrower 
is required to provide a Borrowing Base Certificate or for any reason, 
the amount of Revolving Facility Obligations owed by Borrower exceeds 
the Maximum Availability (the "Overadvance"), Borrower shall 
immediately pay to Bank, in cash, the amount of such Overadvance; 
provided, however, that the amount of Revolving Facility Obligations 
owed by Borrower may exceed the Maximum Availability so long as such 
Overadvance (i) occurs during the second month of any fiscal quarter; 
(ii) does not exceed Two Million Dollars ($2,000,000); (iii) does not 
remain unpaid for more than thirty (30) consecutive days; and (iv) is 
supported by a cash deposit with Bank in an amount not less than one 
hundred twenty-five percent (125%) of the amount of such Overadvance. 
2.4 Interest Rates, Payments, and Calculations.
(a) Interest Rate.  Any Advances shall bear 
interest, on the average Daily Balance, at a rate equal to one-half 
(0.5%) percentage point above the Prime Rate. 
(b) Default Rate.  All Obligations shall bear 
interest, from and after the occurrence of an Event of Default, at a 
rate equal to five (5) percentage points above the interest rate 
applicable immediately prior to the occurrence of the Event of Default.
(c) Payments.  Interest hereunder shall be due and 
payable on the Payment Date during the term hereof.  Bank shall, at its 
option, charge such interest, all Bank Expenses, and all Periodic 
Payments against any of Borrower's accounts with Bank, in which case 
those amounts shall thereafter accrue interest at the rate then 
applicable hereunder.  Borrower hereby authorizes Bank to debit any 
accounts with Bank, including, without limitation, Account Number 
_____________________ for payments of principal and interest due on the 
Obligations and any other amounts owing by Borrower to Bank.  Bank will 
notify Borrower of all debits that Bank makes against Borrower's 
accounts.  Any interest not paid when due shall be compounded by 
becoming a part of the Obligations, and such interest shall thereafter 
accrue interest at the rate then applicable hereunder.
(d) Computation.  In the event the Prime Rate is 
changed from time to time hereafter, the applicable rate of interest 
hereunder shall be increased or decreased effective as of 12:01 a.m. on 
the day the Prime Rate is changed, by an amount equal to such change in 
the Prime Rate.  All interest chargeable under the Loan Documents shall 
be computed on the basis of a three hundred sixty (360) day year for 
the actual number of days elapsed.
2.5 Crediting Payments.  Prior to the occurrence of an 
Event of Default, Bank shall credit a wire transfer of funds, check or 
other item of payment to such deposit account or Obligation as Borrower 
specifies.  After the occurrence of an Event of Default, the receipt by 
Bank of any wire transfer of funds, check, or other item of payment 
shall be immediately applied to conditionally reduce Obligations, but 
shall not be considered a payment on account unless such payment is of 
immediately available federal funds or unless and until such check or 
other item of payment is honored when presented for payment.  
Notwithstanding anything to the contrary contained herein, any wire 
transfer or payment received by Bank or acknowledged by Bank as having 
been sent via confirmation of a federal reserve wire number, after 
12:00 noon Pacific time shall be deemed to have been received by Bank 
as of the opening of business on the immediately following Business 
Day.  Whenever any payment to Bank under the Loan Documents would 
otherwise be due (except by reason of acceleration) on a date that is 
not a Business Day, such payment shall instead be due on the next 
Business Day and shall not constitute an Event of Default, and 
additional fees or interest, as the case may be, shall accrue and be 
payable for the period of such extension.
2.6 Fees.  Borrower shall pay to Bank the following:
(a) Facility Fee.  A Facility Fee equal to Thirty-
Two Thousand Five Hundred Dollars ($32,500), which fee shall be due on 
or before the Closing Date and upon the Closing Date shall be fully 
earned and non-refundable;
(b) Financial Examination and Appraisal Fees.  
Bank's customary fees and out-of-pocket expenses for Bank's audits of 
Borrower's Accounts (not to exceed $800 per day for the Initial Audit 
(as defined below)), and for each appraisal of Collateral and financial 
analysis and examination of Borrower performed from time to time by 
Bank or its agents;
(c) Bank Expenses.  Upon the date hereof, all Bank 
Expenses incurred through the Closing Date, including reasonable 
attorneys' fees and expenses up to Seven Thousand Five Hundred Dollars 
($7,500), and, after the date hereof, all Bank Expenses, including 
reasonable attorneys' fees and expenses as and when they become due.
2.7 Additional Costs.  In case any law, regulation, 
treaty or official directive or the interpretation or application 
thereof by any court or any governmental authority charged with the 
administration thereof or the compliance with any guideline or request 
of any central bank or other governmental authority (whether or not 
having the force of law), in each case after the date of this 
Agreement:
(a) subjects Bank to any tax with respect to 
payments of principal or interest or any other amounts payable 
hereunder by Borrower or otherwise with respect to the transactions 
contemplated hereby (except for taxes on the overall net income of Bank 
imposed by the United States of America or any political subdivision 
thereof);
(b) imposes, modifies or deems applicable any 
deposit insurance, reserve, special deposit or similar requirement 
against assets held by, or deposits in or for the account of, or loans 
by, Bank; or
(c) imposes upon Bank any other condition with 
respect to its performance under this Agreement,
(d) and the result of any of the foregoing is to 
increase the cost to Bank, reduce the income receivable by Bank or 
impose any expense upon Bank with respect to any loans hereunder, Bank 
shall notify Borrower thereof.  Borrower agrees to pay to Bank the 
amount of such increase in cost, reduction in income or additional 
expense as and when such cost, reduction or expense is incurred or 
determined, upon presentation by Bank of a statement of the amount and 
setting forth Bank's calculation thereof, all in reasonable detail, 
which statement shall be deemed true and correct absent manifest error.
2.8 Term.  Except as otherwise set forth herein, this 
Agreement shall become effective on the Closing Date and, subject to 
Section 12.7, shall continue in full force and effect for a term ending 
on the Maturity Date.  Notwithstanding the foregoing, Bank shall have 
the right to terminate its obligation to make Advances under this 
Agreement immediately and without notice upon the occurrence and during 
the continuance of an Event of Default.  Notwithstanding termination, 
Bank's Lien on the Collateral shall remain in effect for so long as any 
Obligations are outstanding.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance.  The 
obligation of Bank to make the initial Advance is subject to the 
condition precedent that Bank shall have received, in form and 
substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a Revolving Promissory Note made by Borrower in 
favor of Bank in the form attached hereto as Exhibit E;
(c) a Term Loan Promissory Note made by Borrower in 
favor of Bank in the form attached hereto as Exhibit F;
(d) a certificate of the Secretary of Borrower with 
respect to incumbency and resolutions authorizing the execution and 
delivery of this Agreement;
(e) a collateral assignment, patent mortgage and 
security agreement;
(f) financing statements (Forms UCC-1);
(g) insurance certificate;
(h) payment of the fees and Bank Expenses then due 
specified in Section 2.5 hereof;
(i) completion of an accounts receivable audit with 
results satisfactory to Bank (the "Initial Audit"); and
(j) such other documents, and completion of such 
other matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to All Advances.  The obligation 
of Bank to make each Advance, including the initial Advance, is further 
subject to the following conditions:
(a) timely receipt by Bank of the Payment/Advance 
Form as provided in Section 2.1; and
(b) the representations and warranties contained in 
Section 5 shall be true and correct in all material respects on and as 
of the date of such Payment/Advance Form and on the effective date of 
each Advance as though made at and as of each such date, and no Event 
of Default shall have occurred and be continuing, or would result from 
such Advance.  The making of each Advance shall be deemed to be a 
representation and warranty by Borrower on the date of such Advance as 
to the accuracy of the facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest.  Borrower grants and 
pledges to Bank a continuing security interest in all presently 
existing and hereafter acquired or arising Collateral in order to 
secure prompt repayment of any and all Obligations and in order to 
secure prompt performance by Borrower of each of its covenants and 
duties under the Loan Documents.  Except as set forth in the Schedule, 
such security interest constitutes a valid, first priority security 
interest in the presently existing Collateral, and will constitute a 
valid, first priority security interest in Collateral acquired after 
the date hereof.  Borrower acknowledges that Bank may place a "hold" on 
any deposit account pledged as Collateral to secure the Obligations.
4.2 Delivery of Additional Documentation Required.  
Borrower shall from time to time execute and deliver to Bank, at the 
request of Bank, all Negotiable Collateral, all financing statements 
and other documents that Bank may reasonably request, in form 
satisfactory to Bank, to perfect and continue perfected Bank's security 
interests in the Collateral and in order to fully consummate all of the 
transactions contemplated under the Loan Documents.
4.3 Right to Inspect.  Bank (through any of its officers, 
employees, or agents) shall have the right, upon reasonable prior 
notice, from time to time during Borrower's usual business hours, to 
inspect Borrower's Books and to make copies thereof and to check, test, 
and appraise the Collateral in order to verify Borrower's financial 
condition or the amount, condition of, or any other matter relating to, 
the Collateral. 
5. REPRESENTATIONS AND WARRANTIES
        Borrower represents and warrants as follows: 
5.1 Due Organization and Qualification.  Borrower and 
each Subsidiary is a corporation duly existing and in good standing 
under the laws of its state of incorporation and qualified and licensed 
to do business in, and is in good standing in, any state in which the 
conduct of its business or its ownership of property requires that it 
be so qualified.
5.2 Due Authorization; No Conflict.  The execution, 
delivery, and performance of the Loan Documents are within Borrower's 
powers, have been duly authorized, and are not in conflict with nor 
constitute a breach of any provision contained in Borrower's 
Certificate of Incorporation or Bylaws, nor will they constitute an 
event of default under any material agreement to which Borrower is a 
party or by which Borrower is bound.  Borrower is not in default under 
any agreement to which it is a party or by which it is bound, which 
default could have a Material Adverse Effect.
5.3 No Prior Encumbrances.  Borrower has good and 
indefeasible title to the Collateral, free and clear of Liens, except 
for Permitted Liens. Notwithstanding anything to the contrary stated 
herein, Borrower makes no representations in this Section 5.3 or 
elsewhere that any of the Collateral, except to the best of Borrower's 
knowledge, does not infringe upon any third party's patent rights.
5.4 Bona Fide Eligible Accounts.  The Eligible Accounts 
are bona fide existing obligations.  The property giving rise to such 
Eligible Accounts has been delivered to the account debtor or to the 
account debtor's agent for immediate shipment to and unconditional 
acceptance by the account debtor.  Borrower has not received notice of 
actual or imminent Insolvency Proceeding of any account debtor that is 
included in any Borrowing Base Certificate as an Eligible Account.
5.5 Merchantable Inventory.  All Inventory is in all 
material respects of good and marketable quality, free from all 
material defects.
5.6 Name; Location of Chief Executive Office.  Except as 
disclosed in the Schedule, Borrower has not done business under any 
name other than that specified on the signature page hereof.  The chief 
executive office of Borrower is located at the address indicated in 
Section 10 hereof.
5.7 Litigation.  Except as set forth in the Schedule and 
Borrower's public filings with the Securities and Exchange Commission, 
there are no actions or proceedings pending by or against Borrower or 
any Subsidiary before any court or administrative agency in which an 
adverse decision could have a Material Adverse Effect or a material 
adverse effect on Borrower's interest or Bank's security interest in 
the Collateral.  Borrower does not have knowledge of any such pending 
or threatened actions or proceedings.
5.8 No Material Adverse Change in Financial Statements.  
All consolidated financial statements related to Borrower and any 
Subsidiary that have been delivered by Borrower to Bank fairly present 
in all material respects Borrower's consolidated financial condition as 
of the date thereof and Borrower's consolidated results of operations 
for the period then ended.  There has not been a material adverse 
change in the consolidated financial condition of Borrower since the 
date of the most recent of such financial statements submitted to Bank.
5.9 Solvency.  Borrower is solvent and able to pay its 
debts (including trade debts) as they mature.
5.10 Regulatory Compliance.  Borrower and each Subsidiary 
has met the minimum funding requirements of ERISA with respect to any 
employee benefit plans subject to ERISA.  No event has occurred 
resulting from Borrower's failure to comply with ERISA that is 
reasonably likely to result in Borrower's incurring any liability that 
could have a Material Adverse Effect.  Borrower is not an "investment 
company" or a company "controlled" by an "investment company" within 
the meaning of the Investment Company Act of 1940.  Borrower is not 
engaged principally, or as one of the important activities, in the 
business of extending credit for the purpose of purchasing or carrying 
margin stock (within the meaning of Regulations T and U of the Board of 
Governors of the Federal Reserve System).  Borrower has complied with 
all the provisions of the Federal Fair Labor Standards Act.  Borrower 
has not violated any statutes, laws, ordinances or rules applicable to 
it, violation of which could have a Material Adverse Effect.
5.11 Environmental Condition.  Except as disclosed on 
Schedule C, attached hereto and incorporated herein by this reference, 
none of Borrower's or any Subsidiary's properties or assets has ever 
been used by Borrower or any Subsidiary or, to the best of Borrower's 
knowledge, by previous owners or operators, in the disposal of, or to 
produce, store, handle, treat, release, or transport, any hazardous 
waste or hazardous substance other than in accordance with applicable 
law; to the best of Borrower's knowledge, none of Borrower's properties 
or assets has ever been designated or identified in any manner pursuant 
to any environmental protection statute as a hazardous waste or 
hazardous substance disposal site, or a candidate for closure pursuant 
to any environmental protection statute; no lien arising under any 
environmental protection statute has attached to any revenues or to any 
real or personal property owned by Borrower or any Subsidiary; and 
neither Borrower nor any Subsidiary has received a summons, citation, 
notice, or directive from the Environmental Protection Agency or any 
other federal, state or other governmental agency concerning any action 
or omission by Borrower or any Subsidiary resulting in the releasing, 
or otherwise disposing of hazardous waste or hazardous substances into 
the environment.
5.12 Taxes.  Borrower and each Subsidiary has filed or 
caused to be filed all tax returns required to be filed, and has paid, 
or has made adequate provision for the payment of, all taxes reflected 
therein.
5.13 Subsidiaries.  Except as disclosed on Schedule A 
attached hereto and incorporated herein by this reference, Borrower 
does not own any stock, partnership interest or other equity securities 
of any Person, except for Permitted Investments.
5.14 Government Consents.  Borrower and each Subsidiary 
has obtained all consents, approvals and authorizations of, made all 
declarations or filings with, and given all notices to, all 
governmental authorities that are necessary for the continued operation 
of Borrower's business as currently conducted.
5.15 Full Disclosure.  No representation, warranty or 
other statement made by Borrower in any certificate or written 
statement furnished to Bank contains any untrue statement of a material 
fact or omits to state a material fact necessary in order to make the 
statements contained in such certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS
        Borrower covenants and agrees that, until payment in full of all 
outstanding Obligations, and for so long as Bank may have any 
commitment to make an Advance hereunder, Borrower shall do all of the 
following:
6.1 Good Standing.  Borrower shall maintain its and each 
of its Subsidiaries' (i) corporate existence, except that any 
Subsidiary may be merged into Borrower or any wholly-owned Subsidiary 
of Borrower, and (ii) good standing in its jurisdiction of 
incorporation and maintain qualification in each jurisdiction in which 
the failure to so qualify could have a Material Adverse Effect.  
Borrower shall maintain, and shall cause each of its Subsidiaries to 
maintain, to the extent consistent with prudent management of 
Borrower's business, in force all licenses, approvals and agreements, 
the loss of which could have a Material Adverse Effect.
6.2 Government Compliance.  Borrower shall meet, and 
shall cause each Subsidiary to meet, the minimum funding requirements 
of ERISA with respect to any employee benefit plans subject to ERISA.  
Borrower shall comply, and shall cause each Subsidiary to comply, with 
all statutes, laws, ordinances and government rules and regulations to 
which it is subject, noncompliance with which could have a Material 
Adverse Effect or a material adverse effect on the Collateral or the 
priority of Bank's Lien on the Collateral.
6.3 Financial Statements, Reports, Certificates.  
Borrower shall deliver to Bank: (a) as soon as available, but in any 
event within twenty (20) days after the end of each month, a company 
prepared consolidated balance sheet and income statement covering 
Borrower's consolidated operations during such period, certified by an 
officer of Borrower reasonably acceptable to Bank; (b) as soon as 
available, but in any event within ninety (90) days after the end of 
Borrower's fiscal year, audited consolidated financial statements of 
Borrower prepared in accordance with GAAP, consistently applied, 
together with an unqualified opinion on such financial statements of an 
independent certified public accounting firm reasonably acceptable to 
Bank; (c) within five (5) days of filing, copies of all statements, 
reports and notices sent or made available generally by Borrower to its 
security holders or to any holders of Subordinated Debt and all reports 
on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange 
Commission; (d) promptly upon receipt of notice thereof, a report of 
any legal actions pending or threatened against Borrower or any 
Subsidiary that could result in damages or costs to Borrower or any 
Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (e) 
such budgets, sales projections, operating plans or other financial 
information as Bank may reasonably request from time to time.
        Within twenty (20) days after the last day of each month during 
which Borrowings are outstanding, or if no Borrowings are outstanding, 
within one (1) Business Day prior to requesting an Advance, Borrower 
shall deliver to Bank a Borrowing Base Certificate signed by a 
Responsible Officer in substantially the form of Exhibit C hereto, 
together with aged listings of accounts receivable and accounts 
payable. 
                Borrower shall deliver to Bank with the monthly financial 
statements a Compliance Certificate signed by a Responsible Officer in 
substantially the form of Exhibit D hereto.
                Bank shall have a right from time to time hereafter to 
audit Borrower's Accounts at Borrower's expense, provided that such 
audits will be conducted no more often than every six (6) months unless 
an Event of Default has occurred and is continuing.
6.4 Inventory; Returns.  Borrower shall keep all 
Inventory in good and marketable condition, free from all material 
defects.  Returns and allowances, if any, as between Borrower and its 
account debtors shall be on the same basis and in accordance with the 
usual customary practices of Borrower, as they exist at the time of the 
execution and delivery of this Agreement.  Borrower shall promptly 
notify Bank of all returns and recoveries and of all disputes and 
claims, where the return, recovery, dispute or claim involves more than 
Fifty Thousand Dollars ($50,000).
6.5 Taxes.  Except as disclosed on Schedule B attached 
hereto and incorporated herein by this reference, Borrower shall make, 
and shall cause each Subsidiary to make, due and timely payment or 
deposit of all material federal, state, and local taxes, assessments, 
or contributions required of it by law, and will execute and deliver to 
Bank, on demand, appropriate certificates attesting to the payment or 
deposit thereof; and Borrower will make, and will cause each Subsidiary 
to make, timely payment or deposit of all material tax payments and 
withholding taxes required of it by applicable laws, including, but not 
limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, 
and local, state, and federal income taxes, and will, upon request, 
furnish Bank with proof satisfactory to Bank indicating that Borrower 
or a Subsidiary has made such payments or deposits; provided that 
Borrower or a Subsidiary need not make any payment if the amount or 
validity of such payment is contested in good faith by appropriate 
proceedings and is reserved against (to the extent required by GAAP) by 
Borrower.
6.6 Insurance.
(a) Borrower, at its expense, shall keep the 
Collateral insured against loss or damage by fire, theft, explosion, 
sprinklers, and all other hazards and risks, and in such amounts, as 
ordinarily insured against by other owners in similar businesses 
conducted in the locations where Borrower's business is conducted on 
the date hereof.  Borrower shall also maintain insurance relating to 
Borrower's ownership and use of the Collateral in amounts and of a type 
that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such 
form, with such companies, and in such amounts as reasonably 
satisfactory to Bank.  All such policies of property insurance shall 
contain a lender's loss payable endorsement, in a form satisfactory to 
Bank, showing Bank as an additional loss payee thereof and all 
liability insurance policies shall show the Bank as an additional 
insured, and shall specify that the insurer must give at least twenty 
(20) days notice to Bank before canceling its policy for any reason.  
Borrower shall deliver to Bank certified copies of such policies of 
insurance and evidence of the payments of all premiums therefor.  All 
proceeds payable under any such policy shall, at the option of Bank, be 
payable to Bank to be applied on account of the Obligations.
6.7 Principal Depository.  Borrower shall maintain its 
principal depository and operating accounts with Bank including, 
without limitation, all of Borrower's domestic depository accounts. 
Further, Borrower shall maintain at all times average monthly deposits 
with Bank of at least Three Million Dollars ($3,000,000).
6.8 Debt-Net Worth Ratio.  Borrower shall maintain, as of 
the last day of each fiscal quarter, a ratio of Total Liabilities (net 
of deferred revenue) to Tangible Net Worth of not more than 3.5 to 1.0.
6.9 Tangible Net Worth.  Borrower shall maintain, as of 
the last day of each fiscal quarter, a Tangible Net Worth of not less 
than Two Million Five Hundred Dollars ($2,500,000).
6.10 Debt Coverage.  Borrower shall maintain, as of the 
last day of each fiscal quarter, either of the following:
(a) A Debt Service Ratio of at least 1.25 to 1.00.  
"Debt Service Ratio" is defined as the sum of net profits after taxes 
as measured on the last day of the preceding fiscal quarter plus 
depreciation and amortization, divided by current portion of long term 
debt for that quarter; or
(b) A Cash Ratio of at least 1.75 to 1.00. "Cash 
Ratio" is defined as the sum of cash and cash equivalents plus the 
Revolving Facility Availability, divided by the Term Loan Balance.
6.11 Registration of Intellectual Property Rights.  
Borrower shall register or cause to be registered (to the extent not 
already registered) with the United States Patent and Trademark Office 
or the United States Copyright Office, as applicable, those 
intellectual property rights listed on Exhibits A, B and C to the 
Collateral Assignment, Patent Mortgage and Security Agreement delivered 
to Bank by Borrower in connection with this Agreement within thirty 
(30) days of the date of this Agreement.  Borrower shall register or 
cause to be registered with the United States Patent and Trademark 
Office or the United States Copyright Office, as applicable, those 
additional intellectual property rights developed or acquired by 
Borrower from time to time in connection with any product prior to the 
sale or licensing of such product to any third party, including without 
limitation revisions or additions to the intellectual property rights 
listed on such Exhibits A, B and C.  Borrower shall execute and deliver 
such additional instruments and documents from time to time as Bank 
shall reasonably request to perfect Bank's security interest in such 
additional intellectual property rights.  Notwithstanding anything to 
the contrary stated herein, Borrower shall not be required to register 
Copyrights unless in keeping with its normal business policy. 
6.12 Further Assurances.  At any time and from time to 
time Borrower shall execute and deliver such further instruments and 
take such further action as may reasonably be requested by Bank to 
effect the purposes of this Agreement.
6.13 Use of Proceeds.  Borrower shall use the Advances for 
working capital only.
7. NEGATIVE COVENANTS
        Borrower covenants and agrees that, so long as any credit 
hereunder shall be available and until payment in full of the 
outstanding Obligations or for so long as Bank may have any commitment 
to make any Advances, Borrower will not do any of the following:
7.1 Dispositions.  Convey, sell, lease, transfer or other 
dispose of (collectively, a "Transfer") or permit any of its 
Subsidiaries to Transfer, all or any part of its business or property, 
other than: (i) Transfers of Inventory in the ordinary course of 
business; (ii) Transfers of non-exclusive licenses and similar 
arrangements for the use of the property of Borrower or its 
Subsidiaries; or (iii) Transfers of worn-out or obsolete Equipment.
7.2 Change in Business.  Borrower will not, without the 
prior written consent of Bank which consent shall not be unreasonably 
withheld, suffer to occur a Change in Control or engage in any 
business, or permit any of its Subsidiaries to engage in any business, 
other than the businesses currently engaged in by Borrower and any 
business substantially similar or related thereto (or incidental 
thereto).  Borrower will not, without thirty (30) days prior written 
notification to Bank, relocate its chief executive office or change its 
name or do business under any other name than is set forth on the 
signature page hereof.
7.3 Mergers or Acquisitions.  Borrower will not, without 
the prior written consent of Bank, which consent shall not be 
unreasonably withheld, merge or consolidate, or permit any of its 
Subsidiaries to merge or consolidate, with or into any other business 
organization, or acquire, or permit any of its Subsidiaries to acquire, 
all or substantially all of the capital stock or property of another 
Person.
7.4 Indebtedness.  Create, incur, assume or be or remain 
liable with respect to any Indebtedness, or permit any Subsidiary so to 
do, other than Permitted Indebtedness and Indebtedness incurred with 
the prior written consent of Bank, which consent shall not unreasonably 
be withheld.
7.5 Encumbrances.  Create, incur, assume or suffer to 
exist any Lien with respect to any of its property, or assign or 
otherwise convey any right to receive income, including the sale of any 
Accounts, or permit any of its Subsidiaries so to do, except for 
Permitted Liens.
7.6 Distributions.  Pay any dividends or make any other 
distribution or payment on account of or in redemption, retirement or 
purchase of any capital stock other than any such dividends, 
distributions or payments made with the prior written consent of Bank, 
which consent shall not be unreasonably withheld.
7.7 Investments.  Directly or indirectly acquire or own, 
or make any Investment in or to any Person, or permit any of its 
Subsidiaries so to do, other than Permitted Investments or Investments 
made with the prior written consent of Bank, which consent shall not be 
unreasonably withheld.
7.8 Transactions with Affiliates.  Directly or indirectly 
enter into or permit to exist any material transaction with any 
Affiliate of Borrower except for transactions that are in the ordinary 
course of Borrower's business, upon fair and reasonable terms that are 
no less favorable to Borrower than would be obtained in an arm's length 
transaction with a nonaffiliated Person.
7.9 Subordinated Debt.  Make any payment in respect of 
any Subordinated Debt, or permit any of its Subsidiaries to make any 
such payment, except in compliance with the terms of such Subordinated 
Debt, or amend any provision contained in any documentation relating to 
the Subordinated Debt without Bank's prior written consent.
7.10 Inventory.  Store the Inventory with a bailee, 
warehouseman, or similar party unless Bank has received a pledge of the 
warehouse receipt covering such Inventory.  Except for Inventory sold 
in the ordinary course of business and except for such other locations 
as Bank may approve in writing, Borrower shall keep the Inventory only 
at the location set forth in Section 10 hereof and such other locations 
of which Borrower gives Bank prior written notice and as to which 
Borrower signs and files a financing statement where needed to perfect 
Bank's security interest.
7.11 Compliance.  Become an "investment company" 
controlled by an "investment company," within the meaning of the 
Investment Company Act of 1940, or become principally engaged in, or 
undertake as one of its important activities, the business of extending 
credit for the purpose of purchasing or carrying margin stock, or use 
the proceeds of any Advance for such purpose.  Fail to meet the minimum 
funding requirements of ERISA, permit a Reportable Event or Prohibited 
Transaction, as defined in ERISA, to occur, fail to comply with the 
Federal Fair Labor Standards Act or violate any law or regulation, 
which violation could have a Material Adverse Effect or a material 
adverse effect on the Collateral or the priority of Bank's Lien on the 
Collateral, or permit any of its Subsidiaries to do any of the 
foregoing.
8. EVENTS OF DEFAULT
        Any one or more of the following events shall constitute an Event 
of Default by Borrower under this Agreement:
8.1 Payment Default.  If Borrower fails to pay the 
principal of, or any interest on, any Advances when due and payable; or 
fails to pay any portion of any other Obligations not constituting such 
principal or interest, including without limitation Bank Expenses. 
8.2 Covenant Default.
(a) If Borrower fails to perform any obligation 
under Sections 6.7, 6.8, 6.9 or 6.10 or violates any of the covenants 
contained in Section 7 of this Agreement, or 
(b) If Borrower fails or neglects to perform, keep, 
or observe any other material term, provision, condition, covenant, or 
agreement contained in this Agreement, in any of the Loan Documents, or 
in any other present or future agreement between Borrower and Bank and 
as to any default under such other term, provision, condition, covenant 
or agreement that can be cured, has failed to cure such default within 
ten (10) days after Borrower receives notice thereof or any officer of 
Borrower becomes aware thereof; provided, however, that if the default 
cannot by its nature be cured within the ten (10) day period or cannot 
after diligent attempts by Borrower be cured within such ten (10) day 
period, and such default is likely to be cured within a reasonable 
time, then Borrower shall have an additional reasonable period (which 
shall not in any case exceed thirty (30) days) to attempt to cure such 
default, and within such reasonable time period the failure to have 
cured such default shall not be deemed an Event of Default (provided 
that no Advances will be required to be made during such cure period);
8.3 Material Adverse Change.  If there occurs a Material 
Adverse Change, or if there is a material impairment of the prospect of 
repayment of any portion of the Obligations or a material impairment of 
the value or priority of Bank's security interests in the Collateral;
8.4 Attachment.  If any material portion of Borrower's 
assets is attached, seized, subjected to a writ or distress warrant, or 
is levied upon, or comes into the possession of any trustee, receiver 
or person acting in a similar capacity and such attachment, seizure, 
writ or distress warrant or levy has not been removed, discharged or 
rescinded within ten (10) days, or if Borrower is enjoined, restrained, 
or in any way prevented by court order from continuing to conduct all 
or any material part of its business affairs, or if a judgment or other 
claim becomes a lien or encumbrance upon any material portion of 
Borrower's assets, or if a notice of lien, levy, or assessment is filed 
of record with respect to any of Borrower's assets by the United States 
Government, or any department, agency, or instrumentality thereof, or 
by any state, county, municipal, or governmental agency, and the same 
is not paid within ten (10) days after Borrower receives notice 
thereof, provided that none of the foregoing shall constitute an Event 
of Default where such action or event is stayed or an adequate bond has 
been posted pending a good faith contest by Borrower (provided that no 
Advances will be required to be made during such cure period);
8.5 Insolvency.  If Borrower becomes insolvent, or if an 
Insolvency Proceeding is commenced by Borrower, or if an Insolvency 
Proceeding is commenced against Borrower and is not dismissed or stayed 
within ten (10) days (provided that no Advances will be made prior to 
the dismissal of such Insolvency Proceeding);
8.6 Other Agreements.  If there is a default in any 
agreement to which Borrower is a party with a third party or parties 
resulting in a right by such third party or parties, whether or not 
exercised, to accelerate the maturity of any Indebtedness in an amount 
in excess of One Hundred Thousand Dollars ($100,000) or that could have 
a Material Adverse Effect;
8.7 Subordinated Debt.  If Borrower makes any payment on 
account of Subordinated Debt, except to the extent such payment is 
allowed under any subordination agreement entered into with Bank;
8.8 Judgments.  If a judgment or judgments for the 
payment of money in an amount, individually or in the aggregate, of at 
least Fifty Thousand Dollars ($50,000) shall be rendered against 
Borrower and shall remain unsatisfied and unstayed for a period of ten 
(10) days (provided that no Advances will be made prior to the 
satisfaction or stay of such judgment); or
8.9 Misrepresentations.  If any material 
misrepresentation or material misstatement exists now or hereafter in 
any warranty or representation set forth herein or in any certificate 
delivered to Bank by any Responsible Officer pursuant to this Agreement 
or to induce Bank to enter into this Agreement or any other Loan 
Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies.  Upon the occurrence and during 
the continuance of an Event of Default, Bank may, at its election, 
without notice of its election and without demand, do any one or more 
of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by 
this Agreement, by any of the other Loan Documents, or otherwise, 
immediately due and payable (provided that upon the occurrence of an 
Event of Default described in Section 8.5 all Obligations shall become 
immediately due and payable without any action by Bank);
(b) Cease advancing money or extending credit to or 
for the benefit of Borrower under this Agreement or under any other 
agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly 
with account debtors for amounts, upon terms and in whatever order that 
Bank reasonably considers advisable;
(d) Without notice to or demand upon Borrower, make 
such payments and do such acts as Bank considers necessary or 
reasonable to protect its security interest in the Collateral.  
Borrower agrees to assemble the Collateral if Bank so requires, and to 
make the Collateral available to Bank as Bank may designate.  Borrower 
authorizes Bank to enter the premises where the Collateral is located, 
to take and maintain possession of the Collateral, or any part of it, 
and to pay, purchase, contest, or compromise any encumbrance, charge, 
or lien which in Bank's determination appears to be prior or superior 
to its security interest and to pay all expenses incurred in connection 
therewith.  With respect to any of Borrower's owned premises, Borrower 
hereby grants Bank a license to enter into possession of such premises 
and to occupy the same, without charge, for up to one hundred twenty 
(120) days in order to exercise any of Bank's rights or remedies 
provided herein, at law, in equity, or otherwise;
(e) Without notice to Borrower set off and apply to 
the Obligations any and all (i) balances and deposits of Borrower held 
by Bank, or (ii) indebtedness at any time owing to or for the credit or 
the account of Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, 
maintain, repair, prepare for sale, advertise for sale, and sell (in 
the manner provided for herein) the Collateral.  Bank is hereby granted 
a license or other right, solely pursuant to the provisions of this 
Section 9.1, to use, without charge, Borrower's labels, patents, 
copyrights, rights of use of any name, trade secrets, trade names, 
trademarks, service marks, and advertising matter, or any property of a 
similar nature, as it pertains to the Collateral, in completing 
production of, advertising for sale, and selling any Collateral and, in 
connection with Bank's exercise of its rights under this Section 9.1, 
Borrower's rights under all licenses and all franchise agreements shall 
inure to Bank's benefit;
(g) Sell the Collateral at either a public or 
private sale, or both, by way of one or more contracts or transactions, 
for cash or on terms, in such manner and at such places (including 
Borrower's premises) as Bank determines is commercially reasonable;
(h) Bank may credit bid and purchase at any public 
sale; and       
(i) Any deficiency that exists after disposition of 
the Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the occurrence 
and during the continuance of an Event of Default, Borrower hereby 
irrevocably appoints Bank (and any of Bank's designated officers, or 
employees) as Borrower's true and lawful attorney to: (a) send requests 
for verification of Accounts or notify account debtors of Bank's 
security interest in the Accounts; (b) endorse Borrower's name on any 
checks or other forms of payment or security that may come into Bank's 
possession; (c) sign Borrower's name on any invoice or bill of lading 
relating to any Account, drafts against account debtors, schedules and 
assignments of Accounts, verifications of Accounts, and notices to 
account debtors; (d) make, settle, and adjust all claims under and 
decisions with respect to Borrower's policies of insurance; and (e) 
settle and adjust disputes and claims respecting the accounts directly 
with account debtors, for amounts and upon terms which Bank determines 
to be reasonable; provided Bank may exercise such power of attorney to 
sign the name of Borrower on any of the documents described in 
Section 4.2 regardless of whether an Event of Default has occurred.  
The appointment of Bank as Borrower's attorney in fact, and each and 
every one of Bank's rights and powers, being coupled with an interest, 
is irrevocable until all of the Obligations have been fully repaid and 
performed and Bank's obligation to provide Advances hereunder is 
terminated.
9.3 Accounts Collection.  At any time from the date of 
this Agreement, Bank may notify any Person owing funds to Borrower of 
Bank's security interest in such funds and verify the amount of such 
Account.  Borrower shall collect all amounts owing to Borrower for 
Bank, receive in trust all payments as Bank's trustee, and immediately 
deliver such payments to Bank in their original form as received from 
the account debtor, with proper endorsements for deposit.
9.4 Bank Expenses.  If Borrower fails to pay any amounts 
or furnish any required proof of payment due to third persons or 
entities, as required under the terms of this Agreement, then Bank may 
do any or all of the following: (a) make payment of the same or any 
part thereof; (b) set up such reserves under the Revolving Facility as 
Bank deems necessary to protect Bank from the exposure created by such 
failure; or (c) obtain and maintain insurance policies of the type 
discussed in Section 6.6 of this Agreement, and take any action with 
respect to such policies as Bank deems prudent.  Any amounts so paid or 
deposited by Bank shall constitute Bank Expenses, shall be immediately 
due and payable, and shall bear interest at the then applicable rate 
hereinabove provided, and shall be secured by the Collateral.  Any 
payments made by Bank shall not constitute an agreement by Bank to make 
similar payments in the future or a waiver by Bank of any Event of 
Default under this Agreement.
9.5 Bank's Liability for Collateral.  So long as Bank 
complies with reasonable banking practices, Bank shall not in any way 
or manner be liable or responsible for: (a) the safekeeping of the 
Collateral; (b) any loss or damage thereto occurring or arising in any 
manner or fashion from any cause; (c) any diminution in the value 
thereof; or (d) any act or default of any carrier, warehouseman, 
bailee, forwarding agency, or other person whomsoever.  All risk of 
loss, damage or destruction of the Collateral shall be borne by 
Borrower.
9.6 Remedies Cumulative.  Bank's rights and remedies 
under this Agreement, the Loan Documents, and all other agreements 
shall be cumulative.  Bank shall have all other rights and remedies not 
inconsistent herewith as provided under the Code, by law, or in equity.  
No exercise by Bank of one right or remedy shall be deemed an election, 
and no waiver by Bank of any Event of Default on Borrower's part shall 
be deemed a continuing waiver.  No delay by Bank shall constitute a 
waiver, election, or acquiescence by it.  No waiver by Bank shall be 
effective unless made in a written document signed on behalf of Bank 
and then shall be effective only in the specific instance and for the 
specific purpose for which it was given.
9.7 Demand; Protest.  Express for the notice requirements 
expressly set forth herein, Borrower waives demand, protest, notice of 
protest, notice of default or dishonor, notice of payment and 
nonpayment, notice of any default, nonpayment at maturity, release, 
compromise, settlement, extension, or renewal of accounts, documents, 
instruments, chattel paper, and guarantees at any time held by Bank on 
which Borrower may in any way be liable.
10. NOTICES
        Unless otherwise provided in this Agreement, all notices or 
demands by any party relating to this Agreement or any other agreement 
entered into in connection herewith shall be in writing and (except for 
financial statements and other informational documents which may be 
sent by first-class mail, postage prepaid) shall be personally 
delivered or sent by a recognized overnight delivery service, certified 
mail, postage prepaid, return receipt requested, or by 
telefacsimile to Borrower or to Bank, as the case may be, at its 
addresses set forth below:
        If to Borrower          Consilium, Inc.
                                485 Clyde Avenue
                                Mountain View, CA 94043
                                Attn:  Clifton Wong
                                Fax:  650/691-6350

        If to Bank              Venture Banking Group
                                Three Palo Alto Square, Suite 150
                                Palo Alto, CA 94306
                                Attn:  Jon Krogstad
                                Fax:    650/843-6969
        The parties hereto may change the address at which they are to 
receive notices hereunder, by notice in writing in the foregoing manner 
given to the other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
        This Agreement shall be governed by, and construed in accordance 
with, the internal laws of the State of California, without regard to 
principles of conflicts of law.  Each of Borrower and Bank hereby 
submits to the exclusive jurisdiction of the state and Federal courts 
located in the County of Santa Clara, State of California.  BORROWER 
AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF 
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE 
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, 
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL 
OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES 
THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO 
ENTER INTO THIS AGREEMENT.  EACH PARTY REPRESENTS AND WARRANTS THAT IT 
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY 
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION 
WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 Successors and Assigns.  This Agreement shall bind 
and inure to the benefit of the respective successors and permitted 
assigns of each of the parties; provided, however, that neither this 
Agreement nor any rights hereunder may be assigned by Borrower without 
Bank's prior written consent, which consent may be granted or withheld 
in Bank's sole discretion.  Bank shall have the right without the 
consent of or notice to Borrower to sell, transfer, negotiate, or grant 
participation in all or any part of, or any interest in, Bank's 
obligations, rights and benefits hereunder.
12.2 Indemnification.  Borrower shall defend, indemnify 
and hold harmless Bank and its officers, employees, and agents against: 
(a) all obligations, demands, claims, and liabilities claimed or 
asserted by any other party in connection with the transactions 
contemplated by this Agreement; and (b) all losses or Bank Expenses in 
any way suffered, incurred, or paid by Bank as a result of or in any 
way arising out of, following, or consequential to transactions between 
Bank and Borrower whether under this Agreement, or otherwise (including 
without limitation reasonable attorneys fees and expenses), except for 
losses caused by Bank's gross negligence or willful misconduct.
12.3 Time of Essence.  Time is of the essence for the 
performance of all obligations set forth in this Agreement.
12.4 Severability of Provisions.  Each provision of this 
Agreement shall be severable from every other provision of this 
Agreement for the purpose of determining the legal enforceability of 
any specific provision.
12.5 Amendments in Writing, Integration.  This Agreement 
cannot be amended or terminated orally.  All prior agreements, 
understandings, representations, warranties, and negotiations between 
the parties hereto with respect to the subject matter of this 
Agreement, if any, are merged into this Agreement and the Loan 
Documents.
12.6 Counterparts.  This Agreement may be executed in any 
number of counterparts and by different parties on separate 
counterparts, each of which, when executed and delivered, shall be 
deemed to be an original, and all of which, when taken together, shall 
constitute but one and the same Agreement.
12.7 Survival.  All covenants, representations and 
warranties made in this Agreement shall continue in full force and 
effect so long as any Obligations remain outstanding.  The obligations 
of Borrower to indemnify Bank with respect to the expenses, damages, 
losses, costs and liabilities described in Section 12.2 shall survive 
until all applicable statute of limitations periods with respect to 
actions that may be brought against Bank have run.
12.8 Confidentiality.  In handling any confidential 
information of Borrower or any Subsidiary, Bank shall exercise the same 
degree of care that it exercises with respect to its own proprietary 
information of the same types to maintain the confidentiality of any 
non-public information thereby received or received pursuant to this 
Agreement except that disclosure of such information may be made (i) to 
the subsidiaries or Affiliates of Bank in connection with their present 
or prospective business relations with Borrower, (ii) as required by 
law, regulations, rule or order, subpoena, judicial order or similar 
order and (iii) as may be required in connection with the examination, 
audit or similar investigation of Bank.  Confidential information 
hereunder shall not include information that either: (a) is in the 
public domain or in the knowledge or possession of Bank when disclosed 
to Bank, or becomes part of the public domain after disclosure to Bank 
through no fault of Bank; or (b) is disclosed to Bank by a third party, 
provided Bank does not have actual knowledge that such third party is 
prohibited from disclosing such information.

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


VENTURE BANKING GROUP                           CONSILIUM, INC.
By:                                                     By:
Title:                                                  Title:                  
<PAGE>



                                    EXHIBIT A


The Collateral shall consist of all right, title and interest of 
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter 
acquired, including, without limitation, all machinery, fixtures, 
vehicles (including motor vehicles and trailers), and any interest in 
any of the foregoing, and all attachments, accessories, accessions, 
replacements, substitutions, additions, and improvements to any of the 
foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, 
including, without limitation, all merchandise, raw materials, parts, 
supplies, packing and shipping materials, work in process and finished 
products including such inventory as is temporarily out of Borrower's 
custody or possession or in transit and including any returns upon any 
accounts or other proceeds, including insurance proceeds, resulting 
from the sale or disposition of any of the foregoing and any documents 
of title representing any of the above, and Borrower's Books relating 
to any of the foregoing;
(c) All contract rights and general intangibles now 
owned or hereafter acquired, including, without limitation, goodwill, 
trademarks, servicemarks, trade styles, trade names, patents, patent 
applications, leases, license agreements, franchise agreements, 
blueprints, drawings, purchase orders, customer lists, route lists, 
infringements, claims, computer programs, computer discs, computer 
tapes, literature, reports, catalogs, design rights, income tax 
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising 
accounts, contract rights, royalties, license rights and all other 
forms of obligations owing to Borrower arising out of the sale or lease 
of goods, the licensing of technology or the rendering of services by 
Borrower, whether or not earned by performance, and any and all credit 
insurance, guaranties, and other security therefor, as well as all 
merchandise returned to or reclaimed by Borrower and Borrower's Books 
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, 
securities, investment property, letters of credit, certificates of 
deposit, instruments and chattel paper now owned or hereafter acquired 
and Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, 
copyright registrations and like protections in each work of authorship 
and derivative work thereof, whether published or unpublished, now 
owned or hereafter acquired; all trade secret rights, including all 
rights to unpatented inventions, know-how, operating manuals, license 
rights and agreements and confidential information, now owned or 
hereafter acquired; all mask work or similar rights available for the 
protection of semiconductor chips, now owned or hereafter acquired; all 
claims for damages by way of any past, present and future infringement 
of any of the foregoing; and
(g) Any and all claims, rights and interests in any 
of the above and all substitutions for, additions and accessions to and 
proceeds thereof.
<PAGE>


                                      EXHIBIT B
                 LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
              DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

TO: VENTURE LENDING                             DATE:      
FAX#: (650) 843-6969                            TIME:          

FROM:  CONSILIUM, INC.

REQUESTED BY:                                          

                     AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE:                                

PHONE NUMBER:                                               


FROM ACCOUNT #                           TO ACCOUNT #                     


REQUESTED TRANSACTION TYPE                      REQUEST DOLLAR AMOUNT

         PRINCIPAL INCREASE (ADVANCE)           $              
         PRINCIPAL PAYMENT (ONLY)               $              

         INTEREST PAYMENT (ONLY)                $          

         PRINCIPAL AND INTEREST (PAYMENT)       $    

         OTHER INSTRUCTIONS:                            





All representations and warranties of Borrower stated in the Loan 
Agreement are true, correct and complete in all material respects as of 
the date of the telephone request for and Advance confirmed by this 
Borrowing Certificate; provided, however, that those representations 
and warranties expressly referring to another date shall be true, 
correct and complete in all material respects as of such date.


                                  BANK USE ONLY
TELEPHONE REQUEST:  

The following person is authorized to request the loan payment 
transfer/loan advance on the advance designated account and is known to 
me.  

                                                        Phone #:    
AUTHORIZED REQUESTER

Phone #:                                
RECEIVED BY (BANK)


AUTHORIZED SIGNATURE (BANK)
<PAGE>




















































                                        EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower:   CONSILIUM, INC.                      Bank:   Venture Banking Group

Commitment Amount:      $3,750,000
ACCOUNTS RECEIVABLE 
        1.      Accounts Receivable Book Value as of                 $   
        2.      Additions (please explain on reverse)                $   
        3.      TOTAL ACCOUNTS RECEIVABLE                            $       


ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
        4.      Amounts over 90 days from invoice                    $
        5.      Eligible Foreign Accounts over 120 days from invoice $       

        6.      Balance of 25% over 90 day accounts                  $  
        7.      Concentration Limits                                 $  
        8.      Foreign Accounts                                     $
        9.      Governmental Accounts                                $  
        10.     Contra Accounts                                      $ 
        11.     Promotion or Demo Accounts                           $ 
        12.     Intercompany/Employee Accounts                       $  
        13.     Amount by which loan value of German/Taiwan
                subsidiary accounts exceeds $750,000                 $       
        14.     Other (please explain on reverse)                    $       
        15.     TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                 $     

        16.     Eligible Accounts (#3 minus #15)                     $      
        17.     LOAN VALUE OF ACCOUNTS (80 % of #16)                 $

BALANCES
        18.     Maximum Loan Amount                                  $ 
        19.     Total Funds Available (#17)                          $     
        20.     Present balance owing on Line of Credit              $         


The undersigned represents and warrants that the foregoing is true, 
complete and correct, and that the information reflected in this 
Borrowing Base Certificate complies with the representations and 
warranties set forth in the Loan and Security Agreement between the 
undersigned and Venture Banking Group.
COMMENTS:                                                       




By:                                     
        Authorized Signer
<PAGE>







                                        EXHIBIT D
                                 COMPLIANCE CERTIFICATE


TO:             VENTURE BANKING GROUP

FROM:           CONSILIUM, INC.

        The undersigned authorized officer of Consilium, Inc. hereby 
certifies that in accordance with the terms and conditions of the Loan 
and Security Agreement between Borrower and Bank (the "Agreement"), (i) 
Borrower is in complete compliance for the period ending
with all required covenants except as noted below and (ii) all 
representations and warranties of Borrower stated in the Agreement are 
true and correct in all material respects as of the date hereof.  
Attached herewith are the required documents supporting the above 
certification.  The Officer further certifies that these are prepared 
in accordance with Generally Accepted Accounting Principles (GAAP) and 
are consistently applied from one period to the next except as 
explained in an accompanying letter or footnotes.

Please indicate compliance status by circling Yes/No under "Complies" 
column.

        Reporting Covenant                  Required                 Complies

        Monthly financial statements        Monthly within 20 days   Yes   No
        Annual (CPA Audited)                FYE within 90 days       Yes   No
        A/R & A/P Agings                    Monthly within 20 days   Yes   No
        A/R Audit                           Initial and Semi-Annual  Yes   No

        Financial Covenant                  Required        Actual   Complies


        Maintain on a Monthly Basis:
        Minimum Tangible Net Worth          $2,500,000    $_____      Yes  No
        Maximum Debt/Tangible Net Worth      3.50:1.0      _____:1.0  Yes  No
        One of the following:
            Minimum Debt Services Ratio      1.25:1.0      _____:1.0  Yes  No
            Minimum Cash Ratio               1.75:1.0      _____:1.0  Yes  No

Comments Regarding Exceptions:  See Attached.

Sincerely,



SIGNATURE


TITLE


DATE
<PAGE>

                                    EXHIBIT E

                        Revolving Facility Promissory Note
$3,750,000      Palo Alto, California
        July ___, 1998
FOR VALUE RECEIVED, the undersigned, Consilium, Inc., a Delaware 
corporation (the "Borrower"), promises to pay to the order of Venture 
Banking Group, a division of Cupertino National Bank ("Bank"), at such 
place as the holder hereof may designate, in lawful money of the United 
States of America, the aggregate unpaid principal amount of all 
Advances made by Bank to Borrower under Section 2.1 of that certain 
Loan and Security Agreement between Borrower and Bank of even date 
herewith, as amended from time to time (the "Loan Agreement"), up to a 
maximum principal amount of Three Million Seven Hundred Fifty Thousand 
Dollars ($3,750,000).  Borrower shall also pay interest on the 
aggregate unpaid principal amount of such Advances at the rates and in 
accordance with the terms of the Loan Agreement.  The entire principal 
amount and all accrued but unpaid interest thereon shall be due and 
payable on the Revolving Facility Maturity Date.  All capitalized terms 
used herein but not defined herein shall have the same meaning as given 
to them in the Loan Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and 
records each Advance made by Bank under this Note and the amount of 
each payment or prepayment of principal of each such Advance received 
by Bank; it being understood, however, that failure to make any such 
endorsement (or any errors in notation) shall not affect the 
obligations of Borrower with respect to Advances made hereunder, and 
payments of principal by Borrower shall be credited to Borrower 
notwithstanding the failure to make a notation (or any errors in 
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of 
this Note and to pay all reasonable attorneys' fees incurred in such 
collection or in any suit or action to collect this Note or in any 
appeal thereof.  Borrower waives presentment, demand, protest, notice 
of protest, notice of dishonor, notice of nonpayment, and any and all 
other notices and demands in connection with the delivery, acceptance, 
performance, default or enforcement of this Note, as well as any 
applicable statute of limitations.  No delay by Bank in exercising any 
power or right hereunder shall operate as a waiver of any power or 
right.  Time is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern 
the rights and obligations of Borrower with respect to all obligations 
hereunder.  
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY 
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, 
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL 
OTHER COMMON LAW OR STATUTORY CLAIMS.  This Note shall be deemed to be 
made under, and shall be construed in accordance with and governed by 
the laws of the State of California, excluding conflicts of laws 
principles.



                                                CONSILIUM, INC.

                                                By:
                                                Printed Name:

                                                Title:
<PAGE>




















































                                   EXHIBIT F

                          Term Loan Promissory Note
$2,750,000      Palo Alto, California
        July ___, 1998
FOR VALUE RECEIVED, the undersigned, Consilium, Inc., a Delaware 
corporation (the "Borrower"), promises to pay to the order of Venture 
Banking Group, a division of Cupertino National Bank ("Bank"), at such 
place as the holder hereof may designate, in lawful money of the United 
States of America, the aggregate unpaid principal amount of the Term 
Loan made by Bank to Borrower under Section 2.2 of that certain Loan 
and Security Agreement between Borrower and Bank of even date herewith, 
as amended from time to time (the "Loan Agreement"), up to a maximum 
principal amount of Two Million Seven Hundred Fifty Thousand Dollars 
($2,750,000).  Borrower shall pay installments of principal and 
interest with respect to the Term Loan in accordance with the terms of 
the Loan Agreement.  The remaining principal amount and all accrued but 
unpaid interest thereon shall be due and payable on the Term Loan 
Maturity Date.  All capitalized terms used herein but not defined 
herein shall have the same meaning as given to them in the Loan 
Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and 
records each advance made by Bank under this Note and the amount of 
each payment or prepayment of principal of each such advance received 
by Bank; it being understood, however, that failure to make any such 
endorsement (or any errors in notation) shall not affect the 
obligations of Borrower with respect to advances made hereunder, and 
payments of principal by Borrower shall be credited to Borrower 
notwithstanding the failure to make a notation (or any errors in 
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of 
this Note and to pay all reasonable attorneys' fees incurred in such 
collection or in any suit or action to collect this Note or in any 
appeal thereof.  Borrower waives presentment, demand, protest, notice 
of protest, notice of dishonor, notice of nonpayment, and any and all 
other notices and demands in connection with the delivery, acceptance, 
performance, default or enforcement of this Note, as well as any 
applicable statute of limitations.  No delay by Bank in exercising any 
power or right hereunder shall operate as a waiver of any power or 
right.  Time is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern 
the rights and obligations of Borrower with respect to all obligations 
hereunder.  
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY 
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, 
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL 
OTHER COMMON LAW OR STATUTORY CLAIMS.  This Note shall be deemed to be 
made under, and shall be construed in accordance with and governed by 
the laws of the State of California, excluding conflicts of laws 
principles.



                                                CONSILIUM, INC.

By:                                             
                                                Printed Name:

                                                Title:
<PAGE>




















































                        Revolving Facility Promissory Note
$3,750,000      Palo Alto, California
        July 24, 1998
FOR VALUE RECEIVED, the undersigned, Consilium, Inc., a Delaware 
corporation (the "Borrower"), promises to pay to the order of Venture 
Banking Group, a division of Cupertino National Bank ("Bank"), at such 
place as the holder hereof may designate, in lawful money of the United 
States of America, the aggregate unpaid principal amount of all 
Advances made by Bank to Borrower under Section 2.1 of that certain 
Loan and Security Agreement between Borrower and Bank of even date 
herewith, as amended from time to time (the "Loan Agreement"), up to a 
maximum principal amount of Three Million Seven Hundred Fifty Thousand 
Dollars ($3,750,000).  Borrower shall also pay interest on the 
aggregate unpaid principal amount of such Advances at the rates and in 
accordance with the terms of the Loan Agreement.  The entire principal 
amount and all accrued but unpaid interest thereon shall be due and 
payable on the Revolving Facility Maturity Date.  All capitalized terms 
used herein but not defined herein shall have the same meaning as given 
to them in the Loan Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and 
records each Advance made by Bank under this Note and the amount of 
each payment or prepayment of principal of each such Advance received 
by Bank; it being understood, however, that failure to make any such 
endorsement (or any errors in notation) shall not affect the 
obligations of Borrower with respect to Advances made hereunder, and 
payments of principal by Borrower shall be credited to Borrower 
notwithstanding the failure to make a notation (or any errors in 
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of 
this Note and to pay all reasonable attorneys' fees incurred in such 
collection or in any suit or action to collect this Note or in any 
appeal thereof.  Borrower waives presentment, demand, protest, notice 
of protest, notice of dishonor, notice of nonpayment, and any and all 
other notices and demands in connection with the delivery, acceptance, 
performance, default or enforcement of this Note, as well as any 
applicable statute of limitations.  No delay by Bank in exercising any 
power or right hereunder shall operate as a waiver of any power or 
right.  Time is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern 
the rights and obligations of Borrower with respect to all obligations 
hereunder.  
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY 
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, 
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL 
OTHER COMMON LAW OR STATUTORY CLAIMS.  This Note shall be deemed to be 
made under, and shall be construed in accordance with and governed by 
the laws of the State of California, excluding conflicts of laws 
principles.



                                                CONSILIUM, INC.

                                                By:
                                                Printed Name:

                                                Title:
<PAGE>






















































                             Term Loan Promissory Note
$2,750,000      Palo Alto, California
        July 24, 1998
FOR VALUE RECEIVED, the undersigned, Consilium, Inc., a Delaware 
corporation (the "Borrower"), promises to pay to the order of Venture 
Banking Group, a division of Cupertino National Bank ("Bank"), at such 
place as the holder hereof may designate, in lawful money of the United 
States of America, the aggregate unpaid principal amount of the Term 
Loan made by Bank to Borrower under Section 2.2 of that certain Loan 
and Security Agreement between Borrower and Bank of even date herewith, 
as amended from time to time (the "Loan Agreement"), up to a maximum 
principal amount of Two Million Seven Hundred Fifty Thousand Dollars 
($2,750,000).  Borrower shall pay installments of principal and 
interest with respect to the Term Loan in accordance with the terms of 
the Loan Agreement.  The remaining principal amount and all accrued but 
unpaid interest thereon shall be due and payable on the Term Loan 
Maturity Date.  All capitalized terms used herein but not defined 
herein shall have the same meaning as given to them in the Loan 
Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and 
records each advance made by Bank under this Note and the amount of 
each payment or prepayment of principal of each such advance received 
by Bank; it being understood, however, that failure to make any such 
endorsement (or any errors in notation) shall not affect the 
obligations of Borrower with respect to advances made hereunder, and 
payments of principal by Borrower shall be credited to Borrower 
notwithstanding the failure to make a notation (or any errors in 
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of 
this Note and to pay all reasonable attorneys' fees incurred in such 
collection or in any suit or action to collect this Note or in any 
appeal thereof.  Borrower waives presentment, demand, protest, notice 
of protest, notice of dishonor, notice of nonpayment, and any and all 
other notices and demands in connection with the delivery, acceptance, 
performance, default or enforcement of this Note, as well as any 
applicable statute of limitations.  No delay by Bank in exercising any 
power or right hereunder shall operate as a waiver of any power or 
right.  Time is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern 
the rights and obligations of Borrower with respect to all obligations 
hereunder.  
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY 
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, 
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL 
OTHER COMMON LAW OR STATUTORY CLAIMS.  This Note shall be deemed to be 
made under, and shall be construed in accordance with and governed by 
the laws of the State of California, excluding conflicts of laws 
principles.



                                                CONSILIUM, INC.

By:                                             
                                                Printed Name:

                                                Title:
<PAGE>






















































                      COLLATERAL ASSIGNMENT, PATENT MORTGAGE
                             AND SECURITY AGREEMENT


        THIS COLLATERAL ASSIGNMENT, PATENT MORTGAGE AND SECURITY AGREEMENT is
made as of the 24th day of July 1998, by and between CONSILIUM, INC.
("Assignor") a Delaware corporation, and VENTURE BANKING GROUP, a division of
Cupertino National Bank ("Assignee").

                                 RECITALS
A.      Assignee has agreed to lend to Assignor certain funds (the 
"Loan") and Assignor desires to borrow such funds from Assignee pursuant 
to the terms of that certain Loan and Security Agreement dated even date 
herewith (the "Loan Agreement").  The Loan is evidenced by one or more 
promissory notes (a "Note" or, collectively, the "Notes").
B.      In order to induce Assignee to make the Loan, Assignor has 
agreed to assign certain intangible property to Assignee for purposes of 
securing the obligations of Assignor to Assignee.

        C.      Unless otherwise defined herein, all capitalized terms shall 
have the meanings ascribed to them in the Loan Agreement.

        NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:

1. Assignment, Patent Mortgage and Grant of Security Interest.  As 
collateral security for the prompt and complete payment and performance 
of all of Assignor's present or future indebtedness, obligations and 
liabilities to Assignee, Assignor hereby assigns, transfers, conveys 
and grants a security interest and mortgage to Assignee, as security, 
but not as an ownership interest in and to Assignor's entire right, 
title and interest in, to and under the following (all of which shall 
collectively be called the "Collateral"):
1.1 Any and all copyright rights, copyright applications, 
copyright registrations and like protections in each work or authorship 
and derivative work thereof, whether published or unpublished and 
whether or not the same also constitutes a trade secret, now or 
hereafter existing, created, acquired or held, including without 
limitation those set forth on Exhibit A attached hereto (collectively, 
the "Copyrights");
1.2 Any and all trade secrets, and any and all intellectual 
property rights in computer software and computer software products now 
or hereafter existing, created, acquired or held;
1.3 Any and all design rights which may be available to 
Assignor now or hereafter existing, created, acquired or held;
1.4 All patents, patent applications and like protections 
including, without limitation, improvements, divisions, continuations, 
renewals, reissues, extensions and continuations-in-part of the same, 
including without limitation the patents and patent applications set 
forth on Exhibit B attached hereto (collectively, the "Patents");
1.5 Any trademark and servicemark rights, whether registered or 
not, applications to register and registrations of the same and like 
protections, and the entire goodwill of the business of Assignor 
connected with and symbolized by such trademarks, including without 
limitation those set forth on Exhibit C attached hereto (collectively, 
the "Trademarks");
1.6 Any and all claims for damages by way of past, present and 
future infringements of any of the rights included above, with the 
right, but not the obligation, to sue for and collect such damages for 
said use or infringement of the intellectual property rights identified 
above;
1.7 All licenses or other rights to use any of the Copyrights, 
Patents or Trademarks, and all license fees and royalties arising from 
such use to the extent permitted by such license or rights;
1.8 All amendments, extensions, renewals and extensions of any 
of the Copyrights, Trademarks or Patents;
1.9 All proceeds and products of the foregoing, including 
without limitation all payments under insurance or any indemnity or 
warranty payable in respect of any of the foregoing; and
1.10 The Collateral shall not include Assignor's interest in any 
licenses that would be breached by Assignor's grant of a security 
interest in its rights thereunder, unless the provision that would 
otherwise be breached would be rendered ineffective by Section 9-318 of 
the California Uniform Commercial Code.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE 
CONSTRUED AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT ONLY TO 
SECURE ASSIGNOR'S OBLIGATIONS TO ASSIGNEE UNDER THE NOTES AND THE LOAN 
AGREEMENT.

2. Authorization and Request.  Assignor authorizes and requests that 
the Register of Copyrights and the Commissioner of Patents and 
Trademarks record this conditional assignment.
3. Covenants and Warranties.  Assignor represents, warrants, 
covenants and agrees as follows:
3.1 Assignor is now the sole owner of the Collateral, except 
for non-exclusive licenses granted by Assignor to its customers in the 
ordinary course of business and third party software embedded in the 
Collateral;
3.2 Performance of this Assignment does not conflict with or 
result in a breach of any agreement to which Assignor is bound other 
than the breach of provisions in agreements that would otherwise be 
rendered ineffective by Section 9-318 of the California Uniform 
Commercial Code;
3.3 During the term of this Agreement, Assignor will not 
transfer or otherwise encumber any interest in the Collateral, except 
for non-exclusive licenses granted by Assignor in the ordinary course 
of business or as set forth in this Assignment;
3.4 To its knowledge, each of the Patents is valid and 
enforceable, and no part of the Collateral has been judged invalid or 
unenforceable, in whole or in part, and no claim has been made that any 
part of the Collateral violates the rights of any third party;
3.5 Assignor shall promptly advise Assignee of any Material 
Adverse Change in the composition of the Collateral, including but not 
limited to any subsequent ownership right of the Assignor in or to any 
Trademark, Patent or Copyright not specified in this Assignment;
3.6 Assignor shall (i) protect, defend and maintain the 
validity and enforceability of the Trademarks, Patents and Copyrights, 
(ii) use commercially reasonable efforts to detect infringements of the 
Trademarks, Patents and Copyrights and promptly advise Assignee in 
writing of material infringements detected and (iii) not allow any 
Trademarks, Patents, or Copyrights to be abandoned, forfeited or 
dedicated to the public without the written consent of Assignee, which 
shall not be unreasonably withheld, unless Assignor determines that 
reasonable business practices suggest that abandonment is appropriate;
3.7 Assignor shall promptly register the most recent version of 
any of Assignor's Copyrights, if not so already registered and if in 
keeping with the Assignor's normal business policy, and shall, from 
time to time, execute and file such other instruments, and take such 
further actions as Assignee may reasonably request from time to time to 
perfect or continue the perfection of Assignee's interest in the 
Collateral;
3.8 This Assignment creates, and in the case of after acquired 
Collateral, this Assignment will create at the time Assignor first has 
rights in such after acquired Collateral, in favor of Assignee a valid 
and perfected first priority security interest in the Collateral in the 
United States securing the payment and performance of the obligations 
under the Loan Agreement or evidenced by the Notes upon making the 
filings referred to in clause (i) below;
3.9 To its knowledge, except for, and upon, the filing with the 
United States Patent and Trademark office with respect to the Patents 
and Trademarks and the Register of Copyrights with respect to the 
Copyrights necessary to perfect the security interests and assignment 
created hereunder and except as has been already made or obtained, no 
authorization, approval or other action by, and no notice to or filing 
with, any U.S. governmental authority of U.S. regulatory body is 
required either (i) for the grant by Assignor of the security interest 
granted hereby or for the execution, delivery or performance of this 
Assignment by Assignor in the U.S. or (ii) for the perfection in the 
United States or the exercise by Assignee of its rights and remedies 
thereunder;
3.10 All information heretofore, herein or hereafter supplied to 
Assignee by or on behalf of Assignor with respect to the Collateral is 
accurate and complete in all material respects;
3.11 Assignor shall not enter into any agreement that would 
materially impair or conflict with Assignor's obligations hereunder 
without Assignee's prior written consent, which consent shall not be 
unreasonably withheld.  Assignor shall not permit the inclusion in any 
material contract to which it becomes a party of any provisions that 
could or might in any way prevent the creation of a security interest 
in Assignor's rights and interest in any property included within the 
definition of the Collateral acquired under such contracts;
3.12 Upon any executive officer of Assignor obtaining actual 
knowledge thereof, Assignor will promptly notify Assignee in writing of 
any event that materially adversely affects the value of any 
Collateral, the ability of Assignor to dispose of any Collateral or the 
rights and remedies of Assignee in relation thereto, including the levy 
of any legal process against any of the Collateral.
4. Assignee's Rights.  Assignee shall have the right, but not the 
obligation, to take, at Assignor's sole expense, any actions that 
Assignor is required under this Assignment to take but which Assignor 
fails to take, after fifteen (15) days' notice to Assignor.  Assignor 
shall reimburse and indemnify Assignee for all reasonable costs and 
reasonable expenses incurred in the reasonable exercise of its rights 
under this Section 4.
5. Inspection Rights.  Assignor hereby grants to Assignee and its 
employees, representatives and agents the right to visit, during 
reasonable hours upon prior reasonable written notice to Assignor, and 
any of Assignor's plants and facilities that manufacture, install or 
store products (or that have done so during the prior six-month period) 
that are sold utilizing any of the Collateral, and to inspect the 
products and quality control records relating thereto upon reasonable 
written notice to Assignor and as often as may be reasonably requested 
(it being understood that any information obtained in such inspection 
shall be subject to the confidentiality provisions of Section 16 
hereof).
6. Further Assurances; Attorney in Fact.
6.1 On a continuing basis, Assignor will, subject to any prior 
licenses, encumbrances and restrictions and prospective licenses, make, 
execute, acknowledge and deliver, and file and record in the proper 
filing and recording places in the United States, all such instruments, 
including, appropriate financing and continuation statements and 
collateral agreements and filings with the United States Patent and 
Trademarks Office and the Register of Copyrights, and take all such 
action as may reasonably be deemed necessary or advisable, or as 
requested by Assignee, to perfect Assignee's security interest in all 
Copyrights, Patents and Trademarks and otherwise to carry out the 
intent and purposes of this Collateral Assignment, or for assuring and 
confirming to Assignee the grant or perfection of a security interest 
in all Collateral.
6.2 Assignor hereby irrevocably appoints Assignee as Assignor's 
attorney-in-fact, with full authority in the place and stead of 
Assignor and in the name of Assignor, Assignee or otherwise, from time 
to time in Assignee's discretion, upon Assignor's failure or inability 
to do so, to take any action and to execute any instrument which 
Assignee may deem necessary or advisable to accomplish the purposes of 
this Collateral Assignment, including:
(a) To modify, in its sole discretion, this Collateral 
Assignment without first obtaining Assignor's approval of or signature 
to such modification by amending Exhibit A, Exhibit B and Exhibit C, 
thereof, as appropriate, to include reference to any right, title or 
interest in any Copyrights, Patents or Trademarks acquired by Assignor 
after the execution hereof or to delete any reference to any right, 
title or interest in any Copyrights, Patents or Trademarks in which 
Assignor no longer has or claims any right, title or interest; and
(b) To file, in its sole discretion, one or more 
financing or continuation statements and amendments thereto, relative 
to any of the Collateral without the signature of Assignor where 
permitted by law.
7. Events of Default.  The occurrence of any of the following shall 
constitute an Event of Default under the Assignment:
7.1 An Event of Default occurs under the Loan Agreement or any 
Note; or
7.2 Assignor breaches any warranty or agreement made by 
Assignor in this Assignment other than as set forth in Section 7.3.
7.3 Assignor breaches any warranty or agreement made by 
Assignor in Sections 3.5 and 3.12 hereof and any such breach shall not 
have been cured to Assignee's satisfaction within ten (10) days after 
Assignor shall have first become aware thereof.
8. Remedies.  Upon the occurrence and continuance of an Event of 
Default, Assignee shall have the right to exercise all the remedies of 
a secured party under the California Uniform Commercial Code, including 
without limitation the right to require Assignor to assemble the 
Collateral and any tangible property in which Assignee has a security 
interest and to make it available to Assignee at a place designated by 
Assignee.  Assignee shall have a nonexclusive, royalty free license to 
use the Copyrights, Patents and Trademarks to the extent reasonably 
necessary to permit Assignee to exercise its rights and remedies upon 
the occurrence of an Event of Default.  Assignor will pay any expenses 
(including reasonable attorney's fees) incurred by Assignee in 
connection with the exercise of any of Assignee's rights hereunder, 
including, without limitation, any expense incurred in disposing of the 
Collateral.  All of Assignee's rights and remedies with respect to the 
Collateral shall be cumulative.
9. Indemnity.  Assignor agrees to defend, indemnify and hold 
harmless Assignee and its officers, employees, and agents against:  (a) 
all obligations, demands, claims, and liabilities claimed or asserted 
by any other party in connection with the transactions contemplated by 
this Agreement, and (b) all losses or expenses in any way suffered, 
incurred, or paid by Assignee as a result of or in any way arising out 
of, following or consequential to transactions between Assignee and 
Assignor, whether under this Assignment or otherwise (including without 
limitation, reasonable attorneys fees and reasonable expenses), except 
for losses arising form or out of Assignee's gross negligence or 
willful misconduct.  
10. Reassignment.  At such time as Assignor shall completely satisfy 
all of the obligations secured hereunder, Assignee shall execute and 
deliver to Assignor all deed, assignments, and other instruments as may 
necessary or proper to reinvest in Assignor full title to the property 
assigned hereunder, subject to any disposition thereof which may have 
been made by Assignee pursuant hereto.
11. Course of Dealing.  No course of dealing, nor any failure to 
exercise, nor any delay in exercising any right, power or privilege 
hereunder shall operate as a waiver thereof.
12. Attorneys' Fees.  If any action relating to this Assignment is 
brought by either party hereto against the other party, the prevailing 
party shall be entitled to recover reasonable attorneys fees, costs and 
disbursements.
13. Amendments.  This Assignment may be amended only by a written 
instrument signed by both parties hereto.
14. Counterparts.  This Assignment may be executed in two or more 
counterparts, each of which shall be deemed an original but all of 
which together shall constitute the same instrument.
15. California Law and Jurisdiction.  This Assignment shall be 
governed by the laws of the State of California, without regard for 
choice of law provisions.  Assignor and Assignee consent to the 
nonexclusive jurisdiction of any state or federal court located in 
Santa Clara County, California.
16. Confidentiality.  In handling any confidential information of 
Borrower or any Subisidiary, Assignee shall exercise the same degree of 
care that it exercises with respect to its own proprietary information 
of the same types to maintain the confidentiality of any non-public 
information thereby received or received pursuant to this Assignment 
except that the disclosure of this information may be made (i) to the 
Affiliates of the Assignee, (ii) as required by law, regulation, rule 
or order, subpoena judicial order or similar order and (iii) as may be 
required in connection with the examination, audit or similar 
investigation of Assignee.

        IN WITNESS WHEREOF, the parties hereto have executed this Assignment 
on the day and year first above written.

Address of Assignor:                                    ASSIGNOR:

485 Clyde Avenue                                        CONSILIUM, INC.
Mountain View, CA 94043
                                                        By:             
                                                        Printed Name:   
                                                        Title:          


Address of Assignee:                                    ASSIGNEE:

3 Palo Alto Square, Suite 150                           VENTURE BANKING GROUP, A
DIVISION OF
Palo Alto, California  94306                            CUPERTINO NATIONAL BANK

                                                        By:             
                                                        Printed Name:   
                                                        Title: