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                                6,364,000 SHARES

                             SIMPLE TECHNOLOGY, INC.

                                  COMMON STOCK

                             UNDERWRITING AGREEMENT

                                                               _______ ___, 2000

LEHMAN BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
FIDELITY CAPITAL MARKETS, A DIVISION
   OF NATIONAL FINANCIAL SERVICES CORPORATION
As Representatives of the several
   Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285

Dear Sirs:

                  Simple Technology, Inc., a California corporation (the
"Company"), proposes to sell 6,364,000 shares (the "Firm Stock") of the
Company's Common Stock, par value $0.001 per share (the "Common Stock"). In
addition, the Company proposes to grant to the Underwriters named in Schedule 1
hereto (the "Underwriters") an option to purchase up to an additional 954,600
shares of the Common Stock on the terms and for the purposes set forth in
Section 3 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.

                  It is understood and agreed that the Company has consummated
or will consummate the following transactions (each a "Transaction" and
collectively, the "Transactions") prior to or concurrent with the closing of the
offering: (i) the issuance of undistributed earnings notes (the "Undistributed
Earnings Notes") to trusts established for the benefit of the Principal
Shareholders (as defined below) and members of their respective families
(collectively, the "Shareholder Trusts") in the aggregate principal amount equal
to the Company's undistributed earnings from the date of the Company's formation
through the date immediately prior to the completion of the offering; (ii) the
issuance of the additional paid-in capital notes (the "Additional Paid-In
Capital Notes") in the amount of $3.0 million representing additional paid-in
capital proceeds originally invested by the Principal Shareholders or the
Shareholder Trusts; (iii) the termination of the Company's S corporation status
under Subchapter S of the Internal Revenue Code of


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1986, as amended, and the regulations and published interpretations thereunder
(the "Code"); (iv) the execution of a Distribution and Tax Indemnity Agreement,
dated as of the date hereof, among the Company and the Shareholder Trusts (the
"Tax Indemnity Agreement"); and (v) the payoff of the Undistributed Earnings
Notes and the Additional Paid-In Capital Notes with a portion of the net
proceeds from the offering.

     1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
PRINCIPAL SHAREHOLDERS. The Company and each of the principal shareholders of
the Company named in Schedule 2 hereto (the "Principal Shareholders")
represents, warrants and agrees that:

          (a) A registration statement on Form S-1, and amendments thereto, with
     respect to the Stock have (i) been prepared by the Company in conformity
     with the requirements of the Securities Act of 1933, as amended (the
     "Securities Act"), and the rules and regulations (the "Rules and
     Regulations") of the Securities and Exchange Commission (the "Commission")
     thereunder, (ii) been filed with the Commission under the Securities Act
     and (iii) become effective under the Securities Act. Copies of such
     registration statement and each of the amendments thereto have been
     delivered by the Company to you as the representatives (the
     "Representatives") of the Underwriters. As used in this Agreement,
     "Effective Time" means the date and the time as of which such registration
     statement, or the most recent post-effective amendment thereto, if any, was
     declared effective by the Commission; "Effective Date" means the date of
     the Effective Time; "Preliminary Prospectus" means each prospectus included
     in such registration statement, or amendments thereof, before it became
     effective under the Securities Act and any prospectus filed with the
     Commission by the Company with the consent of the Representatives pursuant
     to Rule 424(a) of the Rules and Regulations; "Registration Statement" means
     such registration statement, as amended at the Effective Time, including
     all information contained in the final prospectus filed with the Commission
     pursuant to Rule 424(b) of the Rules and Regulations in accordance with
     Section 6(a) hereof and deemed to be a part of the registration statement
     as of the Effective Time pursuant to paragraph (b) of Rule 430A of the
     Rules and Regulations; and "Prospectus" means such final prospectus, as
     first filed with the Commission pursuant to paragraph (1) or (4) of Rule
     424(b) of the Rules and Regulations. If the Company has filed an
     abbreviated registration statement to register additional shares of Common
     Stock pursuant to Rule 462(b) under the Securities Act (the "Rule 462
     Registration Statement"), then any reference herein to the term
     "Registration Statement" shall be deemed to include such Rule 462
     Registration Statement. The Commission has not issued any order preventing
     or suspending the use of any Preliminary Prospectus.



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          (b) The Registration Statement conforms, and the Prospectus and any
     further amendments or supplements to the Registration Statement or the
     Prospectus will, when they become effective or are filed with the
     Commission, as the case may be, conform in all respects to the requirements
     of the Securities Act and the Rules and Regulations and do not and will
     not, as of the applicable effective date (as to the Registration Statement
     and any amendment thereto) and as of the applicable filing date (as to the
     Prospectus and any amendment or supplement thereto) contain an untrue
     statement of a material fact or omit to state a material fact required to
     be stated therein or necessary to make the statements therein not
     misleading; PROVIDED that no representation or warranty is made as to
     information contained in or omitted from the Registration Statement or the
     Prospectus in reliance upon and in conformity with written information
     furnished to the Company through the Representatives by or on behalf of any
     Underwriter specifically for inclusion therein.

          (c) The Company and each of its subsidiaries (as defined in Section
     17) have been duly incorporated or, in the case of limited liability
     companies, organized, and are validly existing as corporations or limited
     liability companies, as the case may be, in good standing under the laws of
     their respective jurisdictions of incorporation or organization, are duly
     qualified to do business and are in good standing as foreign corporations
     or limited liability companies, as the case may be, in each jurisdiction in
     which their respective ownership or lease of property or the conduct of
     their respective businesses requires such qualification, and have all
     corporate or limited liability company power and authority necessary to own
     or hold their respective properties and to conduct the businesses in which
     they are engaged except where the failure to so qualify would not in the
     aggregate have a material adverse effect on the Company and its
     subsidiaries taken as a whole; and none of the subsidiaries of the Company
     is a "significant subsidiary," as such term is defined in Rule 405 of the
     Rules and Regulations.

          (d) The Company has an authorized capitalization as set forth in the
     Prospectus, and all of the issued shares of capital stock of the Company
     have been duly and validly authorized and issued, are fully paid and
     non-assessable and conform to the description thereof contained in the
     Prospectus; and, except as disclosed in the Prospectus, all of the issued
     shares of capital stock of each corporate subsidiary of the Company and all
     of the membership interests in each limited liability company subsidiary of
     the Company have been duly and validly authorized and issued and are fully
     paid and non-assessable and (except for directors' qualifying shares and
     except as set forth in the Prospectus) are owned directly or indirectly by
     the Company, free and clear of all liens, encumbrances, equities or claims.



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          (e) The unissued shares of the Stock to be issued and sold by the
     Company to the Underwriters hereunder have been duly and validly authorized
     and, when issued and delivered against payment therefor as provided herein,
     will be duly and validly issued, fully paid and non-assessable; and the
     Stock will conform to the description thereof contained in the Prospectus.

          (f) Each of this Agreement and the Tax Indemnity Agreement has been
     duly authorized, executed and delivered by the Company.

          (g) The Company has all requisite corporate power and authority to
     execute, deliver and perform its obligations under this Agreement, the Tax
     Indemnity Agreement, the Undistributed Earnings Notes and the Additional
     Paid-In Capital Notes.

          (h) The execution, delivery and performance of this Agreement and each
     of the other documents to be entered into in connection with the
     Transactions by the Company and the consummation of the transactions
     contemplated hereby and thereby will not conflict with or result in a
     breach or violation of any of the terms or provisions of, or constitute a
     default under, any indenture, mortgage, deed of trust, loan agreement or
     other agreement or instrument to which the Company or any of its
     subsidiaries is a party or by which the Company or any of its subsidiaries
     is bound or to which any of the property or assets of the Company or any of
     its subsidiaries is subject, nor will such actions result in any violation
     of the provisions of the charter or by-laws or operating agreement, as the
     case may be, of the Company or any of its subsidiaries or any statute or
     any order, rule or regulation of any court or governmental agency or body
     having jurisdiction over the Company or any of its subsidiaries or any of
     their properties or assets; and except for the registration of the Stock
     under the Securities Act and such consents, approvals, authorizations,
     registrations or qualifications as may be required under the Securities
     Exchange Act of 1934, as amended (the "Exchange Act"), and applicable state
     securities laws in connection with the purchase and distribution of the
     Stock by the Underwriters, no consent, approval, authorization or order of,
     or filing or registration with, any such court or governmental agency or
     body is required for the execution, delivery and performance of this
     Agreement or any of the other documents to be entered into in connection
     with the other Transactions by the Company and the consummation of the
     transactions contemplated hereby and thereby.

          (i) There are no contracts, agreements or understandings between the
     Company and any person granting such person the right to require the
     Company to file a registration statement under the Securities Act with
     respect to any securities of the Company owned or to be owned


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     by such person or to require the Company to include such securities in the
     securities registered pursuant to the Registration Statement or in any
     securities being registered pursuant to any other registration statement
     filed by the Company under the Securities Act.

          (j) Except as described in the Registration Statement, the Company has
     not sold or issued any shares of Common Stock during the six-month period
     preceding the date of the Prospectus, including any sales pursuant to Rule
     144A under, or Regulations D or S of, the Securities Act, other than shares
     issued pursuant to employee benefit plans, qualified stock options plans or
     other employee compensation plans or pursuant to outstanding options,
     rights or warrants.

          (k) Neither the Company nor any of its subsidiaries has sustained,
     since the date of the latest financial statements included in the
     Prospectus, any material loss or interference with its business from fire,
     explosion, flood or other calamity, whether or not covered by insurance, or
     from any labor dispute or court or governmental action, order or decree,
     otherwise than as set forth or contemplated in the Prospectus; and, since
     such date, there has not been any change in the capital stock of the
     Company or long-term debt of the Company or any of its subsidiaries or any
     material adverse change, or any development involving a prospective
     material adverse change, in or affecting the general affairs, management,
     consolidated financial position, shareholders' equity or results of
     operations of the Company and its subsidiaries, otherwise than as set forth
     or contemplated in the Prospectus.

          (l) The financial statements (including the related notes and
     supporting schedules) filed as part of the Registration Statement or
     included in the Prospectus present fairly the financial condition and
     results of operations of the entities purported to be shown thereby, at the
     dates and for the periods indicated, and have been prepared in conformity
     with generally accepted accounting principles applied on a consistent basis
     throughout the periods involved. No other financial statements and
     supporting schedules are required to be included in the Registration
     Statement or Prospectus. The financial data set forth in the Prospectus
     under the captions "Summary--Summary Consolidated Financial Data,"
     "Selected Consolidated Financial Data" and "Capitalization" fairly present
     the information set forth therein on a basis consistent with that of the
     audited financial statements contained in the Prospectus. The pro forma
     consolidated financial data of the Company and its subsidiaries and the
     related notes thereto included under the caption "Summary--Summary
     Consolidated Financial Data," "Selected Consolidated Financial Data" and
     elsewhere in the Prospectus present fairly the information contained
     therein, have been prepared in accordance with the Commission's rules


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     and guidelines with respect to pro forma financial data and have been
     properly presented on the bases described therein, and the assumptions used
     in the preparation thereof are reasonable and the adjustments used therein
     are appropriate to give effect to the transactions and circumstances
     referred to therein. No other pro forma financial data is required to be
     included in the Registration Statement pursuant to Regulation S-X.

          (m) PricewaterhouseCoopers LLP, who have certified certain financial
     statements of the Company, whose report appears in the Prospectus and who
     have delivered the initial letter referred to in Section 8(h) hereof, are
     independent public accountants as required by the Securities Act and the
     Rules and Regulations.

          (n) Neither the Company nor any of its subsidiaries owns any real
     property.  The Company and each of its subsidiaries have good and
     marketable title to all personal property owned by them, in each case
     free and clear of all liens, encumbrances and defects, except (i) such as
     are described in the Prospectus (ii) such as do not materially affect the
     value of such property and do not materially interfere with the use made
     and proposed to be made of such property by the Company and its
     subsidiaries or (iii) where the failure to have such good and marketable
     title would not, individually or in the aggregate, have a material adverse
     effect on the Company and its subsidiaries taken as a whole; and all real
     property and buildings held under lease by the Company and its subsidiaries
     that are material to the Company and its subsidiaries taken as a whole, are
     held by them under valid, subsisting and enforceable leases, with such
     exceptions as are not material and do not interfere with the use made and
     proposed to be made of such property and buildings by the Company and its
     subsidiaries.

          (o) The Company and each of its subsidiaries carry, or are covered by,
     insurance covering risks that are material to the Company on a consolidated
     basis in such amounts and covering such risks as is adequate for the
     conduct of their respective businesses and the value of their respective
     properties and as is customary for companies engaged in similar businesses
     in similar industries.

          (p) The Company and each of its subsidiaries own or possess adequate
     rights to use all patents, patent applications, trademarks, service marks,
     trade names, trademark registrations, service mark registrations,
     copyrights, know-how, manufacturing processes, formulae, trade secrets,
     licenses and rights in any thereof and any other intangible property and
     assets which are material to them (herein called "Proprietary Rights") and
     necessary for the conduct of their respective businesses as described in
     the Prospectus. The Company and each of its subsidiaries takes security

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     measures to provide adequate trade secret protection of its material
     non-patented technology. Except as disclosed in the Prospectus, the Company
     has not received any notice of infringement or conflict with asserted
     rights of others with respect to any Proprietary Rights, and except as
     described in the Prospectus, no action, suit, arbitration, or legal,
     administrative or other proceeding, or investigation is pending, or, to the
     knowledge of the Company, is threatened, which involves any Proprietary
     Rights. The Proprietary Rights of the Company referred to in the Prospectus
     do not infringe or conflict with any right or valid and enforceable patent
     of any third party, or any discovery, invention, product or process which
     is the subject of a patent application filed by any third party, where such
     infringement or conflict would have a material adverse effect on the
     Company. The Company is not subject to any judgment, order, writ,
     injunction or decree of any court or any Federal, state, local, foreign or
     other governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, or any arbitrator, nor, has it
     entered into or is a party to any contract which restricts or impairs the
     use of any such Proprietary Rights in a manner which would have a material
     adverse effect on the use of any of the Proprietary Rights. The Company has
     complied in all material respects with its respective contractual
     obligations relating to the protection of the Proprietary Rights used
     pursuant to licenses. Except as disclosed in the Prospectus, to the
     Company's knowledge no person is infringing on or violating the Proprietary
     Rights owned or used by the Company.

          (q) Except as described in the Prospectus, there are no legal or
     governmental proceedings pending to which the Company or any of its
     subsidiaries is a party or of which any property or assets of the Company
     or any of its subsidiaries is the subject which, if determined adversely to
     the Company or any of its subsidiaries, might have a material adverse
     effect on the consolidated financial position, shareholders' equity,
     results of operations, business or prospects of the Company and its
     subsidiaries; and to the best of the Company's knowledge, no such
     proceedings are threatened or contemplated by governmental authorities or
     threatened by others.

          (r) There are no contracts or other documents which are required to be
     described in the Prospectus or filed as exhibits to the Registration
     Statement by the Securities Act or by the Rules and Regulations which have
     not been described in the Prospectus or filed as exhibits to the
     Registration Statement.

          (s) No relationship, direct or indirect, exists between or among the
     Company on the one hand, and the directors, officers, shareholders,


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     customers or suppliers of the Company on the other hand, which is required
     to be described in the Prospectus which is not so described.

          (t) No labor disturbance by the employees of the Company exists or, to
     the knowledge of the Company, is imminent, which might be expected to have
     a material adverse effect on the consolidated financial position,
     shareholders' equity, results of operations, business or prospects of the
     Company and its subsidiaries taken as a whole.

          (u) The Company is in compliance in all material respects with all
     presently applicable provisions of the Employee Retirement Income Security
     Act of 1974, as amended, including the regulations and published
     interpretations thereunder ("ERISA"); no "reportable event" (as defined in
     ERISA) has occurred with respect to any "pension plan" (as defined in
     ERISA) for which the Company would be likely to have any liability; the
     Company has not incurred and does not expect to incur liability under (i)
     Title IV of ERISA with respect to termination of, or withdrawal from, any
     "pension plan" or (ii) Sections 412 or 4971 of the Code; and each "pension
     plan" for which the Company would have any liability that is intended to be
     qualified under Section 401(a) of the Code is so qualified in all material
     respects and nothing has occurred, whether by action or by failure to act,
     which would cause the loss of such qualification.

          (v) The Company and each of its subsidiaries has filed all federal,
     state and local income and franchise tax returns required to be filed
     through the date hereof and has paid all taxes due thereon, and no tax
     deficiency has been determined adversely to the Company or any of its
     subsidiaries which has had (nor does the Company have any knowledge of any
     tax deficiency which, if determined adversely to the Company or any of its
     subsidiaries, would reasonably be expected to have) a material adverse
     effect on the consolidated financial position, shareholders' equity,
     results of operations, business or prospects of the Company and its
     subsidiaries taken as a whole. The Company has made all filings necessary
     to be treated as an S corporation, as defined in Section 1361(a) of the
     Code, from the date of the Company's election thereof through the date
     hereof or has otherwise received written permission from the IRS to be
     treated as an S corporation.

          (w) Since the date as of which information is given in the Prospectus
     through the date hereof, and except as may otherwise be disclosed in the
     Prospectus, the Company has not (i) issued or granted any securities other
     than employee stock options, (ii) incurred any liability or obligation,
     direct or contingent, other than liabilities and obligations which were
     incurred in the ordinary course of business, (iii) entered into any


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     transaction not in the ordinary course of business or (iv) declared or paid
     any dividend on its capital stock.

          (x) The Company (i) makes and keeps accurate books and records and
     (ii) maintains internal accounting controls which provide reasonable
     assurance that (A) transactions are executed in accordance with
     management's authorization, (B) transactions are recorded as necessary to
     permit preparation of its financial statements and to maintain
     accountability for its assets, (C) access to its assets is permitted only
     in accordance with management's authorization and (D) the reported
     accountability for its assets is compared with existing assets at
     reasonable intervals.

          (y) Neither the Company nor any of its subsidiaries (i) is in
     violation of its charter or by-laws or operating agreement, as the case may
     be, (ii) is in default in any material respect, and no event has occurred
     which, with notice or lapse of time or both, would constitute such a
     default, in the due performance or observance of any term, covenant or
     condition contained in any indenture, mortgage, deed of trust, loan
     agreement or other agreement or instrument to which it is a party or by
     which it is bound or to which any of its properties or assets is subject
     and which is material to the Company or (iii) is in violation in any
     material respect of any law, ordinance, governmental rule, regulation or
     court decree to which it or its property or assets may be subject or has
     failed to obtain any material license, permit, certificate, franchise or
     other governmental authorization or permit necessary to the ownership of
     its property or to the conduct of its business, in each case where such
     violation or failure under this clause (iii) would reasonably be expected
     to have a material adverse effect on the Company.

          (z) Neither the Company nor any of its subsidiaries, nor any director,
     officer, agent, employee or other person associated with or acting on
     behalf of the Company or any of its subsidiaries, has used any corporate
     funds for any unlawful contribution, gift, entertainment or other unlawful
     expense relating to political activity; made any direct or indirect
     unlawful payment to any foreign or domestic government official or employee
     from corporate funds; violated or is in violation of any provision of the
     Foreign Corrupt Practices Act of 1977; or made any bribe, payoff, influence
     payment, kickback or other unlawful payment.

          (aa) There has been no storage, disposal, generation, manufacture,
     refinement, transportation, handling or treatment of toxic wastes, medical
     wastes, hazardous wastes or hazardous substances by the Company or any of
     its subsidiaries (or, to the knowledge of the Company, any of their
     predecessors in interest) at, upon or from any of the property


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     now or previously owned or leased by the Company or its subsidiaries in
     violation of any applicable law, ordinance, rule, regulation, order,
     judgment, decree or permit or which would require remedial action under any
     applicable law, ordinance, rule, regulation, order, judgment, decree or
     permit, except for any violation or remedial action which would not have,
     or could not be reasonably likely to have, singularly or in the aggregate
     with all such violations and remedial actions, a material adverse effect on
     the consolidated financial position, shareholders' equity or results of
     operations of the Company and its subsidiaries; there has been no material
     spill, discharge, leak, emission, injection, escape, dumping or release of
     any kind onto such property or into the environment surrounding such
     property of any toxic wastes, medical wastes, solid wastes, hazardous
     wastes or hazardous substances due to or caused by the Company or any of
     its subsidiaries or with respect to which the Company or any of its
     subsidiaries have knowledge, except for any such spill, discharge, leak,
     emission, injection, escape, dumping or release which would not have or
     would not be reasonably likely to have, singularly or in the aggregate with
     all such spills, discharges, leaks, emissions, injections, escapes,
     dumpings and releases, a material adverse effect on the consolidated
     financial position, shareholders' equity or results of operations of the
     Company and its subsidiaries; and the terms "hazardous wastes", "toxic
     wastes", "hazardous substances" and "medical wastes" shall have the
     meanings specified in any local, state, federal and foreign laws or
     regulations with respect to environmental protection applicable to the
     Company or any of its subsidiaries.

          (bb) The Company is not, nor as of the Closing Date after giving
     effect to the consummation of the Transactions and the application of the
     net proceeds from the offering as described in the Prospectus, will it be,
     and no subsidiary of the Company is required to register as, an "investment
     company" or an entity "controlled" by an "investment company" within the
     meaning of such terms under the Investment Company Act of 1940, as amended,
     and the rules and regulations thereunder.

          (cc) On or prior to the Closing Date, each of the documents to be
     entered into in connection with the Transactions will have been duly
     authorized, executed and delivered by the Company in substantially the form
     previously provided to the Underwriters and will conform in all material
     respects to the descriptions thereof in the Prospectus.

          (dd) [None of the Directed Shares (as defined below) distributed in
     connection with the Directed Share Program (as defined below) will be
     offered or sold outside of the United States.] No consent, approval,
     authorization or order of, or qualification with, any governmental body or

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     agency, other than those obtained, is required in connection with the
     offering of the Directed Shares in any jurisdiction where the Directed
     Shares are being offered. The Company has not offered, or caused Lehman
     Brothers Inc. to offer, Stock to any person pursuant to the Directed Share
     Program with the specific intent to unlawfully influence (i) a customer or
     supplier of the Company to alter the customer's or supplier's level or type
     of business with the Company or (ii) a trade journalist or publication to
     write or publish favorable information about the Company or its products.

          (ee) Neither the Company nor any of its affiliates has taken, directly
     or indirectly, any action designed to cause or result in, or which has
     constituted or which might reasonably be expected to constitute, the
     stabilization or manipulation of the price of the shares of Common Stock
     (including the Stock) to facilitate the sale or resale of such shares.

          (ff) There are no affiliations or associations, as such terms are
     defined in the Rules and Regulations of the NASD, between any member of the
     National Association of Securities Dealers, Inc. and any of the Company's
     officers or directors or shareholders that own at least five percent of the
     aggregate number of outstanding shares of Common Stock.

     2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PRINCIPAL
SHAREHOLDERS. Each Principal Shareholder severally represents, warrants and
agrees that the Principal Shareholder has full right, power and authority to
enter into this Agreement; the execution, delivery and performance of this
Agreement by the Principal Shareholder and the consummation by the Principal
Shareholder of the transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Principal Shareholder is
a party or by which the Principal Shareholder is bound or to which any of the
property or assets of the Principal Shareholder is subject, nor will such
actions result in any violation of any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Principal Shareholder or the property or assets of the Principal Shareholder;
and no consent, approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by the Principal
Shareholder and the consummation by the Principal Shareholder of the
transactions contemplated hereby.

     3. PURCHASE OF THE STOCK BY THE UNDERWRITERS. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 6,364,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set forth opposite that Underwriter's name in Schedule 1 hereto. The
respective purchase obligations of the Underwriters with


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respect to the Firm Stock shall be rounded among the Underwriters to avoid
fractional shares, as the Representatives may determine.

     In addition, the Company grants to the Underwriters an option to purchase
up to 954,600 shares of Option Stock during the period specified in Section 5
hereof. Such option is granted solely for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 5 hereof. Shares of Option Stock shall be purchased severally for the
account of the Underwriters in proportion to the number of shares of Firm Stock
set forth opposite the name of such Underwriters in Schedule 1 hereto. The
respective purchase obligations of each Underwriter with respect to the Option
Stock shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Stock other than in 100 share amounts.

     The price to the Underwriters of both the Firm Stock and any Option Stock
shall be $_____ per share.

     The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), except upon payment for
all the Stock to be purchased on such Delivery Date as provided herein.

     4. OFFERING OF STOCK BY THE UNDERWRITERS.

     Upon authorization by the Representatives of the release of the Firm Stock,
the several Underwriters propose to offer the Firm Stock for sale upon the terms
and conditions set forth in the Prospectus; PROVIDED, HOWEVER, that no Stock
registered pursuant to the Rule 462(b) Registration Statement, if any, shall be
offered prior to the Effective Time thereof.

     5. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment for the
Firm Stock shall be made at the offices of Brobeck, Phleger & Harrison LLP, 550
South Hope Street, Los Angeles, California 90071, at 10:00 A.M., New York City
time, on the [third] full business day following the date of this Agreement or
at such other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Firm Stock shall be
registered in such names and in such denominations as the Representatives shall
request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.


                                       12


<PAGE>

     The option granted in Section 3 will expire 30 days after the date of this
Agreement and may be exercised in whole or in part from time to time by written
notice being given to the Company by the Representatives. Such notice shall set
forth the aggregate number of shares of Option Stock as to which the option is
being exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; PROVIDED, HOWEVER, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date."

     Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on the such Second Delivery
Date. On such Second Delivery Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Stock to the Representatives
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to such Second Delivery Date.

     6. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:

          (a) To prepare the Rule 462(b) Registration Statement, if necessary,
     in a form approved by the Representatives and to file such Rule 462(b)
     Registration Statement with the Commission on the date hereof; to prepare
     the Prospectus in a form approved by the Representatives and to file such
     Prospectus pursuant to Rule 424(b) under the Securities Act not later than
     Commission's close of business on the second business day following the
     execution and delivery of this Agreement or, if applicable, such earlier
     time as may be required by Rule 430A(a)(3) under the Securities Act; to
     make no further amendment or any supplement to the Registration Statement
     or to the Prospectus except as permitted herein; to advise the
     Representatives, promptly after it receives notice thereof, of the time
     when any amendment to the Registration Statement has been filed or


                                       13
<PAGE>

     becomes effective or any supplement to the Prospectus or any amended
     Prospectus has been filed and to furnish the Representatives with copies
     thereof; to advise the Representatives, promptly after it receives notice
     thereof, of the issuance by the Commission of any stop order or of any
     order preventing or suspending the use of any Preliminary Prospectus or the
     Prospectus, of the suspension of the qualification of the Stock for
     offering or sale in any jurisdiction, of the initiation or threatening of
     any proceeding for any such purpose, or of any request by the Commission
     for the amending or supplementing of the Registration Statement or the
     Prospectus or for additional information; and, in the event of the issuance
     of any stop order or of any order preventing or suspending the use of any
     Preliminary Prospectus or the Prospectus or suspending any such
     qualification, to use promptly its best efforts to obtain its withdrawal;

          (b) To furnish promptly to each of the Representatives and to counsel
     for the Underwriters a signed copy of the Registration Statement as
     originally filed with the Commission, and each amendment thereto filed with
     the Commission, including all consents and exhibits filed therewith;

          (c) To deliver promptly to the Representatives such number of the
     following documents as the Representatives shall reasonably request: (i)
     conformed copies of the Registration Statement as originally filed with the
     Commission and each amendment thereto (in each case excluding exhibits) and
     (ii) each Preliminary Prospectus, the Prospectus and any amended or
     supplemented Prospectus; and, if the delivery of a prospectus is required
     at any time after the Effective Time in connection with the offering or
     sale of the Stock or any other securities relating thereto and if at such
     time any events shall have occurred as a result of which the Prospectus as
     then amended or supplemented would include an untrue statement of a
     material fact or omit to state any material fact necessary in order to make
     the statements therein, in the light of the circumstances under which they
     were made when such Prospectus is delivered, not misleading, or, if for any
     other reason it shall be necessary to amend or supplement the Prospectus in
     order to comply with the Securities Act, to notify the Representatives and,
     upon their request, to prepare and furnish without charge to each
     Underwriter and to any dealer in securities as many copies as the
     Representatives may from time to time reasonably request of an amended or
     supplemented Prospectus which will correct such statement or omission or
     effect such compliance;

          (d) To file promptly with the Commission any amendment to the
     Registration Statement or the Prospectus or any supplement to the
     Prospectus that may, in the judgment of the Company or the Representatives,
     be required by the Securities Act or requested by the Commission;


                                       14
<PAGE>

          (e) Prior to filing with the Commission any amendment to the
     Registration Statement or supplement to the Prospectus or any Prospectus
     pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
     thereof to the Representatives and counsel for the Underwriters and obtain
     the consent of the Representatives to the filing;

          (f) As soon as practicable after the Effective Date, to make generally
     available to the Company's security holders and to deliver to the
     Representatives an earnings statement of the Company and its subsidiaries
     (which need not be audited) complying with Section 11(a) of the Securities
     Act and the Rules and Regulations (including, at the option of the Company,
     Rule 158);

          (g) For a period of five years following the Effective Date, to
     furnish to the Representatives copies of all materials furnished by the
     Company to its shareholders and all public reports and all reports and
     financial statements furnished by the Company to the principal national
     securities exchange or automatic quotation system upon which the Common
     Stock may be listed or quoted pursuant to requirements of or agreements
     with such exchange or to the Commission pursuant to the Exchange Act or any
     rule or regulation of the Commission thereunder;

          (h) Promptly from time to time to take such action as the
     Representatives may reasonably request to qualify the Stock for offering
     and sale under the securities laws of such jurisdictions as the
     Representatives may request and to comply with such laws so as to permit
     the continuance of sales and dealings therein in such jurisdictions for as
     long as may be necessary to complete the distribution of the Stock;
     PROVIDED that in connection therewith the Company shall not be required to
     qualify as a foreign corporation or to file a general consent to service of
     process in any jurisdiction;

          (i) For a period of 180 days from the date of the Prospectus, not to,
     directly or indirectly, (1) offer for sale, sell, pledge or otherwise
     dispose of (or enter into any transaction or device which is designed to,
     or could be expected to, result in the disposition by any person at any
     time in the future of) any shares of Common Stock or securities convertible
     into or exchangeable for Common Stock (other than the Stock and shares
     issued pursuant to employee benefit plans, qualified stock option plans or
     other employee compensation plans existing on the date hereof or pursuant
     to currently outstanding options, warrants or rights), or sell or grant
     options, rights or warrants with respect to any shares of Common Stock or
     securities convertible into or exchangeable for Common Stock (other than
     the grant of options pursuant to option plans existing on the date hereof),
     or (2) enter into any swap or other derivatives transaction that transfers
     to


                                       15
<PAGE>

     another, in whole or in part, any of the economic benefits or risks of
     ownership of such shares of Common Stock, whether any such transaction
     described in clause (1) or (2) above is to be settled by delivery of Common
     Stock or other securities, in cash or otherwise, in each case without the
     prior written consent of Lehman Brothers Inc. on behalf of the
     Underwriters; and to cause each shareholder, officer and director of the
     Company to furnish to the Representatives, prior to the First Delivery
     Date, a letter or letters, substantially in the form of Exhibit A hereto (a
     "Lock-up Agreement");

          (j) To deliver a Lock-up Agreement request to all current and former
     employees of the Company who have been granted options under the Company's
     employee benefit plans;

          (k) Prior to the Effective Date, to apply for the inclusion of the
     Stock on the National Market System and to use its best efforts to complete
     that listing, subject only to official notice of issuance and evidence of
     satisfactory distribution, prior to the First Delivery Date;

          (l) To apply the net proceeds from the sale of the Stock being sold by
     the Company as set forth in the Prospectus;

          (m) To take such steps as shall be necessary to ensure that the
     Company shall not become, and that any subsidiary of the Company shall not
     be required to register as, an "investment company" or "controlled" by an
     "investment company" within the meaning of such terms under the Investment
     Company Act of 1940, as amended, and the rules and regulations thereunder;

          (n) Not to take, directly or indirectly, any action designed to cause
     or result in, or which constitutes or which might reasonably be expected to
     constitute, the stabilization or manipulation of the price of the shares of
     Common Stock (including the Stock) to facilitate the sale or resale of such
     shares; and

          (o) In connection with the Directed Share Program, to ensure that the
     Directed Shares will be restricted to the extent required by the National
     Association of Securities Dealers, Inc. or the rules of such association
     from sale, transfer, assignment, pledge or hypothecation for a period of
     three months following the date of the effectiveness of the Registration
     Statement, and Lehman Brothers Inc. will notify the Company as to which
     Directed Share Participants will need to be so restricted. At the request
     of Lehman Brothers Inc., the Company will direct the transfer agent to
     place stop transfer restrictions upon such securities for such period of
     time.

                                       16
<PAGE>

     7. EXPENSES. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement and
any other related documents in connection with the offering, purchase, sale and
delivery of the stock; (e) the costs of distributing the terms of agreement
relating to the organization of the underwriting syndicate and selling group to
the members thereof by mail, telex or other means of communication; (f) the
filing fees incident to securing the review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Stock; (g) any applicable
listing or other fees; (h) the fees and expenses of qualifying the Stock under
the securities laws of the several jurisdictions as provided in Section 6(h) and
of preparing, printing and distributing a Blue Sky Memorandum (including related
fees and expenses of counsel to the Underwriters); (i) all costs and expenses of
the Underwriters, including the reasonable fees and disbursements of outside
counsel for the Underwriters, incident to the Directed Share Program described
in Section 10, (j) the documented costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Stock, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show and (k) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; PROVIDED that, except as
provided in this Section 7 and in Sections 10 and 13 the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their counsel,
any transfer taxes on the Stock which they may sell and the expenses of
advertising any offering of the Stock made by the Underwriters.

     8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of
the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company and the
Principal Shareholders contained herein, to the performance by the Company and
the Principal Shareholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:

          (a) The Rule 462(b) Registration Statement, if any, and the Prospectus
     shall have been timely filed with the Commission in accordance with Section
     6(a); no stop order suspending the effectiveness of the Registration
     Statement or any part thereof shall have been issued and no proceeding for
     that purpose shall have been initiated or threatened


                                       17
<PAGE>

     by the Commission; and any request of the Commission for inclusion of
     additional information in the Registration Statement or the Prospectus or
     otherwise shall have been complied with or waived in writing by the
     Commission.

          (b) No Underwriter shall have discovered and disclosed to the Company
     on or prior to such Delivery Date that the Registration Statement or the
     Prospectus or any amendment or supplement thereto contains an untrue
     statement of a fact which, in the opinion of Latham & Watkins, counsel for
     the Underwriters, is material or omits to state a fact which, in the
     opinion of such counsel, is material and is required to be stated therein
     or is necessary to make the statements therein not misleading.

          (c) All corporate proceedings and other legal matters incident to the
     authorization, form and validity of this Agreement, the Stock, the
     Registration Statement and the Prospectus, and all other legal matters
     relating to this Agreement, the transactions contemplated hereby and the
     other Transactions shall be reasonably satisfactory in all material
     respects to counsel for the Underwriters, and the Company and the Principal
     Shareholders shall have furnished to such counsel all documents and
     information that they may reasonably request to enable them to pass upon
     such matters.

          (d) Brobeck, Phleger & Harrison LLP shall have furnished to the
     Representatives their written opinion, as counsel to the Company, addressed
     to the Underwriters and dated such Delivery Date, in the form attached
     hereto as Exhibit B.

          (e) Knobbe, Martens, Olson & Bear, LLP shall have furnished to the
     Representatives their written opinion, as intellectual property counsel to
     the Company, addressed to the Underwriters and dated such Delivery Date, in
     form and substance reasonably satisfactory to the Representatives, to the
     effect that they serve as intellectual property counsel to the Company with
     respect to the Proprietary Rights, and that:

          (i) Such counsel is familiar with the technology used by the Company
     in its business and the manner of its use thereof and has read the
     Registration Statement and the Prospectus, including particularly the
     portions of the Registration Statement and the Prospectus under the
     captions "Risk Factors--We are involved from time to time in litigation
     over intellectual property rights, which may adversely affect our ability
     to manufacture and sell our products," "Business--Intellectual Property
     Rights" and "Business--Legal Proceedings" (the "Patent Information"). Such
     counsel has considered the statements contained therein, although such
     counsel has not independently verified the accuracy, completeness


                                       18
<PAGE>

     and fairness of such statements. Based upon and subject to the foregoing,
     nothing has come to such counsel's attention, as of the date of the
     Prospectus and the date hereof, that leads such counsel to believe that the
     Patent Information contains an untrue statement of a material fact or omits
     to state a material fact in light of the circumstances in which they are
     made. As of the date of the Prospectus and the date hereof, such counsel
     has no reason to believe that the Patent Information is not in all material
     respects a fair and accurate summary of the legal matters, documents and
     proceedings relating thereto;

          (ii) Attached as Schedule A to such opinion is a list of the Company's
     U.S. patents and pending U.S. Patent applications (the "U.S. Patent
     Rights") which, to the best of such counsel's knowledge, are owned by the
     Company, as indicated on such Schedule A. To the best of such counsel's
     knowledge, where the Company is listed on Schedule A to such opinion as the
     owner of any U.S. Patent Right, either (A) an assignment from the
     inventor(s) to the Company has been recorded in the United States Patent
     and Trademark Office, or (b) the inventor(s) are under obligation of
     assignment to the Company, and an assignment will be recorded in the Untied
     States Patent and Trademark Office. To the best of such counsel's
     knowledge, there are no claims to any ownership interests or liens on any
     of the U.S. Patent Rights by any party other than the Company. The Company
     has no non-U.S. patents or pending non-U.S. patent applications and has not
     licensed the rights to use any patents;

          (iii) Such counsel has reviewed portions of certain patent estates, as
     set forth in Schedule A of such opinion, and is unaware of any facts that
     would lead it to believe that: (a) any of the patents are invalid, (b) any
     patent issued in respect of a patent application would be invalid, or (c)
     any material defects exist in respect of form in the preparation of filing
     of any of the patent applications;

          (iv) To the best of such counsel's knowledge, for each of the U.S.
     patent applications filed and prosecuted by such counsel reflected in
     Schedule B to such opinion, the Company has disclosed or intends to
     disclose to the United States Patent and Trademark Office all information
     known and believed to be material to patentability under the extant 37
     C.F.R. Section 1.56;

          (v) Other than the disclosures set forth in the Prospectus, to the
     best of such counsel's knowledge, the Company has not received any claim of
     infringement of any patents held by others, and to the best of such
     counsel's knowledge, there is no pending or threatened action, suit,
     proceeding or claim by others that the Company is infringing a patent.
     Except as described in the Prospectus, nothing has come to such counsel's

                                       19
<PAGE>

     attention that has led such counsel to believe that any patents of others
     are infringed by the present or future business of the Company as described
     in the Prospectus under the caption "Business"; and

          (vi) To the best of such counsel's knowledge, except as set forth in
     the Prospectus, there are no pending or threatened legal or governmental
     proceedings relating to the U.S. patents and pending U.S. patent
     applications reflected in Schedule A to such opinion, other than
     proceedings before the United States Patent and Trademark Office that are
     carried out during the course of prosecution.

          In rendering such opinion, such counsel may assume the genuineness of
     all signatures on original, certified or facsimile copies, the authenticity
     of all items submitted to such counsel as originals and the conformity with
     originals of all items submitted to such counsel as reproduction or
     certified copies. In examining documents executed by entities other than
     the Company, such counsel may assume that each other entity has the power
     and authority to execute and deliver, and to perform and observe the
     provisions of such documents, and the due authorization by each such entity
     of all requisite action and the due execution and delivery of such
     documents by each such entity. Such counsel need not express any opinion
     with regard to the enforceability of any license agreements or assignments
     nor with regard to intervening assignments.

          (f) L. Douglas Brown of Ezer Williamson Fischbach & Brown LLP, shall
     have furnished to the Representatives his written opinion, as litigation
     counsel to the Company, in connection with the litigation described in the
     Prospectus under the captions "Risk Factors--Success by Interactive Flight
     Technologies and Avnet in their lawsuit against us relating to our sale of
     allegedly defective products would harm our business" and "Business--Legal
     Proceedings--Interactive Flight Technologies, Inc.," in the form attached
     hereto as Exhibit C.

          (g) The Representatives shall have received from Latham & Watkins,
     counsel for the Underwriters, such opinion or opinions, dated such Delivery
     Date, with respect to the issuance and sale of the Stock, the Registration
     Statement, the Prospectus and other related matters as the Representatives
     may reasonably require, and the Company shall have furnished to such
     counsel such documents as they reasonably request for the purpose of
     enabling them to pass upon such matters.

          (h) At the time of execution of this Agreement, the Representatives
     shall have received from PricewaterhouseCoopers LLP a letter, in form and
     substance satisfactory to the Representatives, addressed to the
     Underwriters and dated the date hereof (i) confirming that they are

                                       20
<PAGE>

     independent public accountants within the meaning of the Securities Act and
     are in compliance with the applicable requirements relating to the
     qualification of accountants under Rule 2-01 of Regulation S-X of the
     Commission and (ii) stating, as of the date hereof (or, with respect to
     matters involving changes or developments since the respective dates as of
     which specified financial information is given in the Prospectus, as of a
     date not more than five days prior to the date hereof), the conclusions and
     findings of such firm with respect to the financial information and other
     matters ordinarily covered by accountants' "comfort letters" to
     underwriters in connection with registered public offerings.

          (i) With respect to the letter of PricewaterhouseCoopers LLP referred
     to in the preceding paragraph and delivered to the Representatives
     concurrently with the execution of this Agreement (the "initial letter"),
     the Company shall have furnished to the Representatives a letter (the
     "bring-down letter") of such accountants, addressed to the Underwriters and
     dated such Delivery Date (i) confirming that they are independent public
     accountants within the meaning of the Securities Act and are in compliance
     with the applicable requirements relating to the qualification of
     accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
     stating, as of the date of the bring-down letter (or, with respect to
     matters involving changes or developments since the respective dates as of
     which specified financial information is given in the Prospectus, as of a
     date not more than five days prior to the date of the bring-down letter),
     the conclusions and findings of such firm with respect to the financial
     information and other matters covered by the initial letter and (iii)
     confirming in all material respects the conclusions and findings set forth
     in the initial letter.

          (j) The Company shall have furnished to the Representatives a
     certificate, dated such Delivery Date, of its Chairman of the Board, its
     President or a Vice President and its chief financial officer stating that:

          (i) The representations, warranties and agreements of the Company in
     Section 1 are true and correct as of such Delivery Date; the Company has
     complied with all its agreements contained herein; and the conditions set
     forth in Sections 8(a) and 8(k) have been fulfilled; and

          (ii) They have carefully examined the Registration Statement and the
     Prospectus and, in their opinion (A) as of the Effective Date, the
     Registration Statement and Prospectus did not include any untrue statement
     of a material fact and did not omit to state a material fact required to be
     stated therein or necessary to make the statements therein not misleading,
     and (B) since the Effective Date no event has occurred


                                       21
<PAGE>

     which should have been set forth in a supplement or amendment to the
     Registration Statement or the Prospectus.

          (k) (i) Neither the Company nor any of its subsidiaries shall have
     sustained since the date of the latest audited financial statements
     included in the Prospectus any loss or interference with its business from
     fire, explosion, flood or other calamity, whether or not covered by
     insurance, or from any labor dispute or court or governmental action, order
     or decree, otherwise than as set forth or contemplated in the Prospectus or
     (ii) since such date there shall not have been any change in the capital
     stock or long-term debt of the Company or any of its subsidiaries or any
     change, or any development involving a prospective change, in or affecting
     the general affairs, management, financial position, shareholders' equity
     or results of operations of the Company and its subsidiaries, otherwise
     than as set forth or contemplated in the Prospectus, the effect of which,
     in any such case described in clause (i) or (ii), is, in the judgment of
     the Representatives, so material and adverse as to make it impracticable or
     inadvisable to proceed with the public offering or the delivery of the
     Stock being delivered on such Delivery Date on the terms and in the manner
     contemplated in the Prospectus.

          (l) Subsequent to the execution and delivery of this Agreement there
     shall not have occurred any of the following: (i) trading in securities
     generally on the New York Stock Exchange or the American Stock Exchange or
     in the over-the-counter market, or trading in any securities of the Company
     on any exchange or in the over-the-counter market, shall have been
     suspended or minimum prices shall have been established on any such
     exchange or such market by the Commission, by such exchange or by any other
     regulatory body or governmental authority having jurisdiction, (ii) a
     banking moratorium shall have been declared by Federal or New York State
     authorities, (iii) the United States shall have become engaged in
     hostilities, there shall have been an escalation in hostilities involving
     the United States or there shall have been a declaration of a national
     emergency or war by the United States or (iv) there shall have occurred
     such a material adverse change in general economic, political or financial
     conditions (or the effect of international conditions on the financial
     markets in the United States shall be such) as to make it, in the judgment
     of the Representatives, impracticable or inadvisable to proceed with the
     public offering or delivery of the Stock being delivered on such Delivery
     Date on the terms and in the manner contemplated in the Prospectus.

               (m) The National Market System shall have approved the Stock for
          inclusion, subject only to official notice of issuance and evidence of
          satisfactory distribution.

                                       22

<PAGE>

               (n) On the Closing Date, the Company shall have consummated each
          of the Transactions and the Underwriters shall have been provided
          evidence, to their satisfaction, of the consummation thereof.

               (o) On the Closing Date, the Tax Indemnity Agreement, in
          substantially the form included as an exhibit to the Registration
          Statement at the time the Registration Statement was declared
          effective by the Commission, or in such other form satisfactory to the
          Underwriters and counsel to the Underwriters, shall have been executed
          and delivered by the parties thereto.

     All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.

     9. INDEMNIFICATION AND CONTRIBUTION.

          (a) Each of the Company and, subject to the last sentence of this
     paragraph (a), the Principal Shareholders shall indemnify and hold
     harmless each Underwriter, its officers and employees and each person,
     if any, who controls any Underwriter within the meaning of the
     Securities Act, from and against any loss, claim, damage or liability,
     joint or several, or any action in respect thereof (including, but not
     limited to, any loss, claim, damage, liability or action relating to
     purchases and sales of Stock), to which that Underwriter, officer,
     employee or controlling person may become subject, under the Securities
     Act or otherwise, insofar as such loss, claim, damage, liability or
     action arises out of, or is based upon, (i) any untrue statement or
     alleged untrue statement of a material fact contained (A) in any
     Preliminary Prospectus, the Registration Statement or the Prospectus or
     in any amendment or supplement thereto, (B) in any blue sky application
     or other document prepared or executed by the Company (or based upon any
     written information furnished by the Company) specifically for the
     purpose of qualifying any or all of the Stock under the securities laws
     of any state or other jurisdiction (any such application, document or
     information being hereinafter called a "Blue Sky Application"), or (C)
     in any materials or information provided to investors by, or with the
     approval of, the Company in connection with the marketing of the
     offering of the Stock ("Marketing Materials"), including any roadshow or
     investor presentations made to investors by the Company (whether in
     person or electronically), (ii) the omission or alleged omission to
     state in any Preliminary Prospectus, the Registration Statement or the
     Prospectus, or in any amendment or supplement thereto, or in any Blue
     Sky Application or Marketing Materials, any material fact required to be
     stated therein or necessary to

                                       23
<PAGE>

     make the statements therein not misleading or (iii) any act or failure to
     act or any alleged act or failure to act by any Underwriter in connection
     with, or relating in any manner to, the Stock or the offering contemplated
     hereby, and which is included as part of or referred to in any loss, claim,
     damage, liability or action arising out of or based upon matters covered by
     clause (i) or (ii) above (PROVIDED that the Company and the Principal
     Shareholders shall not be liable under this clause (iii) to the extent that
     it is determined in a final judgment by a court of competent jurisdiction
     that such loss, claim, damage, liability or action resulted directly from
     any such acts or failures to act undertaken or omitted to be taken by such
     Underwriter through its gross negligence or willful misconduct), and shall
     reimburse each Underwriter and each such officer, employee or controlling
     person promptly upon demand for any legal or other expenses reasonably
     incurred by that Underwriter, officer, employee or controlling person in
     connection with investigating or defending or preparing to defend against
     any such loss, claim, damage, liability or action as such expenses are
     incurred; PROVIDED, HOWEVER, that the Company and the Principal
     Shareholders shall not be liable in any such case to the extent that any
     such loss, claim, damage, liability or action arises out of, or is based
     upon, any untrue statement or alleged untrue statement or omission or
     alleged omission made (i) in any Preliminary Prospectus, the Registration
     Statement or the Prospectus, or in any such amendment or supplement, or in
     any Blue Sky Application or Marketing Materials, in reliance upon and in
     conformity with written information concerning such Underwriter furnished
     to the Company through the Representatives by or on behalf of any
     Underwriter specifically for inclusion therein which information consists
     solely of the information specified in Section 9(e) or (ii) in any
     Preliminary Prospectus if a copy of the Prospectus (or the Prospectus as
     then amended or supplemented) was not sent or given by or on behalf of the
     Underwriters to the person asserting such loss, claim, damage, liability or
     action at or prior to the written confirmation of the sale of Stock to such
     person in any case where such delivery is required by the Act, such untrue
     statement contained in or omission from such Preliminary Prospectus was
     corrected in the Prospectus (or the Prospectus as so amended or
     supplemented) and the Company had previously furnished copies of such
     corrected Prospectus to the Underwriters. The foregoing indemnity agreement
     is in addition to any liability which the Company may otherwise have to any
     Underwriter or to any officer, employee or controlling person of that
     Underwriter. Notwithstanding the foregoing or anything else to the contrary
     herein, the liability of each Principal Shareholder under the foregoing
     indemnity agreement and under such Principal Shareholder's representations
     and warranties contained in Section 1 of this Agreement shall be limited to
     an amount equal to the sum of (i) the aggregate principal amount of the
     Undistributed Earnings Notes payable by the Company to the Shareholder
     Trusts established for the


                                       24
<PAGE>

     benefit of such Principal Shareholder and members of such Principal
     Shareholder's family (other than another Principal Shareholder) as
     described in the Prospectus under the heading "S Corporation Status and
     Conversion" and (ii) the amount of all distributions made to such
     Shareholder Trusts representing additional paid-in capital originally
     invested by such Principal Shareholder or such Shareholder Trusts.

          (b) Each Underwriter, severally and not jointly, shall indemnify and
     hold harmless the Company, its officers and employees, each of its
     directors (including any person who, with his or her consent, is named in
     the Registration Statement as about to become a director of the Company),
     and each person who controls the Company within the meaning of the
     Securities Act, from and against any loss, claim, damage or liability,
     joint or several, or any action in respect thereof, to which the Company or
     any such director, officer or controlling person may become subject, under
     the Securities Act or otherwise, insofar as such loss, claim, damage,
     liability or action arises out of, or is based upon, (i) any untrue
     statement or alleged untrue statement of a material fact contained (A) in
     any Preliminary Prospectus, the Registration Statement or the Prospectus or
     in any amendment or supplement thereto, (B) in any Blue Sky Application or
     (c) in any Marketing Materials, or (ii) the omission or alleged omission to
     state in any Preliminary Prospectus, the Registration Statement or the
     Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
     Application or Marketing Materials any material fact required to be stated
     therein or necessary to make the statements therein not misleading, but in
     each case only to the extent that the untrue statement or alleged untrue
     statement or omission or alleged omission was made in reliance upon and in
     conformity with written information concerning such Underwriter furnished
     to the Company through the Representatives by or on behalf of that
     Underwriter specifically for inclusion therein, and shall reimburse the
     Company and any such director, officer or controlling person for any legal
     or other expenses reasonably incurred by the Company or any such director,
     officer or controlling person in connection with investigating or defending
     or preparing to defend against any such loss, claim, damage, liability or
     action as such expenses are incurred. The foregoing indemnity agreement is
     in addition to any liability which any Underwriter may otherwise have to
     the Company or any such director, officer, employee or controlling person.

          (c) Promptly after receipt by an indemnified party under this Section
     9 of notice of any claim or the commencement of any action, the indemnified
     party shall, if a claim in respect thereof is to be made against the
     indemnifying party under this Section 9, notify the indemnifying party in
     writing of the claim or the commencement of that action; PROVIDED, HOWEVER,
     that the failure to notify the indemnifying party shall not relieve


                                       25
<PAGE>

     it from any liability which it may have under this Section 9 except to the
     extent it has been materially prejudiced by such failure and, PROVIDED
     FURTHER, that the failure to notify the indemnifying party shall not
     relieve it from any liability which it may have to an indemnified party
     otherwise than under this Section 9. If any such claim or action shall be
     brought against an indemnified party, and it shall notify the indemnifying
     party thereof, the indemnifying party shall be entitled to participate
     therein and, to the extent that it wishes, jointly with any other similarly
     notified indemnifying party, to assume the defense thereof with counsel
     reasonably satisfactory to the indemnified party. After notice from the
     indemnifying party to the indemnified party of its election to assume the
     defense of such claim or action, the indemnifying party shall not be liable
     to the indemnified party under this Section 9 for any legal or other
     expenses subsequently incurred by the indemnified party in connection with
     the defense thereof other than reasonable costs of investigation; PROVIDED,
     HOWEVER, that the Representatives shall have the right to employ counsel to
     represent jointly the Representatives and those other Underwriters and
     their respective officers, employees and controlling persons who may be
     subject to liability arising out of any claim in respect of which indemnity
     may be sought by the Underwriters against the Company or any Principal
     Shareholder under this Section 9 if, in the reasonable judgment of the
     Representatives, it is advisable for the Representatives and those
     Underwriters, officers, employees and controlling persons to be jointly
     represented by separate counsel, and in that event the fees and expenses of
     such separate counsel shall be paid by the Company or any Principal
     Shareholder. Notwithstanding anything contained herein to the contrary, if
     indemnity may be sought pursuant to Section 9(a) hereof in respect of such
     claim or action, then in addition to such separate firm for the indemnified
     parties, the indemnifying party shall be liable for the fees and expenses
     of not more than one separate firm (in addition to any local counsel) for
     Lehman Brothers Inc. for the defense of any loss, claim, damage, liability
     or action arising out of the Directed Share Program. No indemnifying party
     shall (i) without the prior written consent of the indemnified parties
     (which consent shall not be unreasonably withheld), settle or compromise or
     consent to the entry of any judgment with respect to any pending or
     threatened claim, action, suit or proceeding in respect of which
     indemnification or contribution may be sought hereunder (whether or not the
     indemnified parties are actual or potential parties to such claim or
     action) unless such settlement, compromise or consent includes an
     unconditional release of each indemnified party from all liability arising
     out of such claim, action, suit or proceeding, or (ii) be liable for any
     settlement of any such action effected without its written consent (which
     consent shall not be unreasonably withheld), but if settled with the
     consent of the indemnifying party or if there be a final judgment of the
     plaintiff in any such action, the indemnifying party agrees to indemnify
     and hold


                                       26
<PAGE>

     harmless any indemnified party from and against any loss or liability by
     reason of such settlement or judgment.

          (d) If the indemnification provided for in this Section 9 shall for
     any reason be unavailable to or insufficient to hold harmless an
     indemnified party under Section 9(a) or 9(b) in respect of any loss, claim,
     damage or liability, or any action in respect thereof, referred to therein,
     then each indemnifying party shall, in lieu of indemnifying such
     indemnified party, contribute to the amount paid or payable by such
     indemnified party as a result of such loss, claim, damage or liability, or
     action in respect thereof, (i) in such proportion as shall be appropriate
     to reflect the relative benefits received by the Company and the Principal
     Shareholders on the one hand and the Underwriters on the other from the
     offering of the Stock or (ii) if the allocation provided by clause (i)
     above is not permitted by applicable law, in such proportion as is
     appropriate to reflect not only the relative benefits referred to in clause
     (i) above but also the relative fault of the Company and the Principal
     Shareholders on the one hand and the Underwriters on the other with respect
     to the statements or omissions which resulted in such loss, claim, damage
     or liability, or action in respect thereof, as well as any other relevant
     equitable considerations. The relative benefits received by the Company and
     the Principal Shareholders on the one hand and the Underwriters on the
     other with respect to such offering shall be deemed to be in the same
     proportion as the total net proceeds from the offering of the Stock
     purchased under this Agreement (before deducting expenses) received by the
     Company and the Principal Shareholders, on the one hand, and the total
     underwriting discounts and commissions received by the Underwriters with
     respect to the shares of the Stock purchased under this Agreement, on the
     other hand, bear to the total gross proceeds from the offering of the
     shares of the Stock under this Agreement, in each case as set forth in the
     table on the cover page of the Prospectus. The relative fault shall be
     determined by reference to whether the untrue or alleged untrue statement
     of a material fact or omission or alleged omission to state a material fact
     relates to information supplied by the Company, the Principal Shareholders
     or the Underwriters, the intent of the parties and their relative
     knowledge, access to information and opportunity to correct or prevent such
     statement or omission. The Company, the Principal Shareholders and the
     Underwriters agree that it would not be just and equitable if contributions
     pursuant to this Section were to be determined by pro rata allocation (even
     if the Underwriters were treated as one entity for such purpose) or by any
     other method of allocation which does not take into account the equitable
     considerations referred to herein. The amount paid or payable by an
     indemnified party as a result of the loss, claim, damage or liability, or
     action in respect thereof, referred to above in this Section shall be
     deemed to include, for purposes of this Section 9(d), any legal or other
     expenses reasonably incurred by


                                       27
<PAGE>

     such indemnified party in connection with investigating or defending any
     such action or claim. Notwithstanding the provisions of this Section 9(d),
     no Underwriter shall be required to contribute any amount in excess of the
     amount by which the total price at which the Stock underwritten by it and
     distributed to the public was offered to the public exceeds the amount of
     any damages which such Underwriter has otherwise paid or become liable to
     pay by reason of any untrue or alleged untrue statement or omission or
     alleged omission. No person guilty of fraudulent misrepresentation (within
     the meaning of Section 11(f) of the Securities Act) shall be entitled to
     contribution from any person who was not guilty of such fraudulent
     misrepresentation. The Underwriters' obligations to contribute as provided
     in this Section 9(d) are several in proportion to their respective
     underwriting obligations and not joint.

          (e) The Underwriters severally confirm and the Company acknowledges
     that the statements with respect to the public offering of the Stock by the
     Underwriters set forth on the cover page of, the legend concerning
     over-allotments on the inside front cover page of and the concession and
     reallowance figures, the identification of and share allocation among the
     underwriting syndicate members and the paragraph concerning the role of
     Fidelity Capital Markets with respect to electronic distribution appearing
     under the caption "Underwriting" in, the Prospectus are correct and
     constitute the only information concerning such Underwriters furnished in
     writing to the Company by or on behalf of the Underwriters specifically for
     inclusion in the Registration Statement, the Prospectus, any Blue Sky
     Application and the Marketing Materials.

          10. DIRECTED SHARE PROGRAM.

          (a) It is understood that approximately ________ shares of the Firm
     Stock ("Directed Shares") will initially be reserved by the Underwriters
     for offer and sale to employees and persons having business relationships
     with the Company and its subsidiaries ("Directed Share Participants") upon
     the terms and conditions set forth in the Prospectus and in accordance with
     the rules and regulations of the National Association of Securities
     Dealers, Inc. (the "Directed Share Program"). Under no circumstances will
     Lehman Brothers Inc. or any Underwriter be liable to the Company or to any
     Directed Share Participant for any action taken or omitted to be taken in
     good faith in connection with such Directed Share Program. To the extent
     that any Directed Shares are not affirmatively reconfirmed for purchase by
     any Directed Share Participant on or immediately after the date of this
     Agreement, such Directed Shares may be offered to the public as part of the
     public offering contemplated hereby.

                                       28
<PAGE>

          (b) The Company agrees to pay all fees and disbursements incurred by
     the Underwriters in connection with the Directed Share Program, including
     counsel fees and any stamp duties or other taxes incurred by the
     Underwriters in connection with the Directed Share Program.

          (c) In connection with the offer and sale of the Directed Shares, the
     Company agrees, promptly upon a request in writing, to indemnify and hold
     harmless Lehman Brothers Inc. and the other Underwriters from and against
     any loss, claim, damage, expense, liability or action which (i) arises out
     of, or is based upon, any untrue statement or alleged untrue statement of a
     material fact regarding the Company contained in any material prepared by
     or with the prior written approval of the Company for distribution to
     Directed Share Participants in connection with the Directed Share Program
     or any omission or alleged omission to state therein a material fact
     regarding the Company required to be stated therein or necessary to make
     the statements therein not misleading, (ii) arises out of the failure of
     any Directed Share Participant to pay for and accept delivery of Directed
     Shares that the Directed Share Participant agreed to purchase, (iii) arises
     out of the failure of any Directed Share Participant that is also an
     employee of the Company to pay for and accept delivery by the end of the
     first day after the date of this Agreement any Directed Shares that were
     allocated to such employee Directed Share Participant, (iv) arises out of,
     or is based upon, the violation of any applicable laws or regulations of
     foreign jurisdictions where Directed Shares have been offered, or (v) is
     otherwise related to the Directed Share Program, other than losses, claims,
     damages or liabilities (or expenses relating thereto) that are finally
     judicially determined to have resulted directly from the bad faith or gross
     negligence of Lehman Brothers Inc. or such Underwriter.

          11. DEFAULTING UNDERWRITERS.

     If, on either Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Stock which the defaulting Underwriter agreed
but failed to purchase on such Delivery Date in the respective proportions which
the number of shares of the Firm Stock set opposite the name of each remaining
non-defaulting Underwriter in Schedule 1 hereto bears to the total number of
shares of the Firm Stock set opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Stock on such Delivery Date if the total number of shares of the Stock which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of shares of the Stock to be purchased on
such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated


                                       29
<PAGE>

to purchase more than 110% of the number of shares of the Stock which it agreed
to purchase on such Delivery Date pursuant to the terms of Section 3. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Representatives who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Stock to be purchased on such Delivery
Date. If the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Stock)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company, except that the Company will continue to be liable for the
payment of expenses to the extent set forth in Sections 7, 10 and 13. As used in
this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 11, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.

     Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.

     12. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 8(k), 8(l) or 8(m), shall have occurred or
if the Underwriters shall decline to purchase the Stock for any reason permitted
under this Agreement.

     13. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Company shall fail to
tender the Stock for delivery to the Underwriters by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company (including,
without limitation, with respect to the Transactions) is not fulfilled, the
Company will reimburse the Underwriters for all reasonable documented
out-of-pocket expenses (including reasonable documented fees and disbursements
of counsel) incurred by the Underwriters in connection with this Agreement and
the proposed purchase of the Stock, and upon demand the Company shall pay the
full amount thereof to the Representatives. If this Agreement is terminated
pursuant to Section 11 by reason of the default of one or more Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.

                                       30
<PAGE>

     14. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:

          (a) if to the Underwriters, shall be delivered or sent by mail, telex
     or facsimile transmission to Lehman Brothers Inc., Three World Financial
     Center, New York, New York 10285, Attention: Syndicate Department (Fax:
     212-526-6588), with a copy, in the case of any notice pursuant to Section
     9(c), to the Director of Litigation, Office of the General Counsel, Lehman
     Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;

          (b) if to the Company, shall be delivered or sent by mail, telex or
     facsimile transmission to the address of the Company set forth in the
     Registration Statement, Attention: Manouch Moshayedi, Chief Executive
     Officer (Fax: 949-851-2706), with a copy to Kenneth R. Bender, Esq.,
     Brobeck, Phleger & Harrison LLP, 550 South Hope St., Suite 2100, Los
     Angeles, CA 90071; and

          (c) if to any Principal Shareholder, shall be delivered or sent by
     mail, telex or facsimile transmission to such Principal Shareholder at the
     address set forth on Schedule 2 hereto;

PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 9(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Principal Shareholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Lehman Brothers Inc. on behalf of the Representatives.

     15. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to
the benefit of and be binding upon the Underwriters, the Company, the Principal
Shareholders and their respective personal representatives and successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and the Principal Shareholders contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained in
Section 9(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 15, any


                                       31
<PAGE>

legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.

     16. SURVIVAL. The respective indemnities, representations, warranties and
agreements of the Company, the Principal Shareholders and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.

     17. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For purposes
of this Agreement, (a) "business day" means each Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and Regulations.

     18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.

     19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

     20. HEADINGS. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.



                            [SIGNATURE PAGE FOLLOWS]



                                       32
<PAGE>


     If the foregoing correctly sets forth the agreement among the Company, the
Principal Shareholders and the Underwriters, please indicate your acceptance in
the space provided for that purpose below.

                                 Very truly yours,

                                 SIMPLE TECHNOLOGY, INC.



                                 By
                                      ------------------------------------------
                                      Manouch Moshayedi
                                      Chief Executive Officer


                                 THE PRINCIPAL SHAREHOLDERS:



                                 -----------------------------------------------
                                 Manouch Moshayedi



                                 -----------------------------------------------
                                 Mark Moshayedi



                                 -----------------------------------------------
                                 Mike Moshayedi


Accepted:

LEHMAN BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
FIDELITY CAPITAL MARKETS, A DIVISION
     OF NATIONAL FINANCIAL SERVICES CORPORATION
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto

         BY LEHMAN BROTHERS INC.


         By
           ------------------------------------
                  AUTHORIZED REPRESENTATIVE


<PAGE>

                                   SCHEDULE 1


<TABLE>
<CAPTION>

                                                                      Number of
                                                                      Shares of
                                                                      Firm Stock
                                                                       to be
Underwriters                                                          Purchased
------------                                                          ----------

<S>                                                                   <C>
Lehman Brothers Inc........................................
Banc of America Securities LLC.............................
Fidelity Capital Markets, a division of
  National Financial Services LLC..........................
              Total........................................
                                                                      ----------
                                                                       6,364,000
                                                                      ==========
</TABLE>


                                      S-1

<PAGE>

                                   SCHEDULE 2

                   NAME AND ADDRESS OF PRINCIPAL SHAREHOLDERS



Manouch Moshayedi
3001 Daimler Street
Santa Ana, California 92705-5812
Fax:  ______________________


Mark Moshayedi
3001 Daimler Street
Santa Ana, California 92705-5812
Fax:  ______________________


Mike Moshayedi
3001 Daimler Street
Santa Ana, California 92705-5812
Fax:  ______________________


                                      S-2


<PAGE>



                                    EXHIBIT A

                            LOCK-UP LETTER AGREEMENT



LEHMAN BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
FIDELITY CAPITAL MARKETS, A DIVISION
OF NATIONAL FINANCIAL SERVICES CORPORATION
As Representatives of the several
   Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285

Dear Sirs:

     The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.001 per share (the "Common Stock") of
Simple Technology, Inc., a California corporation (the "Company"), and that the
Underwriters propose to reoffer the Shares to the public (the "Offering").

     In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Lehman
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock (other
than the Shares) owned by the undersigned on the date of execution of this
Lock-Up Letter Agreement or on the date of the completion of the Offering, or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, for a period of 180 days after the date of the
final Prospectus relating to the Offering.

                                      A-1

<PAGE>

     The foregoing restrictions shall not apply to transfers of Common Stock by
the undersigned (i) as bona fide gifts or gifts, provided the donee or donees
thereof agree in writing to be bound by this restriction, (ii) as a distribution
to partners or shareholders of such person, provided the distributees thereof
agree in writing to be bound by the terms of this restriction, (iii) with
respect to sales or purchases of Common Stock acquired on the open market or
(iv) with respect to shares received in the Directed Share Program.

     In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.

     It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Shares, we will be released from our obligations under this
Lock-Up Letter Agreement.

     The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.

     Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.

                                      A-2

<PAGE>


     The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.

                                             Very truly yours,


                                             By:
                                                --------------------------------
                                             Name:
                                             Title:


Dated: _________________________


                                      A-3

<PAGE>


                                    EXHIBIT B

                                   OPINION OF
                        BROBECK, PHLEGER & HARRISON, LLP


                                      B-1

<PAGE>


                                    EXHIBIT C

                                   OPINION OF
                               LITIGATION COUNSEL




                                      C-1