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                                                                   Exhibit 10.16

                              PRISM SOLUTIONS, INC.
                                1000 Hamlin Court
                               Sunnyvale, CA 94089

March 17, 1997

Earl C. Charles
15230 Fruitvale Ave.
Saratoga, CA  95070

         Re:      Employment With Prism Solutions, Inc.

Dear Earl:

         Prism Solutions, Inc. (the "Company") is pleased to offer you a
position as Chief Financial Officer of the Company on the terms set forth in
this letter agreement, effective as of March 17, 1997 upon your acceptance by
execution of a counterpart copy of this letter where indicated below.

         1. Reporting; Duties and Responsibilities; Employment At Will; Employee
Invention Assignment and Confidentiality Agreement. In this position you will
report to the Chief Executive Officer of the Company. This offer is for a full
time position, located at the offices of the Company, except as travel to other
locations may be necessary to fulfill your responsibilities. Your employment
with the Company is on an "at will" basis, and either you or the Company may
terminate your employment with the Company at any time, for any reason. You will
be required to enter into an Invention Assignment and Confidentiality Agreement
as described in paragraph 5 below.

         2.       Termination Provisions.

         (a) Severance Payments. If the Board of Directors terminates your
employment with the Company for any reason other than your gross misconduct or
the acquisition of the Company, the Company will pay you as agreed upon
severance an amount equal to your then base salary for the lesser of (i) twelve
months; or (ii) the number of months during which you have been employed by
Company up to your date of termination. In the event that (i) your employment
with the Company is terminated because the Company is acquired; (ii) you
terminate your employment with the Company after an acquisition of the Company
because you are not offered a position with the successor in interest of the
Company comparable in salary and responsibility to the position with the Company
which you held prior to such acquisition; or (iii) you terminate your employment
with the Company at your own discretion after an acquisition of the Company in
which you are offered a position with the successor in interest of the Company
comparable in salary and responsibility to the position with the Company which
you held prior to such acquisition, then the Company will pay you as agreed upon
severance your then base salary for the lessor of (i) twelve months following
such termination; or (ii) the number of months before you obtain a position with
another firm.


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Earl C. Charles
March 17, 1997
Page 2

         (b) Acceleration of Vesting of Stock Options. If (i) your employment
with the Company is terminated because the Company is acquired or (ii) you
terminate your employment with the Company after an acquisition of the Company
because you are not offered a position with the successor in interest of the
Company comparable in salary and responsibility to the position with the Company
which you held prior to such acquisition, then each option to purchase shares of
the Company's Common Stock under the Company's 1996 Equity Incentive Plan or a
successor plan which you hold, including the option described in Section 4 of
this agreement, shall become vested as to one hundred percent (100%) of the
Shares as to which such option is unvested as of such time, and you will be
permitted to exercise each such option, to the extent (and only to the extent)
that it has not yet been exercised as of your date of termination, at any time
until the earlier to occur of (i) twelve (12) months after your date of
termination or (ii) the expiration date of such option. If you terminate your
employment with the Company at your own discretion after an acquisition of the
Company in which you are offered a position with the successor in interest of
the Company comparable in salary and responsibility to the position with the
Company which you held prior to such acquisition, then each option to purchase
shares of the Company's Common Stock under the Company's 1996 Equity Incentive
Plan or a successor plan which you hold, including the option described in
Section 4 of this agreement, shall become vested as to fifty percent (50%) of
the Shares as to which such option is unvested as of such time, and you will be
permitted to exercise each such option, to the extent (and only to the extent)
that it is vested and has not yet been exercised as of your date of termination,
at any time until the earlier to occur of (i) twelve (12) months after your date
of termination or (ii) the expiration date of such option.

         (c) No Additional Payments. You agree that the payments set forth in
this offer letter constitute all payments that you shall be entitled to, and
under any theory, in the event of any termination of employment.

         3. Salary; Bonus; Benefits and Vacation. Your initial base salary will
be $14,584.00 per month, subject to adjustment in good faith by the Company's
Board of Directors, payable in accordance with the Company's customary payroll
practice as in effect from time to time. You will also be eligible to earn an
annual bonus in the amount of $25,000 based on the achievement of objectives
which you and the Company's Chief Executive Officer with agreement of the Board
of Directors will mutually determine in good faith. The objectives for 1997 will
be determined promptly after your acceptance of this letter; objectives for
future years will be determined promptly after the beginning of each fiscal year
of the Company. You will also receive the Company's standard employee benefits
package, and will be subject to the Company's vacation policy, as such package
and policy are in effect from time to time.

         4. Stock Options. Effective at the Company's Board of Directors meeting
next after your acceptance of the offer contained in this letter, the Board will
grant you a stock option, effective upon the date of your commencement of
employment pursuant to this letter agreement. 


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Earl C. Charles
March 17, 1997
Page 3

All options will have an exercise price equal to the then-current fair market
value of the Company Common Stock at the date of grant, such date to be within
15 days of your acceptance of this letter. If the Company is acquired before
your options are fully vested, then the provisions described in paragraph 2
above will apply. The stock option will be to purchase up to 140,000 shares of
the Company Common Stock pursuant to the Company's Stock Option Plan. The option
will become exercisable over a four-year exercise schedule at the rate of 2,917
shares per month, at the close of each month during which you remain employed
with the Company.

         5. Confidential Information. As an employee of the Company, you will
have access to certain Company confidential information and you may, during the
course of your employment, develop certain information or inventions which will
be the property of the Company. To protect the interest of the Company, you will
need to sign the Company's standard "Employee Inventions and Confidentiality
Agreement" as a condition of your employment. We wish to impress upon you that
we do not wish you to bring with you any confidential or proprietary material of
any former employer or to violate any other obligation to your former employers.

         6. At-Will Employment. While we look forward to a long and profitable
relationship, should you decide to accept our offer, you will be an at-will
employee of the Company, which means the employment relationship can be
terminated by either of us for any reason at any time. Any statements or
representations to the contrary (and, indeed, any statements contradicting any
provision in this letter) should be regarded by you as ineffective. Further,
your participation in any stock option or benefit program is not to be regarded
as assuring you of continuing employment for any particular period of time.

         7. Authorization to Work. Because of Federal regulations adopted in the
Immigration Reform and Control Act of 1986, you will need to present
documentation demonstrating that you have authorization to work in the United
States. If you have any questions about this requirement, which applies to U.S.
citizens and non-U.S.
citizens alike, please contact our human resources department.

         8. Term of Offer. This offer will remain open until March 19, 1997. If
you decide to accept our offer, and I hope that you will, please sign the
enclosed copy of this letter in the space indicated and return it to me or to
Warren Weiss. Upon your signature below, this will become our binding agreement
with respect to the subject matter of this letter, superseding in their entirety
all other or prior agreements by you with the Company as to the specific
subjects of this letter, will be binding upon and inure to the benefit of our
respective successors and assigns, and your heirs, administrators and executors,
will be governed by California law, and may not only be amended in a writing
signed by you and the Company.


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Earl C. Charles
March 17, 1997
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         We are excited to have you join us and look forward to working with
you. We will be required to announce your joining us in a timely manner and will
work on the details of our press announcements with you.

                                    Sincerely,



                                    E. Floyd Kvamme, Director
                                    for the Board of Directors



Acknowledged, Accepted and Agreed


______________________________      Date:  ____________________________
Earl C. Charles