Document:

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                                                                    EXHIBIT 10.2

                             SECURED PROMISSORY NOTE

$500,000                                                     Irvine, California
                                                               November __, 1999

         FOR VALUE RECEIVED, the undersigned, OBJECTSHARE, INC., a Delaware
corporation having a place of business at 16811 Hale Avenue, Suite A, Irvine, CA
92606 ("OBJS") promises to pay to the order of STARBASE CORPORATION ("StarBase")
at the office of StarBase located at 4 Hutton Drive, Suite 800, Santa Ana, CA
92707 or at such other place as StarBase may designate in writing, the lesser of
(a) the principal sum of Five Hundred Thousand Dollars ($500,000) and (b) the
aggregate outstanding unpaid principal amount of this Note as set forth on
Schedule A attached hereto, together with any accrued and unpaid interest
thereon, on October 31, 2000 (the "Maturity Date") unless earlier becoming due
pursuant to Section A(3) hereof or as otherwise provided in this Note..

                         A. LOANS AND TERMS OF PAYMENT

1. Loans. (a) Subject to the provisions of Article B hereof and the terms and
conditions hereinafter set forth, at any time prior to the Maturity Date on ten
(10) days prior written notice in the form of Exhibit 1 attached hereto (the
"Borrowing Request"), OBJS may request from StarBase, and StarBase shall make to
OBJS, a loan (each a "Loan"); provided, however that no Loan requested shall be
greater than the Maximum Request Allotment (as defined in subparagraph (c)
below) at the time of such request and further provided, however, that the
aggregate principal amount of all Loans outstanding hereunder shall not exceed
Five Hundred Thousand Dollars ($500,000).

(a) Each Loan made hereunder shall be evidenced by a notation thereof on
Schedule A annexed hereto and incorporated herein by reference, constituting an
integral part of this Note. For purposes hereof, StarBase is hereby authorized
to record the date and amount of each Loan made by StarBase, and the date and
amount of each payment or prepayment of principal thereof on Schedule A and any
such recordation shall constitute prima facie evidence of the amount of the
Loans made and outstanding hereunder.

(b) Notwithstanding compliance by OBJS with the provisions of Article B hereof,
in no event shall OBJS request Loan(s) aggregating more than the amounts
available during the periods indicated below (the "Maximum Request Allotment"):

<TABLE>
<CAPTION>
         Period                             Maximum Request Allotment
         ------                             -------------------------
<S>                                 <C>
         During November 1999       up to $200,000
         After December 1, 1999     up to an additional $200,000, for an aggregate of $400,000
         After January 1, 2000      up to an additional $100,000, for an aggregate of $500,000
</TABLE>
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          2. Interest. (a) OBJS shall pay interest in arrears on the unpaid
principal amount of this Note from time to time outstanding at a rate per annum
which shall be equal to three quarters of a percent (0.75%) above the rate of
interest from time to time announced by Bank of America, NA at its principal
office in San Francisco, California as its prime rate (the "Prime Rate").
Interest shall accrue and shall be computed on the basis of a year of 360 days.

               (a) OBJS will pay interest, at the rate described above, monthly
on the first day of each month in each year, commencing November 1, 1999, for
the interest which accrued in the prior month, at the maturity of this Note
(whether by acceleration, at the Maturity Date, or otherwise) and upon the
making of any prepayment of the principal amount of this Note, as hereinafter
provided. In addition, Borrower will pay interest on any overdue installment of
principal, and, to the extent permitted by applicable law, overdue interest for
the period for which overdue, on demand, at a rate equal to five percent (5%)
per annum above the Prime Rate. In no event shall interest exceed the maximum
legal rate permitted by law.

          3. Mandatory Prepayment.

               (a) In the event the Merger Agreement (as defined in Section B(2)
hereof) is terminated prior to StarBase loaning to OBJS the full aggregate
Maximum Request Allotment permitted under this Note, then the outstanding
principal balance and all accrued interest due and owing under this Note at the
time of such termination shall become due and payable in equal monthly
installment payments, commencing on the 1st business day of the month next
succeeding the date of termination, equal to the aggregate outstanding principal
balance and all accrued interest thereon amortized over the number of months
left until the Maturity Date. Notwithstanding anything to the contrary contained
in this Note, StarBase shall not be obligated to make any further Loans to OBJS
under this Note following the termination of the Merger Agreement as provided
herein or therein.

               (b) In the event prior to the Maturity Date OBJS sells in
accordance with the Merger Agreement substantially all of the stock or the
business and assets of its European subsidiaries, ObjectShare GmbH, ObjectShare
(UK) Limited and ObjectShare AG (a "European Transaction"), then, upon receipt
of the proceeds therefrom (whether in cash or in the form of a promissory note
or some other instrument) the outstanding principal balance and all accrued
interest due and owing under this Note at the time of such receipt shall be
immediately due and payable, automatically, without any demand required.
Notwithstanding anything to the contrary contained in this Note, StarBase shall
not be obligated to make any further Loans to OBJS under this Note following any
European Transaction.

          4. Optional Prepayment. Subject to Section A(3) hereof, OBJS shall
have the right to prepay the outstanding principal amount of this Note, in whole
or in part, at any time and from time to time; provided that any such prepayment
of principal shall be accompanied by the payment of accrued interest on the
amount of principal being paid.

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          5. Payments. If any payment of principal or interest becomes due on a
day on which banks in the State of California are closed (as required or
permitted by law or otherwise), such payment shall be made not later than the
next succeeding business day, and such extension shall be included in computing
interest in connection with such payment. All payments by OBJS of this Note on
account of principal or interest hereunder shall be made in lawful money of the
United States of America and in immediately available funds.

                            B. CONDITIONS TO LENDING

         The obligation of StarBase to make any Loan hereunder is subject to the
following conditions precedent:

          1. Corporate Documentation. Receipt by StarBase, in form and substance
satisfactory to StarBase, of (a) certified copies of the resolutions of the
Board of Directors of OBJS approving the execution and delivery of this Note and
performance hereunder and (b) certificates of the Secretary of OBJS certifying
the names and true signatures and incumbency of the officers of OBJS authorized
to sign this Note, the Borrowing Request and the other documents to be delivered
by OBJS pursuant to this Note.

          2. Agreement and Plan of Merger. OBJS shall have executed and
delivered the Agreement and Plan of Merger dated as of even date herewith by and
among StarBase, OBJS Acquisition Corp. and OBJS (the "Merger Agreement").

          3. Consent of Silicon Valley Bank. Receipt of written consent of
Silicon Valley Bank with respect to OBJS's execution and delivery of and
performance under this Note, as well as to the Loans and the security interest
granted to StarBase hereby.

          4. Financing Statements. Receipt of: (a) acknowledgment copies of
Uniform Commercial Code Financing Statements (Forms UCC-1) duly filed under the
Uniform Commercial Code of all jurisdictions as may be necessary or, in the
opinion of StarBase and its counsel, desirable in order to perfect the security
interests created pursuant to Article F hereof and (b) copies of all effective
financing statements, other than those referred to in subparagraph (a) above,
which name OBJS as debtor and which are filed in the jurisdictions referred to
in said subparagraph (a), together with copies of such other financing
statements as may be requested by StarBase (none of which financing statements
shall cover the Collateral purported to be covered by the security interest
granted in Article F hereof except such financing statements which may have been
previously filed by Silicon Valley Bank as the secured party).

          5. Perfected Security Interest. Receipt of evidence that all other
actions necessary or, in the opinion of StarBase and its counsel, desirable to
create a valid, enforceable and perfected security interest and lien in the
Collateral (as defined in Section F(1) hereof) covered by this Note and, subject
to any proposed factoring arrangement between OBJS and Silicon Valley Bank or an
alternative provider of factoring (a "Substitute Provider"), provided StarBase
has consented to the substitution of the Substitute Provider for Silicon Valley
Bank,

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which consent shall not be unreasonably withheld, to maintain and protect the
validity, perfection, enforceability and priority of the security interest
created hereby have been taken. Any transfer of accounts receivable to the
Silicon Valley Bank or a Substitute Provider shall be free and clear of any
security interest and lien of StarBase.

          6. Representations and Warranties. The representations and warranties
contained in this Note are true, complete and correct on and as of the date of
each Loan as though made on and as of such date, except to the extent such
representations and warranties may be affected by the occurrence of transactions
permitted under this Agreement

          7. No Default. A certificate of the Chief Executive Officer, President
or Chief Financial Officer of OBJS to the effect that no event has occurred and
is continuing, or would result from the Loan which constitutes an Event of
Default or would constitute an Event of Default except for the requirement that
notice be given or time elapse or both.

          8. Officer Certificate. A certificate of the Chief Executive Officer,
President or Chief Financial Officer of OBJS to the effect that all conditions
herein to the obligation of StarBase to make the Loan have been satisfied; it
being understood nonetheless that each borrowing by OBJS under this Note shall
constitute a representation and warranty by OBJS as of the date of such
borrowing that the conditions in this Article B have been satisfied.

          9. Other Actions. Such other documents and such other action as may be
reasonably requested from time to time by StarBase in connection with the
transactions contemplated by this Note, all on terms and in form and substance
satisfactory to StarBase and its counsel.

                       C. REPRESENTATIONS AND WARRANTIES

         OBJS represents and warrants to StarBase, as follows:

          1. Organization. OBJS is a corporation, validly existing, and in good
standing under the laws of the State of Delaware, has full corporate power and
authority to own, lease and operate its properties and to transact the business
as presently conducted by it, is duly qualified and is in good standing under
the laws of each jurisdiction in which such qualification is required.

          2. Authority. OBJS has full power and authority to execute and deliver
this Note, to borrow Loans hereunder and to grant to StarBase a perfected
security interest in the Collateral, all of which have been duly and validly
authorized by all proper and necessary action on the part of OBJS.

          3. Binding Agreement. This Note constitutes, and the Borrowing Request
and each other document to be executed and delivered by OBJS pursuant hereto
will constitute, the legal, valid, and binding obligation of OBJS, enforceable
against OBJS in accordance with their respective terms.

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          4. Noncontravention. Neither the execution and delivery by OBJS of
this Note or such other documents to be executed and delivered by OBJS pursuant
hereto, nor any borrowing by OBJS nor the granting of any security interest to
StarBase contemplated hereby, nor the performance by OBJS of its obligations
hereunder or thereunder, will (nor with the giving of notice or the lapse of
time or both would): (a) conflict with or result in a breach of any provision of
the Certificate of Incorporation or By-laws of OBJS; or (b) give rise to a
default, or any right of termination, cancellation or acceleration, or otherwise
be in conflict with or result in a loss of contractual benefits to OBJS or under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which OBJS is
a party or by which OBJS may be bound or to which OBJS or its assets (including
the Collateral) may be subject, or require any consent, approval or notice under
the terms of any such document or instrument, other than the prior consent of
Silicon Valley Bank as provided in Section B(3) hereof, or (c) violate any
order, writ, injunction, decree, law, statute, rule or regulation of any court
or governmental authority which is applicable to OBJS, its assets or its
business, or (d) except for the prior consent of Silicon Valley Bank, require
the consent, waiver, approval, authorization, license, certificate or franchise,
of or any filing by OBJS with a third party or public authority.

          5. Litigation. There are no suits or actions, or administrative,
arbitration or other proceedings or governmental investigations, pending, or, to
the knowledge of OBJS, threatened, against or relating to OBJS, any of its
properties or assets (including the Collateral), or with respect to this Note
and any other documents to be executed and delivered pursuant hereto or with the
transactions contemplated hereby or thereby (a "Proceeding"), which Proceeding
would have a material adverse effect on the business, results of operations,
property or financial or other condition of OBJS.

          6. Financial Statements. The audited balance sheets of OBJS as at
March 31, 1999 and the related audited statements of income and retained
earnings and cash flows for the fiscal year then ended, and the unaudited
balance sheets of OBJS as at June 30, 1999 and each of August 31, 1999 and
September 30, 1999 and the related unaudited statements of income and retained
earnings and cash flows for the fiscal periods then ended, certified by the
Chief Financial Officer of OBJS or its accountants, copies of which have
heretofore been furnished to StarBase, are complete and materially correct and
present fairly the financial condition of OBJS as at such dates, and the results
of its operations and changes in financial position as at and for the fiscal
years and periods then ended (subject, in the case of unaudited interim
financial statements, to normal recurring year-end adjustments). All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with generally accepted accounting principles
("GAAP"), applied on a consistent basis throughout the periods involved (except
as may otherwise be indicated in the notes thereto or, in the case of unaudited
financial statements, as permitted by the Securities and Exchange Commission
("SEC")) . OBJS has no contingent obligations, liabilities or long-term
commitments of the nature required to be disclosed or accrued for in said
financial statements, and to the best knowledge of OBJS, there are no material
unrealized or anticipated losses or any unfavorable commitments of OBJS which

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have not been disclosed therein. OBJS has not incurred or agreed to any
indebtedness to any of its officers, directors, employees or shareholders nor
has OBJS granted or agreed to grant any Lien to any such persons, except as
otherwise provided in the Merger Agreement or as incurred in the ordinary course
of the business of OBJS with respect to reimbursement of employee business
related expenses.

          7. No Undisclosed Liabilities. Neither OBJS nor any of its
subsidiaries has material liabilities or obligations of any nature whatsoever,
whether accrued, absolute, contingent or otherwise, which have not been (1) set
forth on the audited balance sheet of OBJS at March 31, 1999, (2) incurred in
the ordinary course of business since the date of such audited balance sheet or
(3) disclosed in the form of a public filing with the SEC pursuant to the rules
and regulations promulgated under the Securities and Exchange Act of 1934, as
amended.

          8. Accounts Receivable. The accounts receivable, net of the allowance
for doubtful accounts applicable thereto (which allowance is established on a
basis consistent with GAAP) included in the unaudited balance sheet of OBJS at
September 30, 1999 (a) have already been collected or are at the date hereof
collectible in full over the period of usual trade terms (by use of the normal
collection methods of OBJS) and (b) are not subject to any defenses,
counterclaims or set-offs which would materially adversely affect such
receivables representing obligations for the total dollar amount thereof shown
on the books of OBJS. Subject to the allowances made for doubtful accounts
(established on a basis consistent with GAAP), OBJS has performed all
obligations with respect thereto which they were obligated to perform to the
date hereof.

          9. Ownership of Collateral. With respect to the Collateral, OBJS has,
and at the time the Collateral becomes subject to the security interest granted
to StarBase pursuant to Article F hereof shall have, good record and marketable
title in fee simple to, or valid leasehold interests in, all its real property
and good title to all its other property, and such Collateral is and, at such
time will be, free and clear of all Liens (as defined in Section E(4) hereof)
whatsoever, except for the security interest granted to StarBase pursuant to
this Note and the security interest and rights granted to Silicon Valley Bank
under its financing arrangement with OBJS.

          10. Tax. Except as otherwise disclosed in the Merger Agreement or in
the event OBJS has obtained an appropriate extension, OBJS has duly and timely
filed or caused to be so filed all tax returns which are required to be filed by
it and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its properties or assets, and all other
taxes, fees or other charges imposed on it or any of its properties or assets by
any governmental authority which are due, except for such taxes, fees or other
charges which the failure to pay would not have a material adverse effect on the
business, results of operations, property or financial or other condition of
OBJS. No tax liens have been filed and no claims are being asserted against OBJS
with respect to any such taxes, assessments, fees or other charges.

          11. Use of Proceeds. The proceeds of the loans shall be used by OBJS
for working capital purposes only.

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                            D. AFFIRMATIVE COVENANTS

         Until payment in full of this Note and the payment and performance of
all indebtedness, obligations and liabilities of any kind of OBJS to StarBase,
OBJS shall:

          1. Monthly Financial Statements. (a) Furnish to StarBase as soon as
available, but in any event within 20 days after the end of each calendar month
with respect to OBJS' United States operations and within 30 days after the end
of each calendar month with respect to the consolidated operations of OBJS, a
copy of the unaudited consolidated balance sheets of OBJS and its subsidiaries
as at the end of such month and the related unaudited consolidated statements of
income and retained earnings and cash flows for such month, setting forth in
each case in comparative form the figures for the prior monthly period, with
such consolidated financial statements, certified by the Chief Financial Officer
of OBJS.

                  (b) To the extent that the end of any quarterly or fiscal year
period should occur prior to the Maturity Date, furnish to StarBase as soon as
available, but in any event within 45 days after the end of the quarterly period
or 90 days after the end of the fiscal year, as the case may be, a copy of the
audited consolidated balance sheets of OBJS and its subsidiaries (unaudited in
the case of a quarterly report) as at such quarterly or fiscal year end and the
related audited (or unaudited, in the case of a quarterly report) consolidated
statements of income and retained earnings and cash flows for such quarter or
fiscal year, setting forth in each case in comparative form the figures for the
prior quarterly or fiscal year period, with such consolidated financial
statements, certified by the Chief Financial Officer of OBJS.

          2. SEC Reports Furnish to StarBase promptly after the sending or
filing thereof, copies of all reports which OBJS sends to any of its security
holders and copies of all reports and registration statements which OBJS files
with the SEC or any national securities exchange or other organization on any of
its securities are traded or quoted pursuant to the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or otherwise.

          3. Compliance Certificate. Furnish to StarBase, concurrently with the
delivery of the financial statements referred to in Section D(1) hereof, a
certificate of the Chief Financial Officer of OBJS, (i) stating that during such
period OBJS has observed or performed all of its covenants and other agreements,
and satisfied every condition contained in this Note and all other instruments
and documents executed in connection herewith to be observed, performed or
satisfied by it, and that no Event of Default has occurred except as specified
in such certificate and (ii) showing in detail the calculations supporting the
statements set forth in (i) above in respect of Sections E(1) and E(2) hereof.

          4. Accounts Receivable Certificate. Furnish to StarBase, on the 1st
and 15th day of each calendar month, a schedule of OBJS's accounts receivable as
at the end of such period,

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indicating, among other things from time to time requested by StarBase, the name
of the debtor of each account receivable, the aggregate amount thereof and an
aging schedule of all accounts receivable, indicating those receivables more
than 30 days past due, more than 60 days past due, more than 90 days past due
and more than 120 days past due and those receivables factored.

          5. Projected Financial Condition. Simultaneously with the execution
and delivery hereof and updated weekly thereafter for the term of this Note, (a)
furnish to StarBase statements of projected consolidated cash flows, projected
cash flows and projected consolidated income for the next succeeding week and
subsequent 30-day period, in the form of Schedule D(5) hereto, certified by the
Chief Financial Officer of OBJS as being prepared in accordance with sound
financial planning practice and based on OBJS's best good faith estimates,
information and assumptions at the time (the "OBJS Projections"), and (b)
consult with StarBase as to the status of OBJS' accounts payable.

          6. Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it, and
preserve, renew and keep in full force and effect its corporate existence,
rights, privileges and franchises in good standing in the jurisdiction of
incorporation and qualify and remain qualified, as a foreign corporation in each
jurisdiction in which such qualification is necessary in view of its businesses
and operations or the ownership of its properties and assets.

          7. Inspection of Property; Books and Records. Keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and in compliance with all applicable laws shall be made of all dealings
and transactions in relation to its business and activities, and permit
representatives of StarBase to visit and inspect any of OBJS's properties and
assets and examine and make abstracts from or copy any of OBJS's books and
records, and to discuss the business, operations, properties, assets and
financial and other condition of OBJS with officers and employees of OBJS and
with OBJS's accountants and other representatives.

          8. Notices. Promptly give notice to StarBase: (a) of the occurrence of
any Event of Default; (b) of any (i) default or event of default under any
material agreement, instrument or undertaking to which OBJS is a party or by
which it or its properties and assets (including the Collateral) are bound or
(ii) litigation or investigation of which OBJS has knowledge, or proceeding
which may exist, at any time between OBJS and any court, administrative agency
or body or arbitrator; (c) of the commencement of all actions, proceedings and
investigations to which OBJS is a party where the amount involved shall exceed
$25,000 in any single instance or in the aggregate, or in which injunctive or
similar relief is sought, by or before any governmental agency or body, in any
court or before any arbitrator against or in any way relating to OBJS or any of
its properties or assets (including the Collateral); and (d) of a material
adverse change in the business, results of operations, property or financial or
other condition of OBJS. Each notice pursuant to this Section D(9) shall be
accompanied by a statement of the Chief Executive Officer, President or Chief
Financial Officer of OBJS setting

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forth all details of the occurrence referred to therein and stating what action
OBJS proposes to take with respect thereto.

          9. Payment of Debts, Taxes, Etc. Pay, discharge and perform all debts
and obligations relating to taxes, assessments, governmental charges and levies
imposed upon OBJS and any of its properties and assets promptly and in
accordance with the terms thereof before the same shall become in default or
become a Lien or charge upon the properties or assets of OBJS (including the
Collateral) except as otherwise contemplated by this Note.

                             E. NEGATIVE COVENANTS

         Until payment in full of this Note and the payment and performance of
all indebtedness, obligations and liabilities of any kind by OBJS to StarBase,
except as otherwise expressly consented to or approved in writing by StarBase,
OBJS will not:

          1. Quick Ratio. Permit the ratio of Quick Assets to Current
Liabilities to be less than 0.48 (the "Quick Ratio"). For purposes hereof,
"Quick Assets" shall mean, as of the date of determination thereof, the cash,
cash equivalents, accounts receivable, royalties and any bank refund account
established pursuant to any factoring arrangement between OBJS and Silicon
Valley Bank or a Substitute Provider, all as classified as such in OBJS'
consolidated financial statements in accordance with GAAP consistently applied,
and "Current Liabilities" shall mean, as of the date of determination thereof,
the accounts payable, accrued expenses and indebtedness for money borrowed from
Silicon Valley Bank, a Substitute Provider and StarBase, all as classified as
such on OBJS' consolidated balance sheet in accordance with GAAP consistently
applied.

          2. Cash Flow. Permit the ending cash balance for any week during the
term of this Note to deviate more than a negative $75,000 from the projected
ending cash balance from OBJS' operations for such week, as set forth in the
latest set of OBJS Projections delivered to StarBase in accordance with Section
D(5).

          3. Indebtedness. Create, incur, assume or suffer to exist any
indebtedness for borrowed money of any kind except as evidenced by this Note and
any factoring arrangement with Silicon Valley Bank or a Substitute Provider in
an amount not to exceed $475,000 at any time in funds provided for outstanding
accounts receivable.

          4. Limitation on Liens. Create, incur, assume or suffer to exist, any
mortgage, pledge, hypothecation, assignment for security purposes, deposit
arrangements, encumbrances, lien (statutory or other), or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (a "Lien") upon any of the properties, assets or revenues, whether
now owned or hereafter acquired, of OBJS except Liens held by StarBase, Silicon
Valley Bank and any Substitute Provider in respect of the Collateral.

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          5. Capital Expenditures. Directly or indirectly (by way of the
acquisition of the securities of any person or entity, leases entered into which
under GAAP are required to be capitalized, or otherwise) make or commit to make
any expenditure in respect of the purchase or other acquisition of fixed or
capital assets, except as might by required contractually under any consulting
or training agreement to which OBJS is a party.

          6. Prohibition of Fundamental Changes. Except for any European
Transaction, (a) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or a substantial part of
its business or assets, or acquire by purchase or otherwise all or substantially
all the business or assets of, or stock or other evidences of beneficial
ownership of, any person or entity or make any change in the present method of
conducting business by OBJS or (b) sell, lease, assign, transfer or otherwise
dispose of any of its assets, whether now owned or hereafter acquired,
including, without limitation, the Collateral, other than in the ordinary course
of business.

          7. Loan, Advances, Investments. Except for investment in government
securities and advances to employees not to exceed $ 10,000 made in the ordinary
course of business with respect to travel and related business expenses, make
any loan, advance or capital contribution or extend any credit to any person or
entity, or make any commitment to purchase or otherwise acquire, hold or invest
in any stock, bond, debenture, note or other security or obligation of any
person or entity.

          8. Prepayment of Indebtedness. Prepay, acquire prior to stated
maturity or modify the terms of any indebtedness, obligation or liability of any
kind (including any such indebtedness or an obligation in the nature of a lease)
other than prepayment of indebtedness evidenced by this Note (to the extent
permitted herein) or under any factoring arrangement with Silicon Valley Bank or
a Substitute Provider.

          9. Transactions with Affiliates. Enter into any transaction
(including, without limitation, the lease, purchase, sale or exchange of any
asset or property, the making of any advance or loan or the entering into of any
agreement or arrangement for any payment in respect of any fee, charge or other
expense for services performed or to be performed or any allocation of
administrative salaries, expenses and other general overhead), directly or
indirectly, with any affiliate other than in the ordinary course and pursuant to
the reasonable requirements of the business of OBJS and upon fair and reasonable
terms and provisions no less favorable to OBJS than it could have obtained in a
comparable arm's-length transaction with a person who is not an affiliate of
OBJS.

          10. No Material Adverse Change. Since the date of this Note, there
shall not have been any material adverse change in the business, results of
operations, property or financial or other condition of OBJS.

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                              F. SECURITY INTEREST

          1. Grant/Collateral. In order to induce StarBase to make the Loans
evidenced by this Note, and as security for the repayment in full of all amounts
owing under this Note with respect to the Loans, all interest, fees, charges,
premiums and penalties due and owing under this Note and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) which
StarBase may incur in enforcing this Note and/or to protect, perfect or enforce
its rights as a secured party under the Uniform Commercial Code (collectively,
the "Liabilities"), OBJS hereby assigns, pledges and grants to StarBase a
perfected, continuing lien and security interest in all of OBJS's right, title
and interest in personal property, whether now existing or hereafter acquired,
including, without limitation, the following:

          (i)       Tangible Personal Property. All goods, machinery, equipment,
                    inventory and all other tangible personal property of any
                    nature whatsoever, wherever located;

          (ii)      Rights to Payment of Money. All rights of OBJS to receive
                    the payment of money, including, without limitation,
                    accounts and receivables, rights to receive the payment of
                    money under contracts, franchises, licenses, permits,
                    subscriptions or other agreements (whether or not earned by
                    performance);

          (iii)     Intangibles. All (A) contracts, franchises, licenses,
                    permits, subscriptions and other agreements and all rights
                    thereunder; (B) rights granted by others which permit OBJS
                    to sell or market items of personal property; (C) United
                    States and foreign common law and statutory copyrights and
                    rights in literary property and rights and licenses
                    thereunder; (D) United States and foreign trade names,
                    trademarks, service marks, Internet domain names,
                    registrations of any of the foregoing and all related
                    goodwill; (E) United States and foreign patents and patent
                    applications; (F) owned computer software, designs, models,
                    know-how, trade secrets, rights in proprietary information,
                    formulas, customer lists, backlog, orders, subscriptions,
                    royalties, catalogues, sales material, documents, all
                    related goodwill, inventions and processes; (G) judgments,
                    causes in action and claims, whether or not inchoate; and
                    (H) all other general intangibles and intangible property
                    and rights thereunder;

          (iv)      Chattel Paper, Instruments, etc. All chattel paper,
                    non-negotiable instruments, negotiable instruments,
                    documents and investment property;

          (v)       Leases. All leases of personal property, whether OBJS is the
                    lessor the lessee thereunder;

                                      -11-
<PAGE>   12
          (vi)      Deposit Accounts. All general or special deposit accounts,
                    including any demand, time, savings, passbook or similar
                    account maintained by OBJS with any bank, trust company,
                    savings and loan association, credit union or similar
                    organization, and all money, cash and cash equivalents of
                    OBJS, whether or not deposited in any such deposit account;

          (vii)     Collateral. All collateral granted by third parties to, or
                    held by, OBJS;

          (viii)    Books and Records. All of OBJS's books and records,
                    including, without limitation, books of account and ledgers
                    of every kind and nature, and electronically recorded data;

          (ix)      Insurance. All rights of OBJS under insurance policies,
                    whether or not owned by OBJS;

          (x)       All Other Property. All other property, assets and items of
                    value of every kind and nature, tangible or intangible,
                    absolute or contingent, legal or equitable; and

          (xi)      Proceeds and Products. All proceeds, including, without
                    limitation, insurance proceeds, of any of the foregoing.

All of the items of personal property set forth in this Section F(1)(i) - (xi)
are herein collectively called the "Collateral".

          2. Perfected Security Interest. (a) StarBase may, in its discretion,
file one or more financing statements (with or, to the extent permitted by law,
without the signature of OBJS, as debtor) under the Uniform Commercial Code
naming OBJS as debtor and StarBase as secured party and indicating therein the
types or describing the items of Collateral. OBJS shall execute, file and record
any notices, affidavits or other documents and take all such other actions as
StarBase may deem appropriate to protect or perfect its security interest in the
Collateral or to otherwise accomplish the purposes of this Article F. OBJS
hereby agrees to pay on demand, and/or authorizes StarBase to charge its account
with the cost of, any and all filing, recording and other fees and expenses
which StarBase deems appropriate in order to protect or perfect its security
interest in the Collateral or to otherwise accomplish the purposes of this Note,
including, without limitation, the cost of all searches of public records as
StarBase in its sole discretion shall require. OBJS will promptly notify
StarBase of the imposition at any time of any Lien upon any of the Collateral.
The security interest granted hereby shall be subordinated to any security
interest with respect to the Collateral granted to Silicon Valley Bank or a
Substitute Provider under its respective financing arrangement with OBJS.
StarBase shall execute a subordination agreement to effectuate such
subordination if requested by Silicon Valley Bank or the Substitute Provider.

                                      -12-
<PAGE>   13
               (b) Notwithstanding the foregoing, OBJS represents, warrants and
covenants that all of the Collateral now existing or hereafter arising or
acquired is and will be owned by OBJS free and clear of all security interests,
liens and encumbrances of any kind, except for the security interest herein
granted to StarBase, a prior, first security interest granted to Silicon Valley
Bank and any security interest granted to a Substitute Provider. OBJS shall
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein adverse to StarBase.

               (c) Notwithstanding the foregoing, StarBase shall have no
obligation to comply with any recording, re-recording, filing, re-filing, or
other legal requirements necessary to establish or maintain the validity,
priority or enforceability of, or StarBase's right in or to, the Collateral or
any part thereof.

          3. Disposition of Collateral. Until the occurrence of an Event of
Default or notice from StarBase terminating or limiting the right of OBJS to do
so, or, in the case of the collection, compromise, or adjustment of accounts
receivable, until StarBase takes any action pursuant to this Article F, OBJS may
collect, compromise and adjust accounts receivable constituting a part of the
Collateral, all on such terms as OBJS may in good faith deem advisable in the
ordinary course of its regular business, and may retain all sums so collected.

          4. Preservation of Collateral. Until payment and performance in full
of all of the Liabilities and termination of this Note, StarBase's interests in
the Collateral shall continue in full force and effect. During such period OBJS
shall not, without StarBase's prior written consent, pledge, sell, assign,
transfer, create or suffer to exist a Lien upon, or encumber or allow or suffer
to be encumbered in any way, except for the security interest previously granted
to Silicon Valley Bank and any future security interest granted to a Substitute
Provider, any part of the Collateral.

          5. Further Assurances. OBJS agrees to take all actions and to execute
all documents and instruments (including, without limitation, financing
statements and instruments of assignment) as StarBase may request in order to
perfect, protect and enforce the security interest of StarBase in and to the
Collateral.

                              G. EVENTS OF DEFAULT

          1. Event of Default. The occurrence (and continuation) of any of the
following events shall constitute an "Event of Default":

               (a) OBJS shall fail to make any payment of principal or interest
on this Note in the manner or at the time provided for in this Note, which
failure to pay is not cured within ten (10) days of written notice thereof.

               (b) OBJS shall default in the performance or observance of any
non-financial covenant or agreement contained herein and such default is not
cured within thirty (30) days after written notice thereof;

                                      -13-
<PAGE>   14
               (c) OBJS shall default in the performance or observance of any
financial covenant or materially default on any agreement contained herein and
such default is not cured within fifteen (15) days after written notice thereof;

               (d) any representation or warranty made by or on behalf of OBJS
in this Note shall at any time prove to have been incorrect when made in any
material respect;

               (e) OBJS shall default in the payment of principal or interest on
any indebtedness for borrowed money (including, without limitation, any
factoring arrangement with Silicon Valley Bank or a Substitute Provider) or
shall default in the performance or observance of the terms of any instrument
pursuant to which such indebtedness was created or is secured, the effect of
which default is to cause or permit any holder of any such indebtedness to cause
the same to become due prior to its stated maturity; provided, however, that no
such default shall be deemed an Event of Default hereunder in the event that
such default is waived by the holder thereof;

               (f) any judgment against OBJS or any attachment, levy or
execution against any of its properties for any amount shall remain unpaid, or
shall not be released, discharged, dismissed, stayed or fully bonded for a
period of thirty (30) days or more after its entry, issue or levy, as the case
may be;

               (g) OBJS shall make an assignment for the benefit of creditors,
or a trustee, receiver or liquidator shall be appointed for OBJS or for any
substantial portion of its assets or property, or

               (h) the commencement of any proceedings by OBJS under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt, receivership, liquidation or dissolution law or statute, or the
commencement of any such proceedings without the consent of OBJS and such
proceedings shall continue undischarged for a period of sixty (60) days;

               (i) OBJS shall fail to pay any indebtedness or any interest,
fees, charges or premiums thereon, when due (whether by scheduled maturity,
prepayment, acceleration, demand or otherwise) or any other default under any
agreement or instrument relating to any such indebtedness, or any event shall
occur if the effect of such failure, default or event is to accelerate, or to
permit the acceleration of, the maturity of such indebtedness, or any such
indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; and

               (j) any proceeding shall be instituted by or against OBJS seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, dissolution,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts, or relief similar to any of the foregoing, under
any statute, law or regulation, now and from time to time hereafter in effect,
relating to bankruptcy, insolvency or reorganization or relief of debtors,

                                      -14-
<PAGE>   15
or seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any part of its property.

          2. Remedies. Upon the occurrence of an Event of Default, StarBase may:
(a) declare this Note, all interest thereon and all other amounts and
Liabilities payable under this Note to be forthwith due and payable. whereupon
this Note, all such interest and all such amounts and Liabilities shall become
and be forthwith due and payable, without presentment, demand, protest, notice
of protest, or other notice of any kind, all of which are hereby expressly
waived by OBJS; (b) in its discretion, take possession of the Collateral and,
for that purpose, may enter, with the assistance of any persons, any premises
where the Collateral or any part thereof may be located, and retain possession
of the Collateral at such premises or remove the same therefrom; and (c) in
addition to and notwithstanding any other rights granted by law or herein (or
any limitations contained herein on any such rights), StarBase shall have the
rights and remedies with respect to the Security of a secured party under the
Uniform Commercial Code as in effect from time to time in the State of
California with respect to the Collateral. OBJS agrees that any action taken by
StarBase in accordance with this paragraph shall be deemed to be commercially
reasonable.

                                H. MISCELLANEOUS

          1. Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to its rules
or principles of conflicts of laws. This Note shall not be interpreted or
construed with any presumption against StarBase by virtue of StarBase having
caused this Note to be drafted.

          2. No Waiver. No failure or delay on the part of StarBase in
exercising any right, power, or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such rights, power, or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy hereunder. The rights and remedies provided herein
are cumulative, and are not exclusive of any other rights, powers, privileges,
or remedies, now or hereafter existing, at law or in equity or otherwise.

          3. Costs And Expenses. OBJS shall pay to StarBase all costs and
expenses incurred and sums paid by StarBase (including without limitation
attorneys' fees, insurance premiums and sales commissions) in connection with
enforcing this Note and any of the rights of StarBase in and to the Collateral.

          4. Amendments. No amendment, modification, or waiver of any provision
of this Note nor consent to any departure by OBJS therefrom shall be effective
unless the same shall be in writing and signed by StarBase and OBJS and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

                                      -15-
<PAGE>   16
          5. Successors And Assigns. This Note shall be binding upon OBJS and
its successors and permitted assigns and the terms hereof shall inure to the
benefit of StarBase and its successors and assigns (including subsequent holders
hereof).

          6. Severability. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.

          7. Entire Agreement. This Note, together with Schedule A annexed
hereto, sets forth the entire agreement of OBJS and StarBase with respect to the
subject matter of this Note and it supersedes all prior agreements with respect
to such subject matter, all of which are merged herein.

          8. Jurisdiction; Service Of Process. OBJS agrees that in any action,
suit or proceeding on or in connection with this Note and/or any of the Loans
(i) shall be brought in the courts located in the State of California, Orange
County or (in a case involving diversity of citizenship) the federal court
situated thereat, which Courts shall have exclusive jurisdiction of any such
action, suit or proceeding, (ii) service of any summons and complaint or other
process in any such action, suit or proceeding may be made by StarBase upon OBJS
by registered or certified mail directed to OBJS, OBJS hereby waiving personal
service thereof, and (iii) within thirty (30) days after such mailing, OBJS
shall appear or answer to any summons and complaint or other process, and should
OBJS fail to appear to answer within said thirty (30) day period, it shall be
deemed in default and judgment may be entered by StarBase against OBJS for the
amount as demanded in any summons or complaint or other process so served.

          9. WAIVER OF THE RIGHT TO TRIAL BY JURY. OBJS AND, BY ITS ACCEPTANCE
HEREOF, STARBASE HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, CLAIM, COUNTERCLAIM OR OTHER PROCEEDING, WHETHER IN CONTRACT OR
TORT, AT LAW OR IN EQUITY, IN ANY MANNER CONNECTED WITH THIS NOTE OR ANY
TRANSACTIONS HEREUNDER.

          10. Notices. All notices, demands and other communications hereunder
shall be in writing, and shall be delivered in person, by first class registered
mail return receipt requested (postage prepaid) or by facsimile transmission
duly addressed to the parties at their respective addresses and/or facsimile
numbers first set forth herein. Copies of any notice hereunder shall also be
sent to the parties' respective legal counsel, as follows: (a) with respect to
StarBase, Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, New
York, New York 10036-8735 (Attn: Martin Weisberg, Esq.), facsimile No.: (212)
704-6288 and (b) with respect to OBJS, Paul, Hastings, Janofsky & Walker LLP,
695 Town Center Drive, Costa Mesa, CA 92626 (Attn: William J. Simpson, Esq.),
facsimile No.: (714) 979-1921. Any party may specify a different address or
facsimile number for such purpose by a notice of change of address or facsimile
number given to the other parties in the manner specified by this Section 10.
Any

                                      -16-
<PAGE>   17
notice hereunder shall be effective on the day delivered, if delivered in
person, on the day received, if sent by mail (as aforesaid), and on the day
sent, if sent by facsimile transmission prior to 5:00 p.m. (Pacific time) on a
business day and if a written confirmation of receipt is obtained or otherwise
received.

          11. Headings. The headings herein are for convenience only and shall
not limit or define the meaning of the provisions of this Note.

                                        OBJECTSHARE, INC.

                                        By:________________________________
                                           Name:
                                           Title:

                          SCHEDULE A TO PROMISSORY NOTE

Borrower: ObjectShare, Inc.

Date of  Note: November __, 1999

<TABLE>
<CAPTION>
--------------------- -------------------- -------------------- ---------------------- -------------------------
                                                 AMOUNT           UNPAID PRINCIPAL               NAME OF
                           PRINCIPAL               OF                  BALANCE                    PERSON
                            AMOUNT          PRINCIPAL REPAID           OF NOTE               MAKING NOTATION
        DATE                OF LOAN
--------------------- -------------------- -------------------- ---------------------- -------------------------
<S>                   <C>                  <C>                  <C>                    <C>

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

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

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

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

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

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

--------------------- -------------------- -------------------- ---------------------- -------------------------
</TABLE>

                                      -17-
<PAGE>   18
<TABLE>
--------------------- -------------------- -------------------- ---------------------- -------------------------
<S>                   <C>                  <C>                  <C>                    <C>

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

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

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

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

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

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

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

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

--------------------- -------------------- -------------------- ---------------------- -------------------------
</TABLE>

                                      -18-<PAGE>   1
                                                                    EXHIBIT 10.3

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated as of November 3, 1999 by and between StarBase
Corporation, a Delaware corporation with an address at 4 Hutton Centre, Suite
800, Santa Ana, California 92707 (the "Company"), and James Smith, an individual
residing at 9 Atherton Drive, Coto DeCaza, CA 92679 ( Employee").

                              W I T N E S S E T H :

              WHEREAS, subject to the execution of the Merger Agreement between
StarBase Corporation and ObjectShare, Inc., the Company wishes to obtain the
services of Employee as the Executive Vice President of Sales and Marketing of
the Company, upon the terms and subject to the conditions hereinafter set forth;
and

              WHEREAS, Employee is willing to serve as the Executive Vice
President of Sales and Marketing of the Company upon such terms and subject to
such conditions.

              NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Employee hereby
agree as follows:

          Section 1.01 Employment and Term.

              The Company hereby employs Employee, and Employee hereby accepts
employment by the Company, on the terms and conditions herein contained, to
perform the duties described in paragraph 2 for a term of twelve months
beginning the day after the signing of Merger Agreement (the "Employment Term"),
subject to the remaining provisions of this Agreement.

          Section 1.02 Duties.

               (A) During the Employment Term, Employee shall serve as Executive
Vice President of Sales and Marketing of the Company. Employee shall serve the
Company faithfully and to the best of his ability, and devote his full business
time and attention to the business and affairs of the Company.

               (B) The Company and Employee acknowledge and agree that the
duties of Employee are intended primarily to be performed at 4 Hutton Centre
Drive, Suite 800, Santa Ana, Ca 92707.

          Section 1.03 Compensation and Benefits.

               (A) During the Employment Term, the Company agrees to pay
Employee a base annual salary ("Salary") at the rate of $200,000 per annum, less
all necessary and required federal, state and local payroll deductions, payable
in semi-monthly
<PAGE>   2
installments, or in such other manner as senior employees are regularly paid by
the Company. The Company may, at its discretion, at any time and from time to
time, increase (but not decrease) the Salary for Employee. In addition, Employee
will participate in a commission/bonus program to be determined.

               (B) As of the Merger Agreement Date, Employee will be granted
options (the "Options"), under the Company's Stock Plan (the "Plan"), to
purchase up to 437,000 shares of common stock of the Company, par value $.01 per
share, (the "Common Stock") at an exercise price of $1.32 per share. The Options
are exercisable over a four-year period with the initial vesting date one-year
after the date of the Consulting Agreement. The Options shall have a term of ten
(10) years, and shall be subject to the terms and conditions of the Stock Option
Agreement (attached as "Exhibit A"), provided, however, that in the event of a
conflict between such terms and conditions and the terms of this Agreement, the
terms and conditions of the Stock Option Agreement shall govern.

                    In addition, in conjunction with the merger between
ObjectShare and StarBase, pursuant to certain agreements between ObjectShare and
Employee, StarBase will issue to Employee granted options (the "Merger
Options"), under the Company's Stock Plan (the "Plan"), to purchase up to
[555,000 multiplied by the Merger Exchange Ratio as defined in the Merger
Agreement] shares of common stock of the Company, par value $.01 per share, (the
"Common Stock") at an exercise price of $[the average of day before closing of
the Merger] per share. The Options will be immediately exercisable. The Options
shall have a term of three (3) years, and shall be subject to the terms and
conditions of the Stock Option Agreement (attached as "Exhibit A"), provided,
however, that in the event of a conflict between such terms and conditions and
the terms of this Agreement, the terms and conditions of the Stock Option
Agreement shall govern. The Company will also file an S-8 registration agreement
within sixty (60) days of the closing of the Merger.

               (C) Employee shall be entitled to vacation in accordance with
Company's vacation policy. For purposes of vacation accrual, the hire date of
the employee will be the Employee's hire date at ObjectShare.

               (D) If (i) the Employment Term is terminated for "cause" (as
defined in paragraph 6 hereof) or (ii) Employee voluntarily leaves the employ of
the Company prior to the end of the Employment Term, then all unvested Options
shall automatically become null and void.

               (E) During the Employment Term, Employee shall be entitled to
participate in any retirement, medical payment, disability, health or life
insurance and other similar benefit plans and arrangements which may be or
become available to executive officers of the Company in general; provided, that
Employee shall be required to comply with the conditions attendant to coverage
by such plans and arrangements and shall comply with, and be entitled to
benefits only in accordance with, the terms and conditions of such plans and
arrangements.

                                      -2-
<PAGE>   3
               (F) Employee shall be entitled to reimbursement for expenses
reasonably incurred by him in furtherance of the business of the Company and in
the performance of his duties hereunder, upon submission and approval of written
statements and bills in accordance with the regular procedures of the Company.

               (G) Employee agrees not to sell or transfer any Company stock for
a period of six (6) months after the effective date of the Merger.

          Section 1.04 Early Termination upon Death; Death Benefit. Employment
shall terminate on the date of Employee's death, except that Employee's Salary
shall be paid to his estate through the end of the month in which his death
occurs.

          Section 1.05 Termination for Disability. In the event of Employee's
Incapacity (as defined below) during Employment, the Company may, in its
discretion, terminate Employee's employment hereunder; provided, however, that
Employee or Employee's legal representative, as the case may be, shall be
entitled to receive, and the Company shall pay, pay to Employee his/her Salary
(at the annual rate in effect prior to the events described in the immediately
preceding paragraph) from the date of termination of Employment through and
including the date which is six (6) months after such date of termination, which
amount shall be payable in semi-monthly installments in accordance with the
Company's regular pay intervals for its employees or in such other manner as
shall be mutually agreeable to Employee and the Company, and shall continue to
maintain all benefits in effect for a period of six (6) months following the
date of termination. The payments and obligations of the Company pursuant to
this Section 5 shall be in addition to any amounts payable under any disability
insurance coverage maintained for benefit of Employee. "Incapacity" shall mean
any illness or mental or physical incapacity or disability which prevents
Employee from performing Employee's duties hereunder for a continuous period of
one hundred twenty (120) consecutive days or for shorter periods aggregating one
hundred eighty (180) days within any consecutive twelve (12) month period.

          Section 1.06 Termination by Company for Cause.

               (A) The Company may terminate this Agreement, without liability
other than for payment of accrued but unpaid compensation through the date
Employment ends, for "cause." The term for "cause" shall mean (i) the failure by
Employee to perform any of his duties or obligations hereunder, which failure
shall have continued for at least ninety (90) days after notice of such failure
shall have been given to Employee by the Company and provided, however, that
such failure shall be reasonably within the control of the Employee; (ii)
Employee's conviction of, guilty plea or plea of nolo contendere concerning any
felony; (iii) any act of fraud, embezzlement, theft or gross malfeasance on the
part of Employee with respect to the Company or any of its assets; (iv) any of
the representations and warranties made by Employee herein shall prove to have
been materially false or misleading as of the time made; or (v) the breach by

                                      -3-
<PAGE>   4
Employee caused by Employee's failure to observe or perform any of the
agreements or covenants made by Employee herein and the failure of Employee to
remedy such breach or failure to observe or perform any such agreement or
covenant for a period of fourteen (14) days after such notice thereof from the
Company to Employee. The Company shall have the right to terminate Employee's
employment with the Company hereunder immediately upon the occurrence and
continuance of any grounds for termination for "cause," upon written notice to
Employee.

               (B) In the event of (i) termination pursuant to this Section 6 or
(ii) Employee voluntarily leaves the employ of the Company and such departure is
not due to the occurrence of any event set forth in Section 6 (a) or 5 hereof,
then Employee shall receive payment of accrued but unpaid compensation and
vacation pay through the date of termination or resignation, as the case may be,
and all non-vested Options shall automatically become null and void.

          Section 1.07 Termination in Conjunction with a Change of Control. A
"Change of Control" shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale or exchange
in a single or series of related transactions by the stockholders of the Company
of more than fifty percent (50%) of the voting stock of the Company; (ii) a
merger or consolidation in which the Company is a party and is not the surviving
entity; (iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company; or (iv) a liquidation or dissolution of the Company.

                  Pursuant to this Section 7, in the event of any termination of
employment by the Company or any successor, or in the event of any reduction in
Employee's Salary, then Employee shall receive, upon written notice to Company,
the compensation set forth in Section 7(b) hereof.

                  In the event of termination pursuant to this Section 7, then
Employee shall receive payment, provided Employee shall not at any time be in
violation of Section 10 hereof, and except as provided in Section 6 hereof, the
Company shall pay to Employee his/her Salary (at the annual rate in effect prior
to the events described in the immediately preceding paragraph) from the date of
termination of Employment through and including the date which is twelve (12)
months after such date of termination, which amount shall be payable in
semi-monthly installments in accordance with the Company's regular pay intervals
for its employees or in such other manner as shall be mutually agreeable to
Employee and the Company. The Company shall also pay for or provide any benefits
to Employee (and each member of his/her immediate family) through the date which
is twelve (12) months after such date of termination. Employee shall receive
payment of accrued but unpaid vacation pay through the date of termination and
vacation pay will cease to accrue on termination date. Upon termination all
vested Options will remain exerciseable through the date that is twelve months
after the date of such termination; provided, however, that in the event of a
conflict between any terms and conditions of the Plan and this Agreement, the
terms and conditions of the Plan shall govern. In addition, the Company shall
pay to the Employee all accrued but unpaid bonus or incentive compensation
through the date of termination.

                                      -4-
<PAGE>   5
Section 1.08 Termination by Employee. The Employee may terminate Employment with
three (3) months' advance written notice to Company and Employee shall be
entitled to receive, and the Company shall pay, from the date of notice through
and including the date which is three (3) months after such date, which amount
shall be payable in semi-monthly installments in accordance with the Company's
regular pay intervals for its employees or in such other manner as shall be
mutually agreeable to Employee and the Company, and shall continue to maintain
all benefits in effect for a period of three (3) months following the date of
notice. Employee shall be obligated to continue to provide services in the
normal course of business during such three-month period.

Section 1.09 Termination by Mutual Agreement. The Company and Employee may
mutually agree to terminate Employment. In the event of (i) termination pursuant
to this Section 6, Employee shall be entitled to receive, and the Company shall
pay, from the date of notice through and including the date which is nine (9)
months after such date, which amount shall be payable in semi-monthly
installments in accordance with the Company's regular pay intervals for its
employees or in such other manner as shall be mutually agreeable to Employee and
the Company, and shall continue to maintain all benefits in effect for a period
of nine (9) months following the date of notice.

Section 1.10 Non-Disclosure; Non-Competition.

               (A) In consideration of Employee's employment hereunder, Employee
agrees that during the Employment Term and for a period of one year thereafter
Employee will not directly or indirectly (i) engage in any activity intended to
terminate, disrupt or interfere with the Company's or any of its subsidiary's or
affiliate's relationship with a customer, supplier, lessor or other person, or
(ii) engage or participate in, or have any interest in any corporation, entity
or other person that engages or participates in any business or activity
(relating to software configuration management, team collaboration software or
any of the Software as defined in the Purchase Agreement) engaged or
participated in by the Company on date of termination of the Employment Term.
For purposes of this paragraph, Employee will be deemed directly or indirectly
to be engaged or participating in the operation of such a business or activity,
or to have an interest in a corporation, entity or other person, if he is a
proprietor, partner, joint venturer, shareholder, director, officer, lender,
manager, employee, consultant, advisor or agent or if he, directly or indirectly
(including as a member of a group), controls all or any part thereof; provided,
that nothing in this paragraph shall prohibit Employee from holding less than
two percent (2%) of a class of a corporation's outstanding securities that are
listed on a national securities exchange or traded in the over-the-counter
market.

               (B) In the event of a breach or threatened breach by Employee of
any of the provisions of this paragraph, the Company shall be entitled to an
injunction to be

                                      -5-
<PAGE>   6
issued by any court or tribunal of competent jurisdiction to restrain Employee
from committing or continuing any such violation. In any proceeding for an
injunction, Employee agrees that his ability to answer in damages, or his or the
Company's ability to take any other lawful remedial action, shall not be a bar
or be interposed as a defense to the granting of a temporary or permanent
injunction against him. Employee acknowledges that the Company will not have an
adequate remedy at law in the event of any breach by him as aforesaid and that
the Company may suffer irreparable damage and injury in the event of such a
breach by him. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedy or remedies available to the Company in
respect of such breach or threatened breach.

               (C) If any term or provision of this paragraph 10 shall be held
invalid or unenforceable because of its duration, geographic scope, or for any
other reason, the Company and Employee agree that the court making such
determination shall have the power to modify such provision, whether by limiting
the geographic scope, reducing the duration, or otherwise, to the minimum extent
necessary to make such term or provision valid and enforceable, and such term or
provision shall be enforceable in such modified form.

               (D) The provisions of this paragraph 10 shall survive the
termination of the Employment Term.

          Section 1.11 Inventions. Employee agrees to execute the Company's
standard Employee Proprietary Information and Inventions Agreement attached as
"Exhibit B".

          Section 1.12 Company Property. All records, files, lists, including,
without limitation, computer generated lists, drawings, documents, equipment and
similar items relating to the Company's business which Employee prepared or
received from the Company during the course of the retention of Employee
hereunder shall remain the Company's sole and exclusive property and Employee
shall not acquire any interest therein. Upon termination of this Agreement, and
in any event at the request of the Company at any time, Employee shall promptly
return to the Company all property of the Company in its possession. Employee
further agrees that it will not copy or cause to be copied, print out or cause
to be printed any software, documents or other materials originating with or
belonging to the Company. Employee additionally agrees that, upon termination of
its retention by the Company or earlier at the request of the Company, it will
not retain in its possession any such software, documents or other materials in
machine or human readable form.

          Section 1.13 Assignability. This Agreement may not be assigned by
Employee and all of its terms and conditions shall be binding upon and inure to
the benefit of Employee and his heirs, executors, administrators, legal
representatives and assigns and the Company and its successors and assigns.
Successors of the Company shall include, without limitation, any corporation or
other entity acquiring directly or indirectly all or a

                                      -6-
<PAGE>   7
substantial part of the assets of the Company by merger, consolidation,
purchase, lease or otherwise, and such successor shall thereafter be deemed the
"Company" for purposes hereof.

          Section 1.14 Notices. All notices, requests, demands and other
communications provided for hereby shall be in writing and shall be deemed to
have been duly given when delivered personally or two days after sent by
registered or certified mail, return receipt requested, to the party entitled
thereto at the address first above written or to such changed address as the
addressee may have given by a similar notice, with a copy, in each case, to
Martin Eric Weisberg, Esq., Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of
the Americas, New York, New York 10036-8735.

          Section 1.15 Modification. This Agreement may be modified or amended
only by an instrument in writing signed by Employee and the Company and any
provision hereof may be waived only by an instrument in writing signed by the
party hereto against whom any such waiver is sought to be enforced.

          Section 1.16 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect, impair or invalidate any other
provision of this Agreement.

          Section 1.17 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
without regard to principles of conflicts of law (or any other law that would
make the laws of any jurisdiction other than the State of California applicable
to this Agreement).

          Section 1.18 Captions. The captioned headings contained herein are for
convenience of reference only and are not intended, nor shall they be construed,
to have any substantive effect.

          Section 1.19 Arbitration.

               (A) In connection with any dispute between the parties arising
out of or relating to this Agreement which cannot be resolved by the parties,
either party shall be entitled to have the dispute resolved by exclusive binding
arbitration to be conducted in the county of Orange Los Angeles, California in
accordance with the rules and procedures for arbitration as are from time to
time prescribed by the American Arbitration Association (the "AAA"). If a
dispute exists, the parties shall negotiate in good faith for a period of
fifteen (15) days in an attempt to resolve such dispute. If the dispute is not
resolved within that period, either party may submit the dispute to arbitration
upon ten (10) days' prior written notice to the other party. The arbitration
shall be conducted by one arbitrator mutually acceptable to Employee and the
Company or if they are unable to agree on one arbitrator they shall each
designate one individual from a panel of potential arbitrators designated by the
AAA who shall together designate a third arbitrator from a panel of potential
arbitrators designated by the AAA who shall

                                      -7-
<PAGE>   8
be the sole arbitrator in the arbitration proceedings (the "Arbitrator"). The
determination by the Arbitrator shall be conclusive and binding on the parties
and shall not be subject to appeal or other judicial review. The Arbitrator
shall be entitled to award to the prevailing party in the arbitration, the
reimbursement of such party's reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses, the compensation payable to
the Arbitrator and fees payable to the AAA) incurred in connection with such
arbitration. The prevailing party shall be entitled to enforce the determination
of the Arbitrator in any court of competent jurisdiction and the other party
hereby unconditionally and irrevocably waives any right to challenge or contest
such enforcement. The prevailing party shall be entitled to reimbursement of
such party's reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred in attempting to enforce any
such determination.

               (B) Notwithstanding anything to the contrary set forth herein and
in furtherance of the rights and remedies afforded to the Company pursuant to
paragraph 6 hereof, the Company shall be entitled to seek injunctive relief in
any court of competent jurisdiction for any breach or threatened breach of any
of Employee's duties, covenants, agreements or obligations thereunder.

          Section 1.20 Counterparts. This Agreement may be executed in two
counterpart copies, each of which may be executed by one of the parties hereto,
but both of which, when taken together, shall constitute a single agreement
binding upon each of the parties hereto.

                                      -8-
<PAGE>   9
              IN WITNESS WHEREOF, the Company and Employee have signed this
Agreement as of the date set forth on the first page of this Agreement.

                               STARBASE CORPORATION

                               By:  /s/ Douglas S. Norman
                                 --------------------------------------
                                     Name:  Douglas S. Norman
                                     Title: Director of Finance

                                     /s/ James Smith
                                 --------------------------------------
                                     Employee

                                      -9-
<PAGE>   10
                                    EXHIBIT A
                                STOCK OPTION PLAN

                              STARBASE CORPORATION

                    (i) NONSTATUTORY STOCK OPTION AGREEMENT

         THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "OPTION AGREEMENT") is
made and entered into as of ((CurrGDat)) by and between StarBase Corporation and
((FirstNam)) ((LastName)) (the "OPTIONEE").

                                       STARBASE CORPORATION

                                       By:  ____________________________________
                                       Title:       Assistant Secretary

The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement (Sections I and II) and hereby accepts the
Option subject to all of the terms and provisions thereof, including any changes
in the terms and conditions of the Option Agreement. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Board of Directors upon any questions arising under this Option Agreement.

                                       Optionee: ___________________________

                                       Date: _______________________________

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

I.   NOTICE OF STOCK OPTION GRANT

         The Optionee has been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of this Option Agreement, as
follows:

<TABLE>
<S>                                         <C>
         DATE OF OPTION GRANT:              ((CURRGDAT))
         INITIAL VESTING DATE:              ((IVESTDT))
         EXERCISE PRICE PER SHARE:          $((EXCPRICE))
         NUMBER OF OPTION SHARES:           ((OPTIONS))
         OPTION EXPIRATION DATE*:           ((EXPIRYDT))
</TABLE>

         VESTING SCHEDULE:
         This option shall be exercisable, in whole or in part, according to the
following vesting schedule:

         The right to exercise the Option with respect to 25% of the Option
Shares shall vest on the Initial Vesting Date as stated above, and 1/48 of the
Option Shares shall vest each month thereafter until the Option is exercisable

                                      -10-
<PAGE>   11
with respect to all of the Option Shares, provided the Optionee's Service is
continuous from the Date of the Option Grant until the relevant vesting date.

         TERMINATION PERIOD:
         *Options may terminate earlier pursuant to Section 7.

II.  NONSTATUTORY STOCK OPTION AGREEMENT

         The Company has granted to the Optionee an option to purchase certain
shares of Stock upon the terms and conditions set forth in this Option Agreement
(the "OPTION").

         1.       DEFINITIONS AND CONSTRUCTION.

                  1.1 DEFINITIONS. Whenever used herein, the following terms
shall have their respective meanings set forth below:

                           (a) "BOARD" means the Board of Directors of the
Company. If one or more committees have been appointed by the Board to
administer the Option Agreement, "Board" also means such committee(s).

                           (b) "CODE" means the Internal Revenue Code of 1986,
as amended, and any applicable regulations promulgated thereunder.

                           (c) "COMPANY" means StarBase Corporation, a Delaware
corporation, or any successor corporation thereto.

                           (d) "DATE OF OPTION GRANT" is stated on the Notice of
Stock Option Grant.

                           (e) "DISABILITY" means the inability of the Optionee,
in the opinion of a qualified physician acceptable to the Company, to perform
the major duties of the Optionee's position with the Participating Company Group
because of the sickness or injury of the Optionee.

                           (f) "EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.

                           (g) "EXERCISE PRICE" means the Exercise Price per
Share of Stock stated on the Notice of Stock Option Grant, as adjusted from time
to time pursuant to Section 9.

                           (h) "FAIR MARKET VALUE" means, as of any date, the
value of a share of stock or other property as determined by the Board, in its
sole discretion, or by the Company, in its sole discretion, if such
determination is expressly allocated to the Company herein.

                           (i) "INITIAL EXERCISE DATE" means the Initial Vesting
Date.

                           (j) "INITIAL VESTING DATE" means the date stated on
the Notice of Stock Option Grant.

                           (k) "NUMBER OF OPTION SHARES" means the number of
shares of Stock stated on the Notice of Stock Option Grant, as adjusted from
time to time pursuant to Section 9.

                           (l) "OPTION EXPIRATION DATE" means the date ten (10)
years after the Date of Option Grant.

                                      -11-
<PAGE>   12
                           (m) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                           (n) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.

                           (o) "PARTICIPATING COMPANY GROUP" means, at any point
in time, all corporations collectively, which are then Participating Companies.

                           (p) "SECURITIES ACT" means the Securities Act of
1933, as amended.

                           (q) "SERVICE" means the Optionee's employment or
service with the Participating Company Group, whether in the capacity of an
employee, a director, independent contractor, consultant or otherwise. The
Optionee's Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Optionee renders Service to the
Participating Company Group or a change in the Participating Company for which
the Optionee renders such Service, provided that there is no interruption or
termination of the Optionee's Service. The Optionee's Service shall be deemed to
have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its sole
discretion, shall determine whether the Optionee's Service has terminated and
the effective date of such termination.

                           (r) "STOCK" means the common stock, $0.01 par value,
of the Company, as adjusted from time to time in accordance with Section 4.2.

                           (s) "SUBSIDIARY CORPORATION" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f) of
the Code.

                           (t) "VESTING SCHEDULE" specifies the TIMING and
amount of option shares that become exercisable. No option shares are
exercisable prior to the Initial Vesting Date. The schedule is stated on the
Notice of Stock Option Grant.

                  1.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural, the plural shall include the
singular, and the term "or" shall include the conjunctive as well as the
disjunctive.

         2. TAX CONSEQUENCES. TAX STATUS OF OPTION. This Option is intended to
be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock
Option within the meaning of Section 422(b) of the Code. The Optionee
acknowledges that the Optionee has been advised to consult with a tax advisor
prior to the exercise of the Option regarding the tax consequences to the
Optionee of the exercise of the Option.

         3. ADMINISTRATION. All questions of interpretation concerning this
Option Agreement shall be determined by the Board. All determinations by the
Board shall be final and binding upon all persons having an interest in the
Option. Any officer of a Participating Company shall have the authority to act
on behalf of the Company with respect to any matter, right, obligation, or
election which is the responsibility of or which is allocated to the Company
herein, provided the officer has apparent authority with respect to such matter,
right, obligation, or election.

         4. EXERCISE OF THE OPTION.

                  4.1 RIGHT TO EXERCISE. Except as otherwise provided herein,
the Option shall be exercisable on and after the Initial Exercise Date and prior
to the termination of the Option (as provided in Section 6) in an

                                      -12-
<PAGE>   13
amount (determined as of the date on which the Option is to be exercised
pursuant to the terms set forth in Section 4.2), not to exceed the Number of
Option Shares exercisable determined by the Vesting Schedule set forth on the
Notice of Stock Option Grant less the number of shares previously acquired upon
exercise of the Option.

                  4.2 METHOD OF EXERCISE. Exercise of the Option shall be by
written notice to the Company which must state the election to exercise the
Option, the number of whole shares of Stock for which the Option is being
exercised and such other representations and agreements as to the Optionee's
investment intent with respect to such shares as may be required pursuant to the
provisions of this Option Agreement. The written notice must be signed by the
Optionee and must be delivered in person, by certified or registered mail,
return receipt requested, by confirmed facsimile transmission, or by such other
means as the Company may permit, to the Chief Financial Officer of the Company,
or other authorized representative of the Participating Company Group, prior to
the termination of the Option as set forth in Section 6, accompanied by (i) full
payment of the aggregate Exercise Price for the number of shares of Stock being
purchased (as determined under Section 4.3), (ii) an executed copy, if required
herein, of the then current forms of escrow and security agreement referenced
below and iii) the payment of any taxes attributable to the exercise of the
Option (or evidence of such other arrangement satisfactory to the Company). The
Option shall be deemed to be exercised upon receipt by the Company of such
written notice, the aggregate Exercise Price, and, if required by the Company,
such executed agreements.

                  4.3      PAYMENT OF EXERCISE PRICE.

                           (a) FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the aggregate Exercise Price for the number
of shares of Stock for which the Option is being exercised shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company of whole
shares of Stock owned by the Optionee having a Fair Market Value (as determined
by the Company without regard to any restrictions on transferability applicable
to such stock by reason of federal or state securities laws or agreements with
an underwriter for the Company) not less than the aggregate Exercise Price,
(iii) by means of a Cashless Exercise, as defined in Section 4.3(c), (iv) in the
Company's sole discretion at the time the Option is exercised, by cash for a
portion of the aggregate Exercise Price not less than the par value of the
shares being acquired and the Optionee's promissory note for the balance of the
aggregate Exercise Price, or (v) by any combination of the foregoing.

                           (b) TENDER OF STOCK. Notwithstanding the foregoing,
the Option may not be exercised by tender to the Company of shares of Stock to
the extent such tender of Stock would constitute a violation of the provisions
of any law, regulation or agreement restricting the redemption of the Company's
stock. The Option may not be exercised by tender to the Company of shares of
Stock unless such shares either have been owned by the Optionee for more than
six (6) months or were not acquired, directly or indirectly, from the Company.

                           (c) CASHLESS EXERCISE. A "Cashless Exercise" means
the assignment in a form acceptable to the Company of the proceeds of a sale or
loan with respect to some or all of the shares of Stock acquired upon the
exercise of the Option pursuant to a program or procedure approved by the
Company (including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to decline to
approve or terminate any such program or procedure.

                           (d) PAYMENT BY PROMISSORY NOTE. No promissory note
shall be permitted if an exercise of the Option using a promissory note would be
a violation of any law. Unless otherwise specified by the Board at the time the
Option is granted, the promissory note permitted in clause (iv) of Section
4.3(a) shall be a full recourse note in a form satisfactory to the Company, with
principal payable not more than four (4) years after the date the Option is
exercised. Interest on the principal balance of the promissory note shall be
payable in monthly installments at the minimum interest rate necessary to avoid
imputed interest pursuant to all applicable sections of the Code. Such recourse
promissory note shall be secured by the shares of Stock acquired pursuant to the
then current form of security agreement as approved by the Company. At any time
the Company is subject to the regulations promulgated by the Board of Governors
of the Federal Reserve System or any other governmental entity

                                      -13-
<PAGE>   14
affecting the extension of credit in connection with the Company's Securities,
any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations. Except as the
Company in its sole discretion shall determine, the Optionee shall pay the
unpaid principal balance of the promissory note and any accrued interest thereon
upon termination of the Optionee's Service with the Participating Company Group
for any reason, with or without cause.

                  4.4 TAX WITHHOLDING. At the time of, and as a condition to,
any exercise of the Option, in whole or in part, or at any time thereafter as
requested by the Company, the Optionee hereby authorizes withholding from wages
and any other amounts payable to the Optionee, and, at the direction of the
Company, otherwise agrees to make adequate provision for (including by means of
a Cashless Exercise to the extent permitted by the Company), any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of
the Participating Company Group, if any, which arise in connection with the
Option, including, without limitation, obligations arising upon (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in
part, of any shares acquired upon exercise of the Option, (iii) the operation of
any law or regulation providing for the imputation of interest or (iv) the
lapsing of any restriction with respect to any shares acquired upon exercise of
the Option.

                  4.5 CERTIFICATE REGISTRATION. Except in the event the Exercise
Price is paid by means of a Cashless Exercise, the certificate for the shares as
to which the Option is exercised shall be registered in the name of the
Optionee, or, if applicable, in the names of the heirs of the Optionee.

                  4.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF
SHARES. The grant of the Option and the issuance of shares of Stock upon
exercise of the Option shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities.
The Option may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
the Option may not be exercised unless (i) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which
such requisite authority shall not have been obtained. As a condition to the
exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

                  4.7 FRACTIONAL SHARES. The Company shall not be required to
issue fractional shares upon the exercise of the Option.

         5. NONTRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.

                                      -14-
<PAGE>   15
         6. TERMINATION OF THE OPTION. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Expiration Date, (b)
the last date for exercising the Option following termination of the Optionee's
Service as described in Section 7.

         7. EFFECT OF TERMINATION OF SERVICE.

                  7.1 OPTION EXERCISABLE.

                           (a) DISABILITY. If the Optionee's Service with the
Participating Company Group is terminated because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior to the
expiration of one (1) year after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date.

                           (b) DEATH. If the Optionee's Service with the
Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or the
Optionee's guardian or legal representative, or other person who acquired the
right to exercise the Option by reason of the Optionee's death) at any time
prior to the expiration of one (1) year after the date on which the Optionee's
Service terminated, but in any event no later than the Option Expiration Date.
The Optionee's Service shall be deemed to have terminated on account of death if
the Optionee dies within three (3) months after the Optionee's termination of
Service.

                           (c) OTHER TERMINATION OF SERVICE. If the Optionee's
Service with the Participating Company Group terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within thirty (30) days (or such other longer period
of time as determined by the Board, in its sole discretion) after the date on
which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date.

                  7.2 ADDITIONAL LIMITATIONS ON OPTION EXERCISE. Except as the
Company and the Optionee otherwise agree, exercise of the Option pursuant to
Section 7.1 following termination of the Optionee's Service may not be made by
delivery of a promissory note as provided in Section 4.3(d).

                  7.3 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth in Section 7.1 is prevented by the provisions of Section 4.6, the
Option shall remain exercisable until three (3) months after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date.

                  7.4 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(B).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 7.1 of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.

                  7.5 LEAVE OF ABSENCE. For purposes of Section 7.1, the
Optionee's Service with the Participating Company Group shall not be deemed to
terminate if the Optionee takes any military leave, sick leave, or other bona
fide leave of absence approved by the Company of ninety (90) days or less. In
the event of a leave of absence in excess of ninety (90) days, the Optionee's
Service shall be deemed to terminate on the ninety-first (91st) day of such
leave unless the Optionee's right to reemployment with the Participating Company
Group remains

                                      -15-
<PAGE>   16
guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company (or required by law), a leave of absence
shall not be treated as Service for purposes of determining the Optionee's
Vesting Schedule.

         8.       TRANSFER OF CONTROL.

                  8.1 DEFINITIONS.

                           (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to
have occurred if any of the following occurs with respect to the Company:

                                    (i) the direct or indirect sale or exchange
in a single or series of related transactions by the stockholders of the Company
of more than fifty percent (50%) of the voting stock of the Company;

                                    (ii) a merger or consolidation in which the
Company is a party;

                                    (iii) the sale, exchange, or transfer of all
or substantially all of the assets of the Company; or

                                    (iv) a liquidation or dissolution of the
Company.

                            (b) A "TRANSFER OF CONTROL" shall mean an Ownership
Change Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or Multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

                  8.2 EFFECT OF TRANSFER OF CONTROL ON OPTION. In the event of a
Transfer of Control, all Options granted under the Plan shall become immediately
exercisable in full, effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, shares acquired upon exercise of the Option prior
to the date of the Transfer of Control and any consideration received pursuant
to the Transfer of Control with respect to such shares shall continue to be
subject to all applicable provisions of this Option Agreement except as
otherwise provided herein.

         9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership
Change Event) shares of another corporation (the "NEW SHARES"), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise

                                      -16-
<PAGE>   17
Price shall be adjusted in a fair and equitable manner, as determined by the
Board, in its sole discretion. Notwithstanding the foregoing, any fractional
share resulting from an adjustment pursuant to this Section 9 shall be rounded
up or down to the nearest whole number, as determined by the Board, and in no
event may the Exercise Price be decreased to an amount less than the par value,
if any, of the stock subject to the Option. The adjustments determined by the
Board pursuant to this Section 9 shall be final, binding, and conclusive.

         10. RIGHTS AS A STOCKHOLDER, EMPLOYEE OR CONSULTANT. The Optionee shall
have no rights as a stockholder with respect to any shares covered by the Option
until the date of the issuance of a certificate for the shares for which the
Option has been exercised (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
provided in Section 9. Nothing in this Option Agreement shall confer upon the
Optionee any right to continue in the Service of a Participating Company or
interfere in any way with any right of the Participating Company Group to
terminate the Optionee's Service as an employee, consultant, or otherwise as the
case may be, at any time.

         11. ESCROW.

                  11.1 ESTABLISHMENT OF ESCROW. If the Optionee pays for the
shares with a promissory note, the Company may require the Optionee to deposit
the certificate evidencing the shares which the Optionee purchases upon exercise
of the Option with an agent designated by the Company under the terms and
conditions of escrow and security agreements approved by the Company. If the
Company does not require such deposit as a condition of exercise of the Option,
the Company reserves the right at any time to require the Optionee to so deposit
the certificate in escrow. Upon the occurrence of an Ownership Change Event or a
change, as described in Section 9, in the character or amount of any of the
outstanding stock of the Company the stock of which is subject to the provisions
of this Option Agreement, any and all new, substituted or additional securities
or other property to which the Optionee is entitled by reason of the Optionee's
ownership of shares of Stock acquired upon exercise of the Option that remain,
following such Ownership Change Event or change described in Section 9, subject
to any security interest held by the Company shall be immediately subject to the
escrow to the same extent as such shares of Stock immediately before such event.
The Company shall bear the expenses of the escrow.

                  11.2 DELIVERY OF SHARES TO OPTIONEE. As soon as practicable
after full repayment of any promissory note secured by the shares or other
property in escrow, but not more frequently than twice each calendar year, the
escrow agent shall deliver to the Optionee the shares and any other property no
longer subject to such restrictions and no longer securing any promissory note.

                  11.3 NOTICES AND PAYMENTS. In the event the shares and any
other property are held in escrow, the notices required to be given to the
Optionee shall be given to the escrow agent, and any payment required to be
given to the Optionee shall be given to the escrow agent. Within thirty (30)
days after payment by the Company, the escrow agent shall deliver the shares and
any other property which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.

         12. LEGENDS. The Company may at any time place legends referencing any
applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to carry out
the provisions of this Section.

         13. PUBLIC OFFERING. The Optionee hereby agrees that in the event of
any underwritten public offering of stock, including an initial public offering
of stock, made by the Company pursuant to an effective registration statement
filed under the Securities Act, the Optionee shall not offer, sell, contract to
sell, pledge, hypothecate, grant any option to purchase or make any short sale
of, or otherwise dispose of any shares of stock of the Company or any rights to
acquire stock of the Company for such period of time from and after the
effective date of such registration statement as may be established by the
underwriter for such initial public offering; provided,

                                      -17-
<PAGE>   18
however, that such period of time shall not exceed one hundred eighty (180) days
from the effective date of the registration statement to be filed in connection
with such public offering. The foregoing limitation shall not apply to shares
registered in the public offering under the Securities Act. The Optionee shall
be subject to this Section provided and only if the officers and directors of
the Company are also subject to similar arrangements.

         14. BINDING EFFECT. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

         15. TERMINATION OR AMENDMENT. The Board may terminate or amend the Plan
or the Option at any time; provided, however, that except as provided in Section
8.2 in connection with a Transfer of Control, no such termination or amendment
may adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in writing.

         16. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein and there are no agreements,
understandings, restrictions, representations, or warranties among the Optionee
and the Participating Company Group with respect to such subject matter other
than those as set forth or provided for herein. To the extent contemplated
herein, the provisions of this Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.

         17. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.

                                      -18-
<PAGE>   19
                                    EXHIBIT B
            EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

STARBASE CORPORATION
4 Hutton Centre Drive
Suite 800
Santa Ana, CA 92707

Gentlemen:

The following confirms an agreement between me and StarBase Corporation, a
Delaware corporation, one of its subsidiaries, its successors or assigns (the
"Company"), which is a material part of the consideration for my employment by
the Company:

1.   I understand that the Company possesses and will possess Proprietary
     Information which is important to its business. For purposes of this
     Agreement, "Proprietary Information" is information that was or will be
     developed, created, or discovered by or on behalf of the Company, or which
     became or will become known by, or was or is conveyed to the Company, which
     has commercial value in the Company's business. "Proprietary Information"
     includes, but is not limited to, information about circuits, mask works,
     layouts, algorithms, trade secrets, computer programs, designs, technology,
     ideas, know-how, processes, formulas, compositions, data, techniques,
     improvements, inventions (whether patentable or not), works of authorship,
     business and product development plans, the salaries and terms of
     compensation of other employees, customers and other information concerning
     the Company's actual or anticipated business, research or development, or
     which is received in confidence by or for the Company from any other
     person. I understand that my employment creates a relationship of
     confidence and trust between me and the Company with respect to Proprietary
     Information.

2.   I understand that the Company possesses or will possess "Company Materials"
     which are important to its business. For purposes of this Agreement,
     "Company Materials" are documents or other media or tangible items that
     contain or embody Proprietary Information or any other information
     concerning the business, operations or plans of the Company, whether such
     documents have been prepared by me or by others. "Company Materials"
     include, but are not limited to, blueprints, drawings, photographs, charts,
     graphs, notebooks, customer lists, computer disks, tapes or printouts,
     sound recordings and other printed, typewritten or handwritten documents,
     as well as samples, prototypes, models, products and the like.

3.   In consideration of my employment by the Company and the compensation
     received by me from the Company from time to time, I hereby agree,
     effective as of my first day of employment with the Company, as follows:

                                      -19-
<PAGE>   20
     a.   All Proprietary Information and all title, patents, patent rights,
          copyrights, mask work rights, trade secret rights, and other
          intellectual property and rights (collectively "Rights") in connection
          therewith shall be the sole property of the Company. I hereby assign
          to the Company any Rights I may have or acquire in such Proprietary
          Information. At all times, both during my employment by the Company
          and after its termination, I will keep in confidence and trust and
          will not use or disclose any Proprietary Information or anything
          relating to it without the prior written consent of an officer of the
          Company. Nothing contained herein will prohibit an employee from
          disclosing to anyone the amount of his or her wages. I understand and
          agree that, with respect to work under Government contracts, title to
          certain patents and inventions or licenses therein shall be determined
          as provided by Federal law or regulation or by contract with the
          Government.

     b.   All Company Materials shall be the sole property of the Company. I
          agree that during my employment by the Company, I will not remove any
          Company Materials from the business premises of the Company or deliver
          any Company Materials to any person or entity outside the Company. I
          further agree that, immediately upon the termination of my employment
          by me or by the Company for any reason, or during my employment if so
          requested by the Company, I will return all Company Materials,
          apparatus, equipment and other physical property, or any reproduction
          of such property, excepting only (i) my personal copies of records
          relating to my compensation; (ii) my personal copies of any materials
          previously distributed generally to stockholders of the Company; and
          (iii) my copy of this Agreement.

     c.   I will promptly disclose to the Company in writing, all discoveries,
          concepts and ideas, whether patentable or unpatentable, including but
          not limited to processes, methods, formulas, and techniques, as well
          as improvements and know-how related thereto, conceived or reduced to
          practice by me while in the Company's employ, either solely or jointly
          with others during my employment ("Company Inventions"). This
          agreement shall not apply to any invention which qualifies fully under
          the provisions of Section 2870 of the California Labor Code which
          includes inventions developed entirely on my own time without using
          the Company's equipment, supplies, facilities or trade secret
          information, except for those ideas and inventions that either; (a)
          relate, at the time of conception or reduction to practice of the
          invention, to the Company's business, or actual or demonstrably
          anticipated research or development of the Company, or (b) results
          from any work performed by me for the Company.

          To the extent a provision in an employment agreement purports to
          require an employee to assign an invention otherwise excluded from
          being required to be assigned under subdivision (a), the provision is
          against the public policy of this state and is unenforceable.

     d.   I agree to perform, during and after my employment, all acts deemed
          necessary or desirable by the Company to permit and assist it, at the
          Company's expense, in obtaining, maintaining, defending and enforcing
          Rights with respect to such Inventions and improvements in any and all
          countries. Such acts may include, but are not limited to, execution of
          documents and assistance or cooperation in legal proceedings. I hereby
          irrevocably designate and appoint the Company and its duly authorized
          officers and agents, as my agents and attorneys-in-fact to act for and
          in my behalf and instead of me, to execute and file any documents and
          to do all other lawfully permitted acts to further the above purposes
          with the same legal force and effect as if executed by me.

     e.   Any assignment of copyright hereunder includes, but is not limited to,
          all rights of paternity, integrity, disclosure and withdrawal that may
          be known as or referred to as "moral rights"

                                      -20-
<PAGE>   21
          (collectively "Moral Rights"). To the extent such Moral Rights cannot
          be assigned under applicable law and to the extent the following is
          allowed by the laws in the various countries where Moral Rights exist,
          I hereby waive such Moral Rights and consent to any action of the
          Company that would violate such Moral Rights in the absence of such
          consent. I will confirm any such waivers and consents from time to
          time as requested by the Company.

     f.   I have attached hereto a complete list of all existing Inventions or
          improvements to which I claim ownership as of the date of this
          Agreement and that I desire to specifically clarify are not subject to
          this Agreement, and I acknowledge and agree that such list is
          complete. If no such list is attached to this Agreement, I represent
          that I have no such Inventions and improvements at the time of signing
          this Agreement.

     g.   During the term of my employment and for one (1) year thereafter, I
          will not encourage or solicit any employee or consultant of the
          Company to leave the Company for any reason. However, this obligation
          shall not affect any responsibility I may have as an employee of the
          Company with respect to the bona fide hiring and firing of Company
          personnel.

     h.   I agree that during my employment with the Company I will not engage
          in any employment, business, or activity that is in any way
          competitive with the business or proposed business of the Company, and
          I will not assist any other person or organization in competing with
          the Company or in preparing to engage in competition with the business
          or proposed business of the Company. The provisions of this paragraph
          shall apply both during normal working hours and at all other times
          including, but not limited to, nights, weekends and vacation time,
          while I am employed by the Company.

     i.  I represent that my performance of all the terms of this Agreement will
         not breach any agreement to keep in confidence proprietary information
         acquired by me in confidence or in trust prior to my employment by the
         Company. I have not entered into, and I agree I will not enter into,
         unless I have the prior written consent of the Company, any agreement
         either written or oral in conflict herewith or in conflict with my
         employment with the Company.

4.   I agree that I have the right to resign and the Company has the right to
     terminate my employment at any time, for any reason, with or without cause.

5.   I agree that this Agreement does not purport to set forth all of the terms
     and conditions of my employment, and that as an employee of the Company I
     have obligations to the Company which are not set forth in this Agreement.

6.   I agree that my obligations under paragraphs 3(a) through 3(f) of this
     Agreement shall continue in effect after termination of my employment,
     regardless of the reason or reasons for termination, and whether such
     termination is voluntary or involuntary on my part, and that the Company is
     entitled to communicate my obligations under this Agreement to any future
     employer or potential employer of mine.

7.   I agree that any dispute in the meaning, effect or validity of this
     Agreement shall be resolved in accordance with the laws of the State of
     California without regard to the conflict of laws provisions thereof. I
     further agree that if one or more provisions of this Agreement are held to
     be illegal or unenforceable under applicable California law, such illegal
     or unenforceable portion(s) shall be

                                      -21-
<PAGE>   22
     limited or excluded from this Agreement to the minimum extent required so
     that this Agreement shall otherwise remain in full force and effect and
     enforceable in accordance with its terms.

8.   This Agreement shall be effective as of the first day of employment with
     the Company and shall be binding upon me, my heirs, executors, assigns, and
     administrators and shall inure to the benefit of the Company, its
     subsidiaries, successors and assigns.

9.   This Agreement can only be modified by a subsequent written agreement
     executed by the President of the Company or his designee.

I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS
WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS
HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT
VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT ONE
COUNTERPART WILL BE RETAINED BY THE COMPANY AND THE OTHER COUNTERPART WILL BE
RETAINED BY ME.

Accepted and Agreed to:            Accepted and Agreed to:

                                   STARBASE CORPORATION

Employee                           By
         -------------------          ----------------------------
                                              Douglas S. Norman
                                              Director of Finance

Date                               Date
         -------------------          ----------------------------

                                      -22-
<PAGE>   23
                                    EXHIBIT A

STARBASE CORPORATION
4 Hutton Centre Drive
Suite 800
Santa Ana, CA 92707

Gentlemen:

1.   The following is a complete list of inventions or improvements relevant to
     the subject matter of my employment by StarBase Corporation (the "Company")
     that have been made or conceived or first reduced to practice by me alone
     or jointly with others prior to my employment by the Company that I desire
     to clarify are not subject to the Company's Proprietary Information and
     Inventions Agreement.

             No inventions or improvements
     -----
             See below:
     -----

             Additional sheets attached
     -----

2.   I propose to bring to my employment the following materials and documents
     of a former employer:

             No materials or documents
     -----

             See below:
     -----

Employee
         ---------------------------

Date
         ---------------------------

                                      -23-

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