Document:

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               LICENSE, DISTRIBUTION, AND ASSET PURCHASE AGREEMENT

This License, Distribution, and Asset Purchase Agreement (the "Agreement") is
made this 6 day of October, 1999 (the "Effective Date"), by and among FWB
SOFTWARE, LLC, a California limited liability corporation with its principal
offices located at 18103 Sky Park South, Suite E-2, Irvine, California 92614
("FWB"), INSIGNIA SOLUTIONS, INC., a Delaware corporation with its principal
offices located at 41300 Christy Street, Fremont, California 94538 ("Insignia
US"), and INSIGNIA SOLUTIONS, PLC, an English public company with its principal
offices located at 41300 Christy Street, Fremont, California 94538 ("Insignia
UK"; together, Insignia US and Insignia UK are the "Insignia Group").

                             R E C I T A L S:

A.  Insignia US, as licensee of Insignia UK, holds the rights to certain
Intellectual Property and proprietary rights used in connection with the
computer software programs designed and marketed by Insignia US under the
tradenames/trademarks "SoftWindows" and "RealPC", including all logos,
trademarks, trade secrets, source code, object code, executable programs, end
user documentation, patents, copyrights, tradenames, service marks, and internet
domain names, whether issued or pending, registered or unregistered. The
preceding SPECIFICALLY EXCLUDES any proprietary rights in the tradename
"SoftWindows," and the source code and object code of Windows and DOS, both of
which Insignia US presently employs pursuant to licenses from Microsoft and IBM,
respectively.

B.  Insignia US desires to grant to FWB a license to all of Insignia US's right,
title and interest in SoftWindows, and FWB desires to accept such license, upon
the terms and conditions set forth below.

C.  Insignia US wishes to appoint FWB as its sub-contracting manufacturer and
distributor of RealPC, and FWB wishes to serve as Insignia US's manufacturer and
distributor of RealPC, on the terms and conditions set forth herein.

D.  The parties intend that Insignia UK will transfer all of its right, title,
and interest in the Intellectual Property to FWB, on the terms and conditions
set forth herein if and when certain conditions are fulfilled by FWB.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1.       DEFINITIONS
    1.1.      "DOS License" means the currently effective license between IBM
              and Insignia US granting the latter certain manufacturing and
              distribution rights relating to DOS.
    1.2.      "Embedded Market" means the range of consumer, industrial and
              commercial applications whereby computer functionality -- from the
              most basic to complex -- is incorporated within hardware and
              software devices that are not traditional desktop or laptop
              computers.
    1.3.      "Emulation Market" means consumer and commercial purchasers of
              technology through which the functionality of a computer processor
              is mimicked by software so that PC-based software applications may
              be run on non-PC machines, such as the Mac or UNIX product lines.
    1.4.      "FWB Products and Services" means the software products and
              services that are reasonably related to or derived from the
              Intellectual Property.
    1.5.      "Gross Profit" means, for each applicable period relating to the
              Payments, an amount equal to the net sales and services related to
              and derived from the Intellectual Property, determined in
              accordance with Generally Accepted Accounting Principles, and net
              of (i) all royalties due by FWB to third parties; (ii) direct
              product costs such as freight, packaging, product manuals; and
              (iii) all returns, allowances, and discounts relating to the
              Intellectual Property. Indirect costs and expenses relating to
              general administration, sales, marketing, and support are
              expressly excluded from the calculation of Gross Profit.
    1.6.      "Intellectual Property" means the all Intellectual Property Rights
              held respectively by Insignia UK and Insignia US in RealPC and
              SoftWindows, and any derivative works thereof.
    1.7.      "Intellectual Property Rights" means all worldwide statutory and
              common law rights associated solely with (i) patents and patent
              applications; (ii) works of authorship including copyrights,
              copyright applications, copyright registrations, trademarks,
              Internet domain names and "moral rights"; (iii) the protection of
              trade and industrial secrets and confidential information; and
              (iv) divisions,

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              continuations, renewals, and re-issuances of the foregoing now
              existing, acquired or devised in the future.
    1.8.      "JEODE" means the current tradename associated with the
              proprietary implementation of virtual machine technology, related
              software development tools and services owned by Insignia UK and
              developed for the Embedded Market.
    1.9.      "Microsoft License" means the currently effective license between
              Microsoft and Insignia US granting the latter certain
              manufacturing and distribution rights relating to the Windows
              product line and the SoftWindows tradename.
    1.10.     "RealPC" means the software application for the Emulation Market
              whereby DOS-based applications may be run on non-PC machines. The
              RealPC product contains components developed and owned by Insignia
              and from IBM per the DOS license.
    1.11.     "SGI" means the company Silicon Graphics, Inc., its successors and
              assigns.
    1.12.     "SoftWindows" means the software application for the Emulation
              Market whereby Windows-based applications may be run on non-PC
              machines. The SoftWindows product contains components developed
              and owned by Insignia and from Microsoft per the Microsoft
              License. Only the Insignia component is intended in any references
              to the SoftWindows product. SoftWindows is also a trademark of
              Microsoft Corporation.
2.       LICENSE RIGHTS FOR SOFTWINDOWS
    2.1.      Grant of License. Subject to the terms and conditions of this
              Agreement and to the extent of Insignia US's Intellectual Property
              Rights, Insignia US hereby grants to FWB, a perpetual,
              non-transferable, exclusive, worldwide license to modify, use,
              publicly display, reproduce, distribute through its normal
              distribution channels, and sublicense SoftWindows and derivative
              works solely within the Emulation Market.
    2.2.      SGI Exception. The scope of the preceding license grant expressly
              excludes the platform of Silicon Graphics work stations, which
              distribution rights have been previously exclusively granted by
              Insignia US to SGI.
    2.3.      No Source Code Transfers to Third Parties. FWB shall at no time
              during the term of the license grant in Section 2.1 distribute,
              sublicense or otherwise transfer or disclose to any third party
              SoftWindows, any component, or derivative work thereof in source
              code form.
    2.4.      License Term. The SoftWindows license grant in this Section 2
              shall commence on the Effective Date and shall continue in
              perpetuity unless terminated automatically upon consummation of
              the purchase and transfer of the Intellectual Property on the
              terms and conditions set forth in Section 8.
3.       INTERIM MANUFACTURING AND DISTRIBUTION RIGHTS FOR REALPC
    3.1.      Manufacturing Rights. Insignia US, to the extent of its
              Intellectual Property Rights in RealPC and pursuant to the DOS
              License, hereby appoints FWB as its exclusive manufacturer for
              RealPC and shall provide FWB with a Gold Master CD of RealPC for
              use within the scope of this Agreement.
    3.2.      Distribution Rights. Subject to the terms and conditions of this
              Agreement and during the term of FWB's manufacturing rights under
              Section 3.1, Insignia US hereby appoints FWB as its exclusive,
              worldwide distributor of RealPC with respect to all potential
              customers whether at the retail or wholesale level, such rights
              being non-transferable.
    3.3.      Term and Manufacturing Limit. The term of the preceding grant
              shall commence on the Effective Date and shall continue until the
              licenses acquired by Insignia US pursuant to the DOS License and
              remaining as of the Effective Date have all been manufactured. The
              number of remaining licenses, as of the Effective Date, is
              indicated at Schedule 3.1 and represents the maximum number of
              copies of RealPC that FWB may manufacture pursuant to this Section
              3.1.
4.       LICENSE RIGHTS FOR REALPC
    4.1.      Grant of License. Subject to the terms and conditions of this
              Agreement and to the extent of Insignia US's Intellectual Property
              Rights, Insignia US hereby grants to FWB, a perpetual,
              non-transferable, exclusive, worldwide license to modify, use,
              publicly display, reproduce, distribute through its normal
              distribution channels, and sublicense RealPC and derivative works
              solely within the Emulation Market.
    4.2.      No Source Code Transfers to Third Parties. FWB shall at no time
              during the term of the license grant in Section 4.1 distribute,
              sublicense or otherwise transfer or disclose to any third party
              RealPC, any component, or derivative work thereof in source code
              form.
License Term. The RealPC license grant in this Section 4 shall commence
automatically upon termination of the manufacturing and distribution rights of
Section 3, and shall continue in perpetuity unless terminated automatically

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upon consummation of the purchase and transfer of the Intellectual Property on
the terms and conditions set forth in Section 8.
5.       TRADEMARK LICENSE
    5.1.      Grant of Trademark License.  Subject to the terms and conditions
              of this Agreement and to the extent of its Intellectual Property
              Rights, Insignia US hereby grants to FWB a worldwide,
              nonexclusive, non-transferable, royalty-free, license (the
              "Trademark License") during the term indicated in Section 5.4, to
              use the Licensed Trademarks (defined below) solely in connection
              with FWB's marketing, sale and promotion of the FWB Products and
              Services.
    5.2.      Use of Licensed Trademarks. Whenever FWB displays a trademark
              owned by Insignia US and identified on Schedule 5.2 (the "Licensed
              Trademarks"), FWB shall display it in a size and style less
              prominent than, and separate from, FWB's own name, marks or logos,
              and accompanied by a -TM- symbol. FWB shall, if commercially
              reasonable, legibly display the following trademark legend, which
              may be presented in "mouseprint" but must be large enough to be
              legible, on all media in or on which FWB displays the Licensed
              Trademark(s): "Insignia, RealPC, and all associated trademarks and
              logos are trademarks or registered trademarks of Insignia
              Solutions, Inc. in the U.S. and other countries."
    5.3.      Quality Control.  FWB shall maintain the quality of the
              products and services with which FWB uses the Licensed
              Trademarks and the Intellectual Property at a level that meets
              or exceeds the quality standards of the industry with
              respect to similar products.  During the term of the Trademark
              License, FWB agrees to provide Insignia US with a
              royalty-free copy of any and all products produced by FWB
              bearing any Licensed Trademark(s) or using the Intellectual
              Property within thirty (30) days prior to first customer
              shipment of such product.  If within fifteen (15) business days
              of receipt of such FWB Product, Insignia US has not informed
              FWB that the quality of such product fails to meet Insignia US's
              standards, FWB may reasonably assume that the FWB Product is
              suitable for distribution pursuant to the terms of this
              Agreement.  If the FWB Product does not meet or exceed Insignia
              US's standards, and Insignia US so notifies FWB in writing
              within fifteen (15) business days of receipt, FWB shall use
              commercially reasonable efforts to modify such product so
              that such standards are met and shall not distribute such FWB
              Product with any Licensed Trademark until such standards are met.
    5.4.      The Trademark License shall commence as of the Effective Date, and
              shall terminate concurrently with the termination of the license
              or distribution rights granted in Sections 2, 3, and 4, or as
              otherwise agreed upon in writing by the parties hereto.
6.       PAYMENT OBLIGATIONS
    6.1.      Initial Fee. In consideration for the grants in Sections 2, 3, 4
              and 8, FWB shall deliver to Insignia US upon execution of this
              Agreement the non-refundable sum of Twenty-Five Thousand Dollars
              ($25,000) in immediately available funds, via wire transfer to an
              account specified by Insignia US (the "Initial Fee").
    6.2.      Quarterly Payments.
         6.2.1.   During the term of any grant under Section 2, 3 or 4, and as
                  additional consideration for the grants in Sections 2, 3, and
                  4, FWB shall make non-refundable quarterly payments
                  ("Quarterly Payments") to Insignia US in accordance with
                  Section 6.2.4 and based upon the annual, cumulative Gross
                  Profit derived from the FWB Products and Services for the
                  relevant period.
         6.2.2.   The Quarterly Payments shall be computed as follows:
              6.2.2.1. Ten Percent (10%) of the amount by which annual Gross
                       Profits for the applicable period exceed $0 but are less
                       than, or equal to, $500,000; plus
              6.2.2.2. Twenty Percent (20%) of the amount by which annual Gross
                       Profits for the applicable period exceed $500,000 but are
                       less than, or equal to, $1,000,000; plus
              6.2.2.3. Thirty Percent (30%) of the amount by which annual Gross
                       Profits for the applicable period exceed $1,000,000.
         6.2.3.   Quarterly  Payments  shall be calculated on a cumulative,
                  calendar basis and shall be paid on a quarterly basis.  Thus,
                  for purposes of demonstrating the calculation, if Gross
                  Profits for the first quarter of a calendar year equal
                  $1,200,000, then the  Quarterly Payment for that quarter
                  will equal ten percent of the first $500,000 (or $50,000)
                  plus twenty percent of the next $500,000 (or $100,000),
                  plus thirty percent of the remainder ($60,000) for a total
                  Quarterly Payment of $210,000 for that period.  If Gross
                  Profits for the second quarter amounted to $1,000,000, then
                  the cumulative Gross Profits would equal $2,200,000 and the
                  Quarterly  Payment would be payments owed on $2,200,000
                  (e.g.,  $50,000 plus $100,000 plus $400,000 equals  $550,000)
                  minus previous Quarterly Payments during the calendar
                  year.  Following any periodic determination of cumulative

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                  Gross Profits, any excess Quarterly Payments shall be credited
                  against future Quarterly Payments only.
    6.2.4.        Quarterly Payments due to Insignia US pursuant to this Section
                  6 shall be made in immediately available funds, and shall be
                  paid to Insignia US on an quarterly basis concurrent with
                  delivery of the Quarterly Schedule pursuant to Section 6.3.
                  The first Quarterly Payment shall be calculated based upon
                  Gross Profits derived from the FWB Products and Services
                  during the period from the Effective Date through March 31,
                  2000, only (the "Initial Period").
    6.3.      Preparation of Schedule. Beginning in March 2000, FWB shall
              prepare and deliver to Insignia US within thirty (30) days of the
              end of each calendar quarter (March, June, September and December)
              a schedule setting forth a reasonably detailed calculation of
              Gross Profits by FWB Product and Service with respect to the
              calendar quarter just ended. The schedule delivered in April 2000
              shall set forth a calculation of Gross Profits with respect to the
              Initial Period.
    6.4.      Audit Rights. Insignia US may, no more frequently than once per
              year, retain at its own expense an independent accounting firm
              to audit FWB's relevant books and records for any previously
              unaudited period(s) with respect to calculating Gross Profits. If
              the determination of the accounting firm differs from that of FWB,
              the parties shall negotiate in good faith for a period of ten (10)
              business days to resolve any differences. Any resolution agreed to
              in writing shall be final, conclusive and binding on FWB and
              Insignia US with respect to the determination of Gross Profits for
              such period. If the parties have agreed that there was a shortfall
              in FWB's calculation of Gross Profits for any period, FWB shall
              promptly pay to Insignia US the full amount of any underpayment.
              If the calculation of Gross Profits by the accounting firm reveals
              that the Gross Profits calculation by FWB for any quarter was
              understated by five percent (5%) or more, FWB shall reimburse
              Insignia US for all reasonable costs associated with the audit.
7.       CUSTOMER SUPPORT
    7.1.      Commencing thirty (30) days after the Effective Date ("Customer
              Support Assumption Date"), FWB shall assume responsibility for all
              then-existing and future support obligations relating to the Mac
              platform for the Intellectual Property (the "Support
              Obligations"). UNIX support shall commence on an individual basis,
              as each individual customer support agreement comes up for
              renewal, such renewal to be forwarded by the Insignia Group to
              FWB.
    7.2.      The Insignia Group shall promptly credit to FWB's Quarterly
              Payments a pro-rata portion of any pre-paid fees received in
              connection with services rendered, or to be rendered, by FWB
              pursuant to the Support Obligations from and after the Effective
              Date.
    7.3.      Between the Effective Date and the Customer Support Assumption
              Date, the Insignia Group shall ensure that all existing support
              obligations are assigned to FWB effective on the Customer Support
              Assumption Date.
8.       RIGHT TO PURCHASE INTELLECTUAL PROPERTY
    8.1.      Vesting of Right to Purchase. If and when the sum of the
              Quarterly Payments made by FWB to Insignia US pursuant to
              Section 6.2 equals Five Hundred and Fifty Thousand Dollars
              ($550,000) (the "Vesting Date"), FWB will have a vested interest
              in acquiring all right, title and interest to all interests in the
              Intellectual Property (without trademark rights to the Insignia
              name and logo) held by Insignia UK, and Insignia UK will transfer
              the same to FWB upon request. FWB may, at its sole discretion,
              deliver such funds to Insignia US so that such funds plus any
              previous Quarterly Payments equal Five Hundred and Fifty Thousand
              Dollars ($550,000) thus accelerating the arrival of the Vesting
              Date.
    8.2.      Purchase of Intellectual Property; Assumption of Liabilities. Upon
              passage of the Vesting Date and upon request by FWB, Insignia UK
              shall sell, transfer, assign and deliver unto FWB and its
              successors and assigns forever, the Intellectual Property (without
              trademark rights to the Insignia name and logo), and all
              additional existing Support Obligations (the "Assumed
              Liabilities"), and FWB will assume the Assumed Liabilities, and
              purchase the Intellectual Property. There shall be no additional
              consideration required for the transfer of the Intellectual
              Property.
    8.3.      Taxes.  FWB will pay all sales and use taxes and transfer taxes,
              if any, applicable to the transfer of the Intellectual Property
              provided for by this Section 8.
    8.4.      Transfer of Intellectual Property. Delivery of the source code and
              object code comprising part of the Intellectual Property (the
              "Code") shall be completed by transferring the Code via remote
              telecommunications from Insignia UK's place of business to or
              through FWB's computer system.

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    8.5.      Conditions to Obligations of FWB. The obligation of FWB to
              consummate the purchase of the Intellectual Property and to assume
              the Assumed Liabilities pursuant to this Agreement is subject to
              the satisfaction of the following conditions, any of which may be
              waived by FWB:
         8.5.1.   Representations and Warranties; Performance of Obligations.
                  The representations and warranties of each of Insignia UK
                  and Insignia US set forth in Section 11 hereof and in all
                  agreements, documents and instruments executed and delivered
                  pursuant hereto or in connection with the transfer of the
                  Intellectual Property and Assumed Liabilities to FWB (i) shall
                  have been and be true and correct in all material respects as
                  of the Effective Date and, except where the context otherwise
                  requires, (ii) as of the Vesting Date as though made on and as
                  of the Vesting Date. Each of Insignia US and Insignia UK shall
                  have performed in all material respects the agreements and
                  obligations necessary to be performed by it under this
                  Agreement prior to the Closing Date.
         8.5.2.   Certificates and Instruments of Transfer.  The Insignia Group
                  shall have delivered to FWB the following:
              8.5.2.1. possession of all documentation comprising part of, or
                       evidencing title to, the Intellectual Property,
                       provided that in no event shall FWB receive possession of
                       any tangible personal property, such as storage media, in
                       connection with the Code;
              8.5.2.2. a Bill of Sale and Assignment and Assumption, executed by
                       Insignia UK;
              8.5.2.3. a Trademark Assignment relating to RealPC, executed by
                       Insignia US; and
              8.5.2.4. other documents required to be delivered by the Insignia
                       Group in order to effect the transactions contemplated
                       hereby, in form and substance reasonably satisfactory to
                       FWB and its counsel.
         8.5.3.   Microsoft License. FWB shall have entered into a license
                  agreement with Microsoft with respect to the Microsoft
                  component of SoftWindows.
         8.5.4.   DOS License. FWB shall have entered into a license agreement
                  with IBM with respect to the DOS component of RealPC.
         8.5.5.   Consents. The Insignia Group shall have obtained all necessary
                  consents required in connection with the transfer to FWB of
                  the Intellectual Property and Assumed Liabilities, and shall
                  have delivered to FWB evidence of all such consents.
    8.6.      Conditions of Obligations of the Insignia Group. The obligations
              of each of Insignia UK and Insignia US to consummate the sale and
              purchase contemplated by this Agreement are subject to the
              satisfaction of the following conditions, any of which may be
              waived by either Insignia US or Insignia UK:
         8.6.1.   Representations and Warranties; Performance of Obligations.
                  The representations and warranties of FWB set forth in Section
                  12 and in all agreements, documents and instruments executed
                  and delivered pursuant hereto or in connection with this
                  Agreement and the transfer of the Intellectual Property and
                  Assumed Liabilities shall have been and be true and correct in
                  all material respects as of (i) the Effective Date and (ii) as
                  of the Vesting Date as though made on and as of the Vesting
                  Date. FWB shall have performed in all material respects the
                  agreements and obligations necessary to be performed by it
                  under this Agreement prior to the Vesting Date.
         8.6.2.  Deliveries by FWB. FWB shall have delivered to Insignia US the
                 following:
             8.6.2.1. the Initial Fee and all Quarterly Payments required
                      hereunder; and
             8.6.2.2. the Bill of Sale and Assignment and Assumption, executed
                      by FWB.
9.       CLOSING DATE AND TERMINATION OF AGREEMENT
    9.1.      Closing Date. The closing for the consummation of the purchase and
              sale of the Intellectual Property contemplated by this Agreement
              (the "Closing") shall, unless another date or place is agreed to
              in writing by the parties, take place on or about the Vesting Date
              (the "Closing Date") at a place to be determined by the parties.
    9.2.      Termination of Agreement. This Agreement may be terminated and
              abandoned at any time prior to the Closing Date by mutual consent
              of the parties, or by either party for material breach by the
              other party.
    9.3.      Effect of Termination. In the event of termination of this
              Agreement as provided in Section 9.2, notice thereof shall be
              promptly given by the terminating party to the other parties and
              thereafter this Agreement shall forthwith become void, and there
              shall be no liability or obligation on the part of Insignia US or
              FWB or any of their respective affiliates except that nothing
              herein will relieve any party from liability for any breach of any
              representation, warranty, agreement or covenant herein or damages
              resulting therefrom.

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    9.4.      Survival.  Notwithstanding the termination of this Agreement,
              the provisions of Sections 11 and 12 shall continue in effect
              for a period of one (1) year.
10.      INDEMNIFICATION
    10.1.     FWB's Indemnity Obligation. FWB hereby agrees to defend and fully
              indemnify the Insignia Group against any legal proceeding brought
              against it to the extent such claim arises from (i) a breach by
              FWB of any of the covenants, representations and warranties
              contained herein, or (ii) FWB's use of the Intellectual Property
              in connection with the marketing or distribution of FWB Products
              and Services, other than a claim described in Section 10.2 below.
              FWB will pay all damages, costs and fees awarded by a court of
              competent jurisdiction, or such settlement amount negotiated by
              FWB, attributable to such claim.
    10.2.     Insignia's Indemnity Obligation. The Insignia Group will defend
              and fully indemnify FWB against any legal proceeding brought
              against FWB, to the extent such claim (i) arises from a breach by
              the Insignia Group of any of the covenants, representations and
              warranties contained herein, or (ii) is based on a claim that
              FWB's authorized use of the Intellectual Property is an
              infringement of a third party Intellectual Property Right, and
              will pay all damages costs and fees awarded by a court of
              competent jurisdiction, or such settlement amount negotiated by
              the Insignia Group attributable to such claim. The foregoing
              shall not apply to any claims of intellectual property
              infringement based upon the combination of the Intellectual
              Property with code, technology or documentation from other
              sources.
    10.3.     Prerequisites. Under Sections 10.2 above, FWB must, and under
              Section 10.1 above, the Insignia Group must: (i) provide notice of
              the claim promptly to the party providing an indemnity; (ii) give
              the indemnifying party sole control of the defense and settlement
              of the claim; (iii) provide the indemnifying party, at
              indemnifying party's expense, all available information,
              assistance and authority to defend; and (iv) not have compromised
              or settled such claim or proceeding without the indemnifying
              party's prior written consent.
    10.4.     Additional Remedies. Should the Intellectual Property become, or
              in the opinion of the Insignia Group be likely to become, the
              subject of a claim of infringement for which indemnity is provided
              above pursuant to Section 10.2, the Insignia Group may, at its
              sole option, attempt to procure on reasonable terms the rights
              necessary for FWB to exercise its license rights under this
              Agreement with respect to the infringing items, or to modify the
              infringing items so that they are no longer infringing without
              substantially impairing their function or performance. If the
              Insignia Group is unable to do the foregoing after reasonable
              efforts, then the Insignia Group may send a notice of such
              inability to FWB together with a refund of any Quarterly Payments
              received from FWB for the infringing items and terminate this
              Agreement.
    10.5.     Indemnification Exclusive. Absent common law fraud or intentional
              misrepresentation, the indemnification provisions of this Section
              10 shall be the exclusive remedy for breach of any representation
              or warranty contained in this Agreement.
11.      REPRESENTATIONS AND WARRANTIES OF THE INSIGNIA GROUP
The Insignia Group hereby represents and warrants to FWB, as of the Effective
Date or as otherwise set forth in such representation or schedule hereto, as
follows:
    11.1.     Organization. Insignia US is duly incorporated, validly existing
              and in good standing under the laws of the State of Delaware and
              has the requisite power and authority to conduct its business as
              it is presently being conducted and to own and lease its
              properties and assets. Insignia UK is duly incorporated, validly
              existing and in good standing under the laws of the England and
              has the requisite power and authority to conduct its business as
              it is presently being conducted and to own and lease its
              properties and assets
    11.2.     Authorization. The execution and delivery of this Agreement by
              each of Insignia US and Insignia UK and the performance of each
              of their obligations hereunder have been duly authorized by all
              requisite action on the part of each, and no other action or
              approval is necessary for the execution, delivery or performance
              of this Agreement by the Insignia Group. The Insignia Group has
              full right, power, authority and capacity to execute, deliver and
              perform this Agreement and such other agreements and instruments
              as are contemplated hereby. This Agreement has been duly executed
              and delivered by Insignia and is a valid and binding obligation of
              the Insignia Group, enforceable in accordance with its terms,
              except as such enforceability may be limited by (a) bankruptcy,
              insolvency, reorganization, moratorium or other similar laws, now
              or hereafter in effect, relating to or limiting creditors' rights
              generally and (b) general principles of equity (whether considered
              in an action in equity or at law).

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   11.3.    No Contingent Obligations. The Insignia Group has no legal
            obligation, absolute or contingent, to any other person to sell or
            license any of the Intellectual Property (other than as
            contemplated in the ordinary course of business), and has not
            taken any steps to enter into any agreement or arrangement, whether
            written or verbal, with respect thereto.
   11.4.    Title to Intellectual Property. Except as described in connection
            with the Microsoft License and DOS License, Insignia UK and/or its
            affiliated companies has good and marketable title to all of the
            Intellectual Property free and clear of all Encumbrances of any
            nature whatsoever. To the knowledge of Insignia UK, no right of
            Insignia UK in the Intellectual Property (i) conflicts with,
            infringes upon or otherwise violates any rights of others, (ii) is
            subject to any pending or overtly threatened litigation or other
            adverse claims or infringement by any other party, or (iii) is
            based upon proprietary information of others that has been
            illegally obtained. There has been no written, or to the knowledge
            of Insignia UK, other claim of infringement by Insignia UK of any
            domestic or foreign patents, trademarks, service marks, copyrights,
            or any other intellectual property of any other party.
   11.5.    Title to Licensed Trademarks. Insignia US and/or its affiliated
            companies has good and marketable title to all of the Licensed
            Trademarks free and clear of all Encumbrances of any nature
            whatsoever. To the knowledge of Insignia US, no right of Insignia
            US in the Licensed Trademarks (i) conflicts with, infringes upon
            or otherwise violates any rights of others, (ii) is subject to any
            pending or overtly threatened litigation or other adverse claims or
            infringement by any other party, or (iii) is based upon proprietary
            information of others that has been illegally obtained. There has
            been no written, or to the knowledge of the Insignia Group, other
            claim of infringement by Insignia US of any domestic or foreign
            patents, trademarks, service marks, copyrights, or any other
            intellectual property of any other party.
   11.6.    Intellectual Property Warranty. The Insignia Group hereby warrants
            that, to the extent of the Insignia Group's Intellectual Property
            Rights, the Intellectual Property that is the subject of this
            Agreement, as delivered to FWB, shall operate substantially in
            accordance with the end user documentation accompanying SoftWindows
            and RealPC, respectively. The Insignia Group hereby expressly
            disclaims to the full extent allowed by law all terms, warranties,
            and conditions, including, without limitation, that the
            Intellectual Property is free of defects, merchantable,
            satisfactory, or fit for a particular purpose. Insignia does not
            warrant that the Intellectual Property will meet FWB's requirements
            or that its use will be uninterrupted or error free. This
            disclaimer of warranty constitutes an essential part of this
            Agreement, and no use of the Intellectual Property is authorized
            except subject to this disclaimer.
   11.7.    Proceedings; No Violations; Permits. To the knowledge of the
            Insignia Group, there is no suit, action, or proceeding threatened
            against or affecting either company that is likely to prevent or
            materially delay the consummation of the transactions contemplated
            by this Agreement. To the knowledge of the Insignia Group, it is in
            violation of any applicable law, statute, order, rule, or
            regulation promulgated, or judgment entered against either Insignia
            UK or Insignia US, in a manner which is reasonably likely to
            materially adversely affect the business or operations of either,
            or delay the consummation of the transactions contemplated by this
            Agreement. The Insignia Group holds all consents, licenses,
            permits, grants or other authorizations required to permit
            operation of its assets and conduct of its business as it is
            presently being conducted.
   11.8.    No Conflict. Neither the execution and delivery of this Agreement
            by the Insignia Group nor the consummation of the transactions
            contemplated hereunder nor the fulfillment by the Insignia Group
            of any of its terms will:
        11.8.1.  conflict with or result in a breach by either Insignia US or
                 Insignia UK of, or constitute a default under, or create an
                 event that, with the giving of notice or the lapse of time, or
                 both, would be a default under or breach of, or give a right
                 to terminate or cancel under, any of the terms, conditions or
                 provisions of (i) any indenture, mortgage, lease, deed of
                 trust, pledge, loan or credit agreement involving $50,000 or
                 more, or any other material contract, arrangement or agreement
                 to which either Insignia US or Insignia UK is a party or to
                 which any material portion of the assets of Insignia US or
                 Insignia UK is subject, (ii) the Certificate of Incorporation
                 or By-Laws of Insignia US, or (iii) any judgment, order, writ,
                 injunction, decree or demand of any governmental entity which
                 materially affects either Insignia US or Insignia UK, or is
                 likely to adversely affect the ability of either Insignia US
                 or Insignia UK to conduct its business (as conducted prior to
                 the Closing) or own or convey its assets;

                                                                  Page 7 of 14

<PAGE>

        11.8.2.  result in the creation or imposition of any lien, charge or
                 encumbrance of any nature whatsoever upon any material assets
                 of Insignia US or which materially affects Insignia US's
                 ability to conduct its business as conducted prior to the date
                 of this Agreement; or
        11.8.3.  cause a loss or adverse modification of any permit, license,
                 or other authorization granted by a governmental entity to or
                 otherwise held by either Insignia US or Insignia UK, except
                 for any such loss or adverse modification which would not,
                 individually or in the aggregate, result in a material adverse
                 effect.
   11.9.    No Consents. No consent, approval or authorization of, or
            declaration, filing or registration with, any governmental entity
            or any other party is required to be made or obtained by the
            Insignia Group in connection with the execution, delivery and
            performance by the Insignia Group of this Agreement and the
            consummation of the transactions contemplated hereby, including the
            transfer to FWB of the Intellectual Property.
   11.10.   Customer Support Receipts. From the Effective Date, the Insignia
            Group shall forward to FWB any and all sums received for Customer
            Support relating to the Intellectual Property to be provided by
            FWB after the Effective Date.
12.    REPRESENTATIONS AND WARRANTIES OF FWB
FWB hereby represents and warrants to the Insignia Group as follows:
   12.1.    Organization. FWB is a duly organized limited liability company,
            validly existing and in good standing under the laws of the State
            of California and has the requisite power and authority to conduct
            its business as it is presently being conducted and to own and
            lease its properties and assets.
   12.2.    Authorization. The execution and delivery of this Agreement by FWB
            and the performance of its obligations hereunder have been duly
            authorized by all requisite action on the part of FWB and its
            members, and no other action by FWB is necessary for the execution,
            delivery or performance of this Agreement by FWB. This Agreement
            has been duly executed and delivered by FWB, and is a valid and is
            a valid and binding obligation of FWB, enforceable against it in
            accordance with its terms, except as such enforceability may be
            limited by (a) bankruptcy, insolvency, reorganization, moratorium
            or other similar laws, now or hereafter in effect, relating to or
            limiting creditors' rights generally, and (b) general principles
            of equity (whether considered in an action in equity or at law).
   12.3.    No Conflict. Neither the execution and delivery of this Agreement
            by FWB nor the consummation of the transactions contemplated
            hereunder nor the fulfillment by FWB of any of its terms will
            violate, conflict with or result in a breach by FWB of, or
            constitute a default by it under, or create an event that, with
            the giving of notice or the lapse of time, or both, would be a
            default under or breach of, any of the terms, conditions or
            provisions of (i) any indenture, mortgage, lease, deed of trust,
            pledge, loan or credit agreement or any other material contract,
            arrangement or agreement to which FWB is a party or to which a
            material portion of the assets of FWB is subject, (ii) the articles
            of organization or operating agreement of FWB, (iii) any law or
            regulation applicable to FWB, or (iv) any judgment, order, writ,
            injunction, decree or demand of any governmental entity which
            materially affects FWB or which materially affects the ability of
            FWB to conduct its business.
13.    COVENANTS
   13.1.    Further Assurances. Each of the parties hereto agrees to use all
            reasonable efforts to take, or cause to be taken, all action, and
            to do, or cause to be done, all things necessary, proper or
            advisable to consummate and make effective the transactions
            contemplated by this Agreement.
   13.2.    Termination of Microsoft License. Insignia US shall terminate the
            Microsoft License on or prior to October 31, 1999.
   13.3.    Sublicense of the Intellectual Property. Following any sale and
            transfer of the Intellectual Property to FWB pursuant to this
            Agreement, the Insignia Group shall have a perpetual, transferable,
            royalty-free license to use, modify, create derivative works,
            reproduce, distribute, license, sublicense, and publicly display
            all code comprising the Intellectual Property solely within the
            Embedded Market. Furthermore, FWB affirms that neither FWB nor
            any party to whom FWB might license or transfer FWB's rights in
            the Intellectual Property will ever make, directly or indirectly,
            any claim or assertion of any infringement or misappropriation with
            respect to the Intellectual Property and any product or service
            that Insignia, any Insignia licensee, or subsequent transferee of
            any Intellectual Property Right Insignia may hold in its
            then-current technology.
   13.4.    Non-Competition.
        13.4.1.  Non-Competition by the Insignia Group. During the term of
                 this Agreement and for a period of five (5) years following,
                 neither Insignia US nor Insignia UK nor any of their
                 respective

                                                                   Page 8 of 14

<PAGE>

                 transferees shall directly compete with FWB in the Emulation
                 Market. This covenant shall not apply to the ownership by
                 Insignia US or Insignia UK of five percent (5%) or less of
                 the outstanding voting securities of any corporation or other
                 entity which has its securities listed on a national
                 securities exchange or on the Nasdaq Stock Market, and shall
                 not be interpreted to prevent Insignia US or Insignia UK from
                 entering into any license, merger, joint venture or other
                 agreements with any other party who directly competes with
                 FWB in the Emulation Market, provided that any competing
                 product created as a result of such license, merger, or joint
                 venture does not incorporate the Intellectual Property, or any
                 improvements thereto.
        13.4.2.  Non-Competition by FWB. During the term of this Agreement and
                 for a period of five (5) years following, neither FWB nor any
                 transferee shall use, or allow any third party to use, the
                 Intellectual Property in order to develop and market new
                 products or services that directly compete with any products
                 or services in the Embedded Market. This covenant shall not
                 apply to the ownership by FWB of five percent (5%) or less of
                 the outstanding voting securities of any corporation or other
                 entity which has its securities listed on a national
                 securities exchange or on the Nasdaq Stock Market, and shall
                 not be interpreted to prevent FWB from entering into any
                 license, merger, joint venture or other agreements with any
                 other party who directly competes with Insignia US or Insignia
                 UK in the Embedded Market, provided that any competing product
                 created as a result of such license, merger, or joint venture
                 does not incorporate any of the Intellectual Property, or any
                 improvements thereto.
        13.4.3.  Scope of Non-Compete. The covenants contained in this
                 Section 13 shall apply to the entire world. The parties have
                 agreed that it is reasonable to have the provisions of this
                 Section 13 apply to the entire world for various reasons,
                 including, without limitation, that (i) the Insignia Group
                 currently sells and distributes their products and related
                 services to parties in numerous countries and after the
                 closing of the transactions contemplated by this Agreement,
                 the Insignia Group shall continue to sell and distribute their
                 products throughout all of the world, and (ii) FWB intends to
                 sell and distribute the FWB Products and Services, and any
                 product based upon or derived from the Intellectual Property,
                 throughout all of the world.
14.      MISCELLANEOUS
   14.1.    Expenses. Each of FWB and Insignia US shall bear their own
            respective expenses incurred in connection with the
            preparation and negotiation of this Agreement and all related
            ancillary documents, and in connection with the consummation
            of the transactions contemplated by this Agreement.
   14.2.    Entire Agreement. This Agreement, including the Schedules and
            Exhibits hereto and the other documents, agreements and
            instruments executed and delivered pursuant to this Agreement,
            contains the entire agreement between the parties with respect
            to the matters provided therein, and supersedes any previous
            agreements and understandings between the parties with respect
            to those matters.
   14.3.    Governing Law. This agreement shall be governed by and construed
            in accordance with the laws of the State of California applicable
            to such agreements. Any action, suit or other proceeding initiated
            by Insignia US, Insignia UK or FWB against any other party under
            or in connection with this Agreement may be brought in any Federal
            or state court in the State of California, as the party bringing
            such action, suit or proceeding shall elect, having jurisdiction
            over the subject matter thereof. The parties hereby submit
            themselves to the jurisdiction of any such court and agree that
            service of process on them in any such action, suit or proceeding
            may be effected by the means by which notices are to be given to
            it under this Agreement.
   14.4.    Headings. The Section headings of this Agreement are for reference
            purposes only and are to be given no effect in the construction or
            interpretation of this agreement.
   14.5.    Notices. All notices or other communications which are required or
            permitted hereunder shall be in writing and sufficient if (a)
            delivered personally or (b) sent by registered or certified mail,
            postage prepaid, or (c) sent by overnight courier with a nationally
            recognized courier, or (d) via facsimile confirmed in writing in
            any of the foregoing manners, as follows:

If to Insignia:            Insignia Solutions, Inc.
                           41300 Christy Street
                           Fremont, California 94538
                           Attention: President
                           Facsimile: (510) 360-3702

                                                                  Page 9 of 14

<PAGE>

with a copy to:            Insignia Solutions, Inc.
                           41300 Christy Street
                           Fremont, California 94538
                           Attention: Legal Department
                           Facsimile: (510) 360-3701

If to FWB:                 FWB Software, LLC
                           18103 Sky Park South
                           Suite E2
                           Irvine, CA 92614
                           Attention: James R. Hale
                           Facsimile: (949) 863-3136

with a copy to:            Paul, Hastings, Janofsky & Walker LLP
                           695 Town Center Drive, 17th Floor
                           Costa Mesa, California  92626
                           Attention: Douglas A. Schaaf, Esq.
                           Facsimile: (714) 979-1921

If sent by mail, notice shall be considered delivered five (5) business days
after the date of mailing, and if sent by any other means set forth above,
notice shall be considered delivered upon receipt thereof. Any party may by
notice to the other parties change the address to which notice or other
communications to it are to be delivered or mailed.
   14.6.    Assignability. This Agreement shall inure to the benefit of and
            be binding upon the parties hereto and their respective successors
            and permitted assigns. Notwithstanding the foregoing, this
            Agreement shall not be assignable by any party without the written
            consent of the other parties, which consent shall not be
            unreasonably withheld, and any such purported assignment by any
            party without such consent shall be void.
   14.7.    Waivers and Amendments. Any waiver of any term or condition of
            this Agreement, or any amendment or supplementation of this
            Agreement, shall be effective only if in writing and signed by the
            parties hereto. A waiver of any breach or failure to enforce any
            of the terms or conditions of this Agreement shall not in any way
            affect, limit or waive a party's rights hereunder at any time to
            enforce strict compliance thereafter with every term or condition
            of this Agreement.
   14.8.    Public Announcements. The parties agree that they shall issue a
            mutual announcement relating to this transaction no later than one
            (1) business day prior to Insignia's earnings release, presently
            scheduled for October 20, 1999.
   14.9.    Severability. If any term or provision of this Agreement shall, in
            any jurisdiction, be invalid or unenforceable, such term or
            provision shall be ineffective as to such jurisdiction to the
            extent of such invalidity or unenforceability without invalidating
            or rendering unenforceable such term or provision in any other
            jurisdiction, or affecting any other provision of this Agreement.
   14.10.   Arbitration. With the exception of any matter involving a request
            for injunctive relief, any dispute regarding the validity, the
            terms or any aspect of this Agreement, or any act which allegedly
            has or would violate any provision of this Agreement, will be
            submitted to binding arbitration and shall be administered by the
            JAMS/Endispute, Inc. ("JAMS") or the American Arbitration
            Association ("AAA"), which shall be the exclusive remedy for such
            claim or dispute. The selection of JAMS or AAA will be at the
            option of the claimant, and the matter shall be conducted in
            accordance with the rules for commercial arbitration then in
            effect for the tribunal selected. The arbitrator shall be appointed
            by the arbitration body and shall be a retired judge or attorney
            licensed to practice law in California having more than five years
            of substantial experience in litigation of similar disputes. Unless
            the parties otherwise agree, the arbitrator shall apply the
            California Evidence Code to proceedings and the substantive
            California and federal law applicable to the claim asserted, as
            though the matter were heard in the courts of those jurisdictions
            located in the State of California. The arbitrator shall not have
            the power to commit errors of law or legal reasoning, and the award
            may be vacated pursuant to California Code of Civil Procedure
            Sections 1286.2 or 1286.6 for any such error. The arbitration shall
            be conducted in Orange County, California, at a site to be
            determined by the arbitrator. Unless specifically awarded by the
            arbitrator, each party shall bear the cost of its own attorneys'
            fees and expenses.

                                                                 Page 10 of 14

<PAGE>

   14.11.   Counterparts. This Agreement may be executed in any number of
            counterparts, and each such counterpart hereof shall be deemed to
            be an original instrument, but all such counterparts together
            shall constitute but one agreement. Facsimile signatures shall be
            treated as if they were originals.

                         [SIGNATURES ON FOLLOWING PAGE]

                                                                 Page 11 of 14

<PAGE>

         IN WITNESS WHEREOF, authorized officers of the parties hereto have
duly executed this License, Distribution, and Asset Purchase Agreement as of
the Effective Date.

On behalf of:

Insignia Solutions, Inc.

By:      BY:  /s/ RICHARD M. NOLING
        -------------------------------------------

Name:    Richard M. Noling
        -------------------------------------------

Title:   President & CEO
        -------------------------------------------

Date:    October 6, 1999
        -------------------------------------------

Insignia Solutions, Plc.

By:      BY:  /s/ RICHARD M. NOLING
        -------------------------------------------

Name:    Richard M. Noling
        -------------------------------------------

Title:   President & CEO
        -------------------------------------------

Date:    October 6, 1999
        -------------------------------------------

FWB Software, LLC

By:      BY:  /s/ JAMES R. HALE
        -------------------------------------------

Name:    James R. Hale
        -------------------------------------------
         Manager of Parallax Capital Partners, LLC,
Title:   Manager of FWB Software, LLC
        -------------------------------------------

Date:    October 6, 1999
        -------------------------------------------

                                                                  Page 12 of 14

<PAGE>

                                  SCHEDULE 3.1
                   DOS LICENSES REMAINING AS OF EFFECTIVE DATE

As of the Effective Date, the number of DOS licenses remaining under the DOS
License is twenty four thousand, five hundred twenty-nine (24,529).

                                                                  Page 13 of 14

<PAGE>

                                  SCHEDULE 5.1
                               LICENSED TRADEMARKS

                                     [LOGO]

                           RealPC-Registered Trademark-

                                  Insignia-TM-

                             Insignia Solutions-TM-

                                                                  Page 14 of 14<PAGE>

                                                                    Exhibit 10.5

                         STERLING FINANCIAL CORPORATION

                              AMENDED AND RESTATED

                           DEFERRED COMPENSATION PLAN

         Sterling Financial Corporation, a Washington corporation ("Sterling"),
hereby adopts, amends and restates the Deferred Compensation Plan which was
initially adopted by Sterling Savings Bank effective July 1, 1984. This Amended
and Restated Plan is effective as of the 1st day of July, 1999.

                                   I. PURPOSE

         Sterling continues this unfunded deferred compensation plan to provide
retirement benefits to a select group of management personnel in order to
attract, retain, and encourage the efforts of the executives who have rendered
valuable services to Sterling. All rights hereunder shall be construed and
governed by the laws of the State of Washington. This Plan is intended to be a
"top hat" plan for purposes of ERISA and it limits participation to certain key
executives designated by Sterling, or any related entity adopting the Plan.

                                 II. DEFINITIONS

         2.01 ACCOUNT means the account maintained for each Participant under
Section 4.01.

         2.02 BENEFICIARY means a person designated under Section 4.04 by a
Participant to receive plan benefits in the event of the Participant's death.

         2.03 BOARD means the Board of Directors of Sterling.

         2.04 CHANGE IN CONTROL. A change in control shall be deemed to have
occurred at such times as:

                  (a) any "person" (as that term is used in Section 13(d) and
         14(d) of the Exchange Act) (other than Sterling or an affiliate of
         Sterling) becomes, directly or indirectly, the "beneficial owner" (as
         defined in Rule 13d-3 under the Exchange Act) of securities
         representing 25% or more of the then outstanding securities of
         Sterling;

                  (b) during any period of two (2) consecutive years or less,
         individuals who at the beginning of such period constituted the Board
         of Sterling cease, for any reason, to constitute at least a majority of
         the Board, unless the election or nomination for election of each new
         member of the Board was approved by a vote of at least two-thirds of
         the members of the Board then still in office who were members of the
         Board at the beginning of the period;

                  (c) the Shareholders of Sterling approve (i) a plan of
         complete liquidation of Sterling; or (ii) an agreement for the sale or
         disposition of all or substantially all of Sterling's assets; or (iii)
         a merger or consolidation of Sterling with any other corporation, other
         than

                                        1

<PAGE>

         a merger or consolidation which would result in the voting securities
         of Sterling outstanding immediately prior thereto continuing to
         represent (either by remaining outstanding or by being converted into
         voting securities of the surviving entity), at least 50% of the
         combined voting power of the voting securities of Sterling (or such
         surviving entity) outstanding immediately after such merger or
         consolidation.

         2.05 COMMITTEE means the Personnel Committee appointed by the Board,
which shall consist solely of outside directors who are not employees of
Sterling.

         2.06 DEFERRED COMPENSATION POOL. The total annual dollar amount, if
any, to be credited to Participants' Accounts by Sterling as determined by the
Board, after recommendation by the Committee.

         2.07 DISABILITY means disability as determined under Sterling's
long-term or permanent disability insurance policy then in effect.

         2.08 FISCAL YEAR means Sterling's fiscal year which currently ends
December 31.

         2.09 KEY EMPLOYEE means an employee of Sterling who is a member of a
select group of management or a highly compensated employee.

         2.10 NORMAL RETIREMENT AGE means the last day of the calendar month in
which the Participant attains sixty years of age.

         2.11 PARTICIPANT means an employee of Sterling who participates in the
benefits of the Plan, or a person who so participated at the time of his
retirement, death, disability or resignation and who retains or whose
Beneficiary obtains benefits under the Plan in accordance with its terms.

         2.12 PLAN means this Deferred Compensation Plan of Sterling.

         2.13 PLAN YEAR means the twelve-month period corresponding to the
Fiscal Year.

         2.14 SUBSIDIARY means any corporation (whether now or hereafter
existing) which constitutes a "subsidiary" of Sterling within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended.

         2.15 STERLING means Sterling Financial Corporation, a Washington
corporation, including its Subsidiaries which participate in the Plan (each a
"Participating Corporation"), and each of their successors.

         2.16 YEAR OF SERVICE means each fiscal year in which the Participant
works at least one thousand hours for Sterling.

                                        2

<PAGE>

              III. PARTICIPATION AND METHOD OF ALLOCATION OF FUNDS

         3.01 ELIGIBILITY. Pursuant to Section 7.02, the Committee shall specify
which Key Employees shall be entitled to participate in the Deferred
Compensation Pool for any given Plan Year. The Committee's selection shall be
based on objective criteria uniformly applied which may change from time to time
in the discretion of the Committee. The Committee's determination of eligibility
for any given Plan Year does not guarantee eligibility in subsequent Plan Years.
In the event any Key Employee is no longer designated as an active Participant
eligible for further allocations under the Plan, such Key Employee shall become
an inactive Participant and retain all other rights described under this Plan,
until the Key Employee again becomes an active Participant.

         3.02 ALLOCATION. The method by which the Deferred Compensation Pool
shall be allocated or credited for the benefit of each Participant for the
following Plan Year shall be determined annually by the Committee, in its
absolute discretion.

                                  IV. BENEFITS

         4.01 PARTICIPANT ACCOUNTS. The Committee shall cause an Account to be
kept in the name of each Participant and each Beneficiary of a deceased
Participant, which shall reflect the value of the deferred benefit and the
vested amount thereof allocated to each Participant or Beneficiary under the
Plan. Effective as of the date the Board approves the Deferred Compensation Pool
for such Plan Year, or on such other date as the Committee may determine, each
Participant's Account shall be credited with that portion, if any, of the
Deferred Compensation Pool as has been allocated by the Committee pursuant to
Section 7.02. The balance of each Account shall be equal to the sum of all
contributions to the Account plus the net sum of all investment gains and losses
attributable to the Account (the "Balance"). Benefits payable from an Account
shall be determined by subtracting the sum of unvested contributions to the
Account from the Account Balance as of the date of determination. For example,
if on a date of determination contributions to a Participant's account equal
$10,000, the contributions are 10% vested and the net amount of investment gains
and losses is $1,200, an eligible Participant will be entitled to a benefit of
$2,200. Conversely, if the same Account has incurred net investment losses of
$2,000, no benefit will be payable as of the date of determination. In such an
event, however, no Participant shall be required to reimburse Sterling for net
investment losses.

         4.02 NATURE OF PARTICIPANT'S INTEREST. Until and except to the extent
that funds from a Participant's Account are actually distributed to such
Participant (or Beneficiary), the interest therein of each Participant (or
Beneficiary) is contingent and subject to forfeiture. Title to and beneficial
ownership of all assets in the Plan, whether cash, certificates of deposit, or
other deposits (including certificates of or deposits in Sterling Savings Bank),
and whether in stocks (including Sterling stock), bonds, mutual funds, life
insurance, or other investments, shall, at all times, remain general assets of
Sterling subject to the claims of its general creditors. Neither Sterling nor
this Plan gives any ownership interest in any assets of Sterling to a
Participant or Beneficiary. The rights of each Participant, any Beneficiary, or
any person claiming through a Participant shall be solely those of an unsecured
general creditor of Sterling.

                                        3

<PAGE>

         4.03 NO TRUST. Sterling's obligation under this Plan shall be an
unfunded and unsecured promise to pay. Sterling shall not be obligated under any
circumstances to fund its financial obligations under this Plan prior to the
date any benefits become payable pursuant to the terms of the Plan, and neither
Sterling, members of the Board or Committee, nor any other person shall be
deemed to be a trustee of any amounts to be paid under the Plan. Benefits
payable under the Plan shall be reflected on the account records of Sterling but
shall not be construed to create or require the creation of a trust, custodial,
or escrow account. No Participant or Beneficiary shall have any right, title, or
interest whatever in or to any investment reserves, accounts, or funds that
Sterling may purchase, establish, or accumulate to aid in providing benefits
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create a trust or fiduciary relationship of any kind
between the Employer and a Participant, Beneficiary, or any other person.

         4.04 DESIGNATION OF BENEFICIARY. Each Participant shall have the right
to designate Beneficiaries who are to succeed to his contingent right to receive
future payments hereunder in the event of his death. In case of a failure to
designate, or in the case of the death of a designated Beneficiary without a
designated successor, distributions shall be made to a Participant's surviving
spouse or, if none, to his estate. No designation of Beneficiary or change
thereof shall be valid unless in writing, signed by the Participant, dated and
filed with the Committee.

                                V. DISTRIBUTIONS

         5.01 FORM OF BENEFITS. The Committee, in its absolute discretion, will
determine the method of distribution, which may be a lump sum or otherwise, and
the manner of distribution of the Participant's Account, but in no event shall
installment distributions be made over a period of more than ten years.
Installment distributions shall be made in substantially equal monthly,
quarterly or annual installments and the Account shall receive its proportionate
share of net earnings until it has been fully paid. Such installments may be
accelerated at any time by the Committee. Upon the Request of a Participant or
Beneficiary, which Request the Committee may in its absolute discretion grant or
deny, payments to a Participant or Beneficiary may be made in whole or in part
through distributions in kind of Plan assets, if any, such as stock.

         5.02 COMMENCEMENT OF PAYMENTS. Commencement of distribution in each
case may be deferred by the Committee, but not beyond one year after the
termination, retirement, disability or death of a Participant. In case of a
Participant's death before distributions are completed, the balance may be
distributed in a lump sum or on an installment basis, as the Committee may
determine. The Committee shall have the right, in its absolute discretion, to
accelerate any payments being made hereunder.

                          VI. AMENDMENT AND TERMINATION

         6.01 AMENDMENT. Sterling reserves the right to amend the Plan at any
time by resolution of its Board of Directors. The Board of Directors will
determine the effective date of the amendment. The amendment may not deprive any
Participant or Beneficiary of any benefit or right he or she would have been
entitled to prior to the effective date of the amendment.

                                        4

<PAGE>

         6.02 TERMINATION. Sterling also may terminate the Plan at any time by
resolution of the Board of Directors. In the event of Plan termination, each
Participant's Account balance shall become 100% vested and nonforfeitable. A
Participant's Account will be distributed in accordance with the provisions of
Article V.

                                 VII. COMMITTEE

         7.01 DISCRETION. The Committee shall, with respect to the general
management of the Plan, have the final and absolute right to reconcile any
inconsistency in the Plan, to interpret and construe the provisions of the Plan
in all particulars in such manner and to such extent as it deems proper and to
take all action and make all decisions and determinations necessary under the
Plan or in connection with its administration, interpretation and application.
Any interpretation or construction placed upon any term or provision of the Plan
by the Committee, any decision of the Committee with regard to the rights of a
Participant, former Participant or Beneficiary or any other person, any
reconciliation of an inconsistency in the Plan made by the Committee and any
other action, determination or decision whatsoever taken by the Committee, shall
be final, conclusive and binding upon all persons or parties interested or
concerned in the Plan.

         7.02 MEETINGS. The Committee shall meet no later than forty-five (45)
days following the end of each Plan Year. At such meeting the Committee, in
addition to addressing any other matters which may come to its attention, shall:

         (a) Identify the Key Employees who will be eligible to participate in
the Plan during the current Plan Year;

         (b) Arrive at a recommendation as to the amount of the Deferred
Compensation Pool for the current Plan Year, which recommendation shall be
communicated to the Board; and

         (c) Determine the method by which the Deferred Compensation Pool shall
be allocated to the Participants for that Plan Year.

                                VIII. INVESTMENTS

         8.01 ELECTION. Sterling participates in a retirement plan qualified
under Section 401 of the Internal Revenue Code of 1986, as amended (the "401(k)
Plan"). Participants under the 401(k) Plan have the conditional right to direct
the investment and re-investment of assets comprising such participants'
individual accounts. Subject to the conditions set forth herein and in the
401(k) Plan, Participants hereunder shall have the right to direct the
investment and re-investment of amounts in their individual Accounts at the
times and in the manner specified in the 401(k) Plan.

         8.02 STATEMENT OF ACCOUNT. Within one hundred twenty (120) days after
the close of each Plan Year, a statement shall be given by the Committee to each
Participant setting forth, with regard to such Plan Year, the balance standing
to the credit of his or her Account, the net earnings and losses, and the vested
amount of the Account.

                                        5

<PAGE>

         8.03 NO LIABILITY. Neither Sterling, the Committee, the Board nor any
affiliate of any of them shall be liable for any investment or other losses or
damages arising out of or relating to a Participant's Account including a
Participant's election under Section 8.01.

                                   IX. VESTING

         9.01 VESTING SCHEDULE. Notwithstanding any contrary provision in this
Plan, all amounts in an Account shall become 100% vested: (a) upon a Change of
Control; (b) when the related Participant attains Normal Retirement Age; (c)
when the employment of the related Participant terminates due to death or
disability; or (d) upon termination of the Plan. Prior to such an event, each
contribution to an Account shall vest in accordance with the schedule below:

<TABLE>
<CAPTION>
          YEARS OF SERVICE WITH STERLING INCLUDING THE PLAN
            YEAR IN WHICH SUCH CONTRIBUTION IS CREDITED TO                     PERCENT OF EACH CONTRIBUTION
                        PARTICIPANT'S ACCOUNT                                             VESTED
         ---------------------------------------------------                   ----------------------------
        <S>                                                                   <C>
         1 Year of Service but less than 2                                                  10%
         2 Years of Service but less than 3                                                 20%
         3 Years of Service but less than 4                                                 30%
         4 Years of Service but less than 5                                                 40%
         5 Years of Service but less than 6                                                 50%
         6 Years of Service but less than 7                                                 60%
         7 Years of Service but less than 8                                                 70%
         8 Years of Service but less than 9                                                 80%
         9 Years of Service but less than 10                                                90%
         10 Years of Service                                                               100%
</TABLE>

         9.02 ACCELERATION. As provided in Section 9.01(d) and notwithstanding
the foregoing schedule, after a Participant has reached the age of 51, the
vesting of all new contributions to the Participant's Account shall be
accelerated, pro rata, so that such vesting will reach 100% in the year the
Participant attains the age of 60. For example, if $1,000 is contributed to a
Participant's Account when the Participant is 55 years of age, such contribution
will vest at 20% per year so that it will be 100% vested in the year the
Participant attains the age of 60. After a Participant has attained the age of
60, all new contributions to the Participant's Account shall immediately vest at
100%.

                                X. MISCELLANEOUS

         10.01 EMPLOYMENT NOT GUARANTEED. Nothing contained in the Plan nor any
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to be retained in the employ of Sterling, or
any related entity.

         10.02 NO LIABILITY. Neither Sterling, the Committee, the Board nor any
affiliate of any of them shall be liable for any action or determination made in
good faith with respect to this Plan.

                                        6

<PAGE>

         10.03 NO GUARANTEE OF TAX CONSEQUENCES. Neither Sterling nor the
Committee makes any commitment or guarantee that any federal or state tax
treatment will apply or be available to any Participant in the Plan.

         10.04 SEVERABILITY. In the event any provision of this Plan shall be
held illegal, invalid or unenforceable for any reason, such provision shall be
fully severable, but shall not affect the remaining provisions of the Plan, and
the Plan shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never been included herein.

         10.05 BENEFITS NOT ASSIGNABLE. Neither the Participant nor Beneficiary
may assign, transfer, anticipate or pledge the benefits under this Agreement,
nor may they be subject to attachment or garnishment of creditors. Any attempt
to assign, transfer or pledge a Participant's benefits under this Agreement is
void.

         10.06 BENEFIT. This Agreement is binding upon and inures to Sterling,
its successors and assigns and the Participant, his heirs and legal
representatives.

         10.07 GENDER USAGE. The use of the masculine includes the feminine
gender for all purposes of this Agreement.

         10.08 NOTICE. Any notices required or permitted to be given under this
Plan shall be sufficient if in writing and hand delivered or sent by certified
or registered mail, return receipt requested, to the following addresses:

         To Sterling:         Sterling Financial Corporation
                              111 North Wall Street
                              Spokane, WA 99201

         To Participant:      AT THE PARTICIPANT'S ADDRESS ON FILE WITH STERLING

or at such other addresses as Sterling or a Participant may designate, from time
to time, in writing.

                                        STERLING FINANCIAL CORPORATION

                                        By______________________________________
                                        Title___________________________________

                                        7

<PAGE>

                         STERLING FINANCIAL CORPORATION
                              AMENDED AND RESTATED
                           DEFERRED COMPENSATION PLAN
                             PARTICIPATION AGREEMENT
                        FOR PARTICIPATION BY SUBSIDIARIES
                               (PLAN SECTION 2.15)

         The undersigned Corporation, by executing this Participation Agreement,
elects to become or to continue as a Participating Corporation in the Plan as if
the Participating Corporation were a signatory to the Plan. The Participating
Corporation accepts, and agrees to be bound by, all of the provisions of the
Plan.

         DATED this ____ day of _______________, 1999.

                                       -----------------------------------------
                                       NAME OF PARTICIPATING CORPORATION

                                       -----------------------------------------
                                       Signed:
                                               ---------------------------------

                                       Participating Employer's EIN:
                                                                     -----------

                                        8

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