SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT

                                      Under
                           The Securities Act of 1933

                              LEGATO SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                          94-3077394
 (State or other jurisdiction of                             (IRS Employer
  incorporation or organization)                          Identification No.)

                                      7372
                          (Primary Standard Industrial
                          Classification Code Number)

                                3210 Porter Drive
                           Palo Alto, California 94304
               (Address of principal executive offices) (Zip Code)

                              LEGATO SYSTEMS, INC.
                      1995 Stock Option/Stock Issuance Plan
                  Shares Issued Pursuant to a Written Agreement
                            (Full title of the Plan)

                                  Louis C. Cole
                      President and Chief Executive Officer
                              LEGATO SYSTEMS, INC.
                                3210 Porter Drive
                           Palo Alto, California 94304
                     (Name and address of agent for service)

                                 (415) 812-6000
          (Telephone number, including area code, of agent for service)

                         CALCULATION OF REGISTRATION FEE


<TABLE>
                                                             Proposed Maximum    Proposed Maximum
                                             Amount to be     Offering Price        Aggregate          Amount of
  Title of Securities to be Registered      Registered(1)      per Share(2)     Offering Price(2)    Registration
                                                                                                          Fee
------------------------------------------ ------------------------------------ ------------------- ----------------
<S>                                        <C>                     <C>             <C>                  <C>

1995 Stock Option/Stock Issuance Plan
Options to Purchase Common Stock           508,151                 N/A                 N/A                N/A

Common Stock, $0.0001 par value            508,151 shares        $19.375           $9,845,425.625       $2,983.46

Written Agreement
Common Stock,  $0.0001 par value           837 shares            $19.375           $   16,216.875       $    4.91


<FN>
(1)  This  Registration  Statement  shall  also cover any  additional  shares of
     Common  Stock  which  become  issuable  under the 1995  Stock  Option/Stock
     Issuance  Plan and the Written  Agreement by reason of any stock  dividend,
     stock split, recapitalization or other similar transaction effected without
     the receipt of consideration  which results in an increase in the number of
     the outstanding shares of Common Stock of Legato Systems, Inc.
(2)  Calculated  solely for purposes of this  offering  under Rule 457(h) of the
     Securities Act of 1933, as amended, on the basis of the average of the high
     and low  prices  per  share of  Common  Stock of Legato  Systems,  Inc.  as
     reported on the Nasdaq National Market on May 27, 1997.
</FN>
</TABLE>

<PAGE>


                                EXPLANATORY NOTE



         Pursuant  to  General  Instruction  C of Form  S-8,  this  Registration
Statement  contains a prospectus  meeting the requirements of Part I of Form S-3
relating to the reoffer by a certain  individual of shares of Common Stock,  par
value $0.0001 per share, of Legato Systems,  Inc. acquired pursuant to a Written
Agreement.



<PAGE>



                              LEGATO SYSTEMS, INC.


         FORM S-8 CROSS REFERENCE SHEET SHOWING LOCATION OF INFORMATION
                         REQUIRED BY PART I OF FORM S-3


<TABLE>
<S>                                                           <C>
Form S-3 Item Number                                          Location/Heading in Prospectus

1.    Forepart of Registration Statement and Outside          Cover page
         Front Cover page of Prospectus
2.    Inside Front and Outside Back Cover Page of             Available Information; Incorporation of
         Prospectus                                               Certain Information by Reference
3.    Summary Information, Risk Factors and Ratio of          Risk Factors
         Earnings to Fixed Charges
4.    Use of Proceeds                                         Not applicable
5.    Determination of Offering Price                         Not applicable
6.    Dilution                                                Not applicable
7.    Selling Security Holder                                 Selling Security Holder
8.    Plan of Distribution                                    Plan of Distribution
9.    Description of Securities to be Registered              Not Applicable
10.   Interests of Named Experts and Counsel                  Not Applicable
11.   Material Changes                                        Not Applicable
12.   Incorporation of Certain Information                    Documents Incorporated by Reference
13.   Disclosure of Commission Position on                    Indemnification
         Indemnification for Securities Act Liabilities
</TABLE>


<PAGE>

                                     PART II


               Information Required in the Registration Statement

Item 3.  Incorporation of Documents by Reference

     Legato Systems,  Inc. (the "Registrant")  hereby  incorporates by reference
into this Registration  Statement the following documents  previously filed with
the Securities and Exchange Commission (the "SEC"):

     (a) The  Registrant's  Annual Report on Form 10-K for the fiscal year ended
December 31, 1996; and

     (b) The Registrant's  Registration  Statement No. 0-26130 on Form 8-A filed
with the SEC on May 19, 1995 pursuant to Section 12 of the  Securities  Exchange
Act of 1934, as amended (the "1934 Act"), in which there is described the terms,
rights and provisions applicable to the Registrant's outstanding Common Stock.

         All  reports  and  definitive  proxy or  information  statements  filed
pursuant to Section 13(a),  13(c), 14 or 15(d) of the 1934 Act after the date of
this  Registration  Statement  and  prior  to  the  filing  of a  post-effective
amendment which  indicates that all securities  offered hereby have been sold or
which  deregisters  all securities  then remaining  unsold shall be deemed to be
incorporated  by reference  into this  Registration  Statement  and to be a part
hereof from the date of filing of such documents.  Any statement  contained in a
document  incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration  Statement
to the extent that a statement  contained  herein or in any  subsequently  filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes  such statement.  Any such statement so modified or superseded  shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4.  Description of Securities

         Not Applicable.

Item 5.  Interests of Named Experts and Counsel

         Not Applicable.

Item 6.  Indemnification of Directors and Officers

         Section 145 of the Delaware General  Corporation Law authorizes a court
to award or a  corporation's  Board of  Directors  to grant  indemnification  to
directors   and   officers   in  terms   sufficiently   broad  to  permit   such
indemnification   under  certain   circumstances   for  liabilities   (including
reimbursement  for expenses  incurred) arising under the Securities Act of 1933,
as amended (the "1933  Act").  The  Registrant's  Bylaws  provide for  mandatory
indemnification of its directors and officers and permissible indemnification of
employees  and other  agents to the maximum  extent  permitted  by the  Delaware
General Corporation Law. The Registrant's  Certificate of Incorporation provides
that,  pursuant to Delaware law, its directors  shall not be liable for monetary
damages for breach of their  fiduciary  duty as directors to the  Registrant and
its  stockholders.  This provision in the Certificate of Incorporation  does not
eliminate   the  fiduciary   duty  of  the   directors,   and,  in   appropriate
circumstances,   equitable  remedies  such  as  injunctive  or  other  forms  of
non-monetary relief will remain available under Delaware law. In addition,  each
director will  continue to be subject to liability for breach of the  director's
duty of loyalty to the  Registrant  for acts or  omissions  not in good faith or
involving  intentional  misconduct,  for knowing  violations of law, for actions
leading  to  improper  personal  benefit  to the  director  and for  payment  of
dividends  or approval of stock  repurchases  or  redemptions  that are unlawful
under   Delaware  law.  The   provision   also  does  not  affect  a  director's
responsibilities  under any other law,  such as the federal  securities  laws or
state  or  federal   environmental   laws.   The  Registrant  has  entered  into
Indemnification  Agreements with its officers and directors. The Indemnification
Agreements  provide  the  Registrant's   officers  and  directors  with  further
indemnification  to  the  maximum  extent  permitted  by  the  Delaware  General
Corporation Law.

Item 7.  Exemption from Registration Claimed

         Not Applicable.

Item 8.  Exhibits

         Exhibit        Exhibit
         Number

            4           Instrument  Defining  Rights of  Stockholders.
                        Reference is made to  Registrant's Registration
                        Statement No. 0-26130 on Form 8-A, which is incorporated
                        herein by reference pursuant to Item 3(b) of this
                        Registration Statement.
            5           Opinion and consent of Gunderson Dettmer Stough
                        Villeneuve  Franklin & Hachigian, LLP.
           23.1         Consent of Coopers & Lybrand LLP,
                        Independent Accountants.
           23.2         Consent of  Gunderson  Dettmer  Stough  Villeneuve
                        Franklin &  Hachigian,  LLP is contained in Exhibit 5.
           24           Power of Attorney.  Reference is made to page II-3 of
                        this Registration Statement.
           99.1         Written Agreement with Louis C. Cole.

Item 9.  Undertakings

         A. The undersigned  Registrant hereby  undertakes:  (1) to file, during
any period in which offers or sales are being made, a  post-effective  amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the  prospectus any facts or events
arising after the  effective  date of this  Registration  Statement (or the most
recent  post-effective   amendment  thereof)  which,   individually  or  in  the
aggregate,  represent a fundamental  change in the information set forth in this
Registration  Statement  and (iii) to  include  any  material  information  with
respect  to  the  plan  of  distribution   not  previously   disclosed  in  this
Registration  Statement  or any  material  change  to such  information  in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not  apply  if the  information  required  to be  included  in a  post-effective
amendment by those  paragraphs  is contained  in periodic  reports  filed by the
Registrant  pursuant  to Section  13 or  Section  15(d) of the 1934 Act that are
incorporated  by reference into this  Registration  Statement;  (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment  shall be deemed to be a new  registration  statement  relating to the
securities  offered  therein and the  offering of such  securities  at that time
shall be deemed to be the initial bona fide  offering  thereof and (3) to remove
from  registration by means of a post-effective  amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1995
Stock Option/Stock Issuance Plan.

         B. The undersigned  Registrant  hereby undertakes that, for purposes of
determining  any liability  under the 1933 Act, each filing of the  Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

         C. Insofar as  indemnification  for liabilities  arising under the 1933
Act may be  permitted  to  directors,  officers  or  controlling  persons of the
Registrant  pursuant to the indemnification  provisions  summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the SEC, such
indemnification  is against  public policy as expressed in the 1933 Act, and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy  as  expressed  in the  1933  Act  and  will  be  governed  by the  final
adjudication of such issue.



<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the  requirements  for  filing  on Form  S-8,  and has duly  caused  this
Registration Statement to be signed on its behalf by the undersigned,  thereunto
duly  authorized,  in the City of Palo Alto,  State of California on this 2nd
day of June, 1997.


                                      LEGATO SYSTEMS, INC.

                                      /s/ Louis C. Cole
                                      By:
                                           Louis C. Cole
                                           President, Chief Executive Officer
                                             and Chairman of the Board




                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

         That the undersigned officers and directors of Legato Systems,  Inc., a
Delaware corporation, do hereby constitute and appoint Louis C. Cole and Stephen
C. Wise, and either of them, the lawful  attorneys-in-fact  and agents with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents,  and either one of them,  determine
may be necessary or advisable or required to enable said  corporation  to comply
with the  Securities  Act of 1933, as amended,  and any rules or  regulations or
requirements  of the Securities and Exchange  Commission in connection with this
Registration  Statement.  Without limiting the generality of the foregoing power
and authority,  the powers  granted  include the power and authority to sign the
names of the  undersigned  officers and  directors in the  capacities  indicated
below  to  this  Registration  Statement,  to  any  and  all  amendments,   both
pre-effective   and   post-effective,   and  supplements  to  this  Registration
Statement,  and to any and all  instruments or documents  filed as part of or in
conjunction  with this  Registration  Statement  or  amendments  or  supplements
thereof,  and either of the  undersigned  hereby  ratifies and confirms all that
said attorneys and agents,  or either one of them,  shall do or cause to be done
by virtue hereof. This Power of Attorney may be signed in several counterparts.

         IN WITNESS WHEREOF,  each of the undersigned has executed this Power of
Attorney as of the date indicated.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this  Registration  Statement has been signed below by the following  persons in
the capacities and on the dates indicated.

<TABLE>
               Signature                       Title                              Date


<S>                                 <C>                                         <C>
     /s/ Louis C. Cole              President, Chief Executive Officer          June 2, 1997
     -------------------------      and Chairman of the Board
             Louis C. Cole          (Principal Executive Officer)



     /s/ Stephen C. Wise            Chief Financial Officer, Vice President of  June 2, 1997
     -------------------------      Finance and Administration and
            Stephen C. Wise         Assistant Secretary (Principal Financial
                                    and Accounting Officer)



     /s/ Eric Benhamou
     -------------------------      Director                                    June 2, 1997
             Eric Benhamou


     /s/ Kevin A. Fong
     -------------------------      Director                                    June 2, 1997
             Kevin A. Fong


     /s/ David N. Strohm
     -------------------------      Director                                    May 13, 1997
            David N. Strohm


     /s/ Phillip E. White
     -------------------------      Director                                    June 2, 1997

           Phillip E. White
</TABLE>
<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.



                                    EXHIBITS

                                       TO

                                    FORM S-8

                                      UNDER

                             SECURITIES ACT OF 1933



                              LEGATO SYSTEMS, INC.



<PAGE>

                                  EXHIBIT INDEX


  Exhibit        Exhibit
  Number
     4           Instrument Defining Rights of Stockholders.  Reference is made
                 to Registrant's Registration Statement No. 0-26130 on Form 8-A,
                 which is incorporated herein byreference pursuant to Item 3(b)
                 of this Registration Statement.
     5           Opinion and consent of Gunderson Dettmer Stough Villeneuve
                 Franklin & Hachigian, LLP.
   23.1          Consent of Coopers & Lybrand LLP, Independent Accountants
   23.2          Consent of Gunderson Dettmer Stough Villeneuve Franklin &
                 Hachigian, LLP is contained
                 in Exhibit 5.
    24           Power of Attorney.  Reference is made to page II-3 of this
                 Registration Statement.
   99.1          Written Agreement with Louis C. Cole.



<PAGE>

                                    EXHIBIT 5



                             Opinion and Consent of
         Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP


                                                  May 28, 1997



Legato Systems, Inc.
3210 Porter Drive
Palo Alto, CA  94304

         Re:      Legato Systems, Inc. Registration Statement
                  for Offering of 508,151 Shares of Common Stock
                  and Reoffering of 837 Shares of Common Stock

Ladies and Gentlemen:

         We  refer  to  your   registration  on  Form  S-8  (the   "Registration
Statement") under the Securities Act of 1933, as amended,  of (i) 508,151 shares
of  Common  Stock   available  for  issuance  under  the  Company's  1995  Stock
Option/Stock Issuance Plan and (ii) 837 shares of Common Stock under the Written
Agreement  between  the Company  and Louis C. Cole.  We advise you that,  in our
opinion,  when such shares have been issued and sold pursuant to the  applicable
provisions  of the  1995  Stock  Option/Stock  Issuance  Plan  and  the  Written
Agreement  between  the Company and Louis C. Cole,  and in  accordance  with the
Registration  Statement,  such  shares  will be validly  issued,  fully paid and
nonassessable shares of the Company's Common Stock.

         We hereby  consent to the  filing of this  opinion as an exhibit to the
Registration Statement.

                                       Very truly yours,



                                       Gunderson Dettmer Stough
                                       Villeneuve Franklin & Hachigian, LLP



<PAGE>



                                  EXHIBIT 23.1



            Consent of Coopers & Lybrand LLP, Independent Accountants


                       ONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the  incorporation by reference in the  registration  statement of
Legato  Systems,  Inc. and  Subsidiaries on Form S-8 of our report dated January
20, 1997, on our audits of the consolidated  financial  statements and financial
statement  schedule of Legato Systems,  Inc. and Subsidiaries as of December 31,
1996 and  1995,  and for the  years  ended  December  31,  1996,  1995 and 1994,
appearing in the Annual Report on Form 10-K of Legato  Systems,  Inc. filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1934.




                                                        COOPERS & LYBRAND L.L.P.


San Jose, California
May 28, 1997



<PAGE>


                                  EXHIBIT 99.1


                      Written Agreement with Louis C. Cole
                                    AGREEMENT



         Agreement  entered  into as of this 31st day of January,  1997  between
Legato Systems, Inc., a Delaware corporation ("Corporation"),  and Louis C. Cole
("Purchaser").

         Whereas, the Corporation wishes to retain the services of Purchaser and
Purchaser  wishes to be engaged by the  Corporation to perform  services and, in
consideration of the services to be performed by Purchaser,  the Corporation has
this day awarded  Purchaser the right to purchase  shares of the Common Stock of
the Corporation.

         NOW, THEREFORE, it is agreed as follows:

     D.  Award of  Shares.  Purchaser  has been  awarded  the right to  purchase
shares,  subject to and upon  terms and  conditions  identical  to the terms and
conditions applicable to the purchase of shares under the Corporation's Employee
Stock Purchase Plan.

     E. Successors and Assigns.  The provisions of this Agreement shall inure to
the benefit of, and be binding  upon,  the  successors,  administrators,  heirs,
legal representatives and assigns of Purchaser and the successors and assigns of
the Corporation.

     F. Governing Law. The interpretation,  performance, and enforcement of this
Agreement  shall be  governed  by the laws of the  State of  California  without
resort to that State's conflict-of-laws rules.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.

                                   LEGATO SYSTEMS, INC.

                                   By: /s/ Stephen C. Wise
                                   Title:   Chief Financial Officer

                                   /s/ Louis C. Cole


                                   Address: 3210 Porter Drive
                                   Palo Alto, CA 94304
<PAGE>

                               REOFFER PROSPECTUS

                                   837 Shares

                              Legato Systems, Inc.

                                  Common Stock

         This  Reoffer  Prospectus  relates  to the  offer and sale of up to 837
shares of the Common  Stock,  par value $.0001 (the "Common  Stock"),  of Legato
Systems,  Inc.  (the  "Company"),  which may be offered from time to time by the
registered  stockholder  named herein (the  "Selling  Security  Holder").  It is
anticipated  that the  Selling  Security  Holder  will offer  shares for sale at
prevailing  prices on the Nasdaq National Market System on the date of sale. The
Company  will  receive  no part of the  proceeds  of sale  made  hereunder.  All
expenses of  registration  incurred in  connection  with this offering are being
borne by the Company, but all selling and other expenses incurred by the Selling
Security Holder will be borne by such Selling Security Holder.

         The  Company's  Common  Stock is quoted on the Nasdaq  National  Market
under the symbol LGTO.  On  May 27,  the average  of  the  high  and low selling
prices of the Common Stock was $19.375 per share.

         The Selling Security Holder and any broker executing  selling orders on
behalf of the Selling Security Holder may be deemed to be "underwriters"  within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
which event commissions received by such broker may be deemed to be underwriting
commissions under the Securities Act.

            THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD
            BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
                            THEIR ENTIRE INVESTMENT.
                     SEE "RISK FACTORS" BEGINNING ON PAGE 3.

    THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
     AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
               OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
                     TO THE CONTRARY IS A CRIMINAL OFFENSE.

         No  person  is  authorized  to give  any  information  or to  make  any
representations,  other than those contained in this  Prospectus,  in connection
with the offering  described herein,  and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any Selling Security Holder.  This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities  by any person in any  jurisdiction  in which it is unlawful for such
person to make such offer,  solicitation  or sale.  Neither the delivery of this
Prospectus nor any sale made hereunder shall under any  circumstances  create an
implication  that the  information  contained  herein is  correct as of any time
subsequent to the date hereof.

         The date of this Prospectus is June 3, 1997.



<PAGE>

                              AVAILABLE INFORMATION

         The Company is subject to the informational  reporting  requirements of
the  Securities  Exchange Act of 1934,  as amended (the  "Exchange  Act") and in
accordance therewith files reports and other information with the Securities and
Exchange  Commission  (the  "Commission").  Such reports,  proxy and information
statements  and other  information  can be  inspected  and  copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices at 219 South Dearborn Street,  Chicago,
IL 60604; 26 Federal Plaza, New York, NY 10007; and 5757 Wilshire Boulevard, Los
Angeles, CA 90036, at prescribed rates. The Commission maintains a Web site that
contains  reports,  proxy  and  information  statements  and  other  information
regarding   companies   that  file   electronically   with  the   Commission  at
http://www.sec.gov.  The  Common  Stock of the  Company  is quoted on the Nasdaq
National Market System.  Reports,  proxy statements,  information statements and
other information  concerning the Company can be inspected at the offices of the
National  Association  of  Securities  Dealers,  Inc.  at 1735 K  Street,  N.W.,
Washington, D.C. 20006.

         A copy of any document  incorporated  by reference in the  Registration
Statement (not including  exhibits to the  information  that is  incorporated by
reference unless such exhibits are  specifically  incorporated by reference into
the information  that the  Registration  Statement  incorporates)  of which this
Reoffer  Prospectus  forms a part but which is not  delivered  with this Reoffer
Prospectus  will  be  provided  by the  Company  without  charge  to any  person
(including  any  beneficial  owner) to whom  this  Reoffer  Prospectus  has been
delivered upon the oral or written request of such person.  Such requests should
be directed to Rick Ruiz, Investor Relations,  Legato Systems, Inc., 3210 Porter
Drive,  Palo Alto,  California  94304.  The Company's  telephone  number at that
location is (415) 812-6000.


                                TABLE OF CONTENTS

                                                                           Page

THE COMPANY...................................................................3

RISK FACTORS..................................................................3

SELLING SECURITY HOLDER.......................................................9

PLAN OF DISTRIBUTION..........................................................9

DOCUMENTS INCORPORATED BY REFERENCE..........................................10

INDEMNIFICATION..............................................................10


<PAGE>

                                   THE COMPANY

         Legato  Systems,  Inc. (the "Company")  develops,  markets and supports
network storage  management  software products for  heterogeneous  client/server
computing environments. The Company believes it is currently a technology leader
in the network storage management  software market because of the heterogeneity,
scalability, performance and ease of use of its software products. The Company's
NetWorker  software  supports many storage  management  server platforms and can
accommodate  a variety of clients,  servers and storage  devices.  The Company's
long term strategy is to create an integrated set of solutions  centered  around
storage management that enhance and simplify network computing as a whole.

         The  Company  utilizes  multiple   distribution   channels,   including
resellers, OEMs and direct sales, as a part of the Company's strategy to achieve
comprehensive  coverage in the market.  The Company  licenses its source code to
leading computer system and software suppliers,  including Amdahl,  Banyan, Data
General,  Digital,  ICL,  Siemens  Nixdorf,  Silicon  Graphics,  Sony,  SunSoft,
Nihon-Unisys and Unisys, which port the products to their proprietary platforms,
sell the products  through their direct and indirect  distribution  channels and
provide primary support for the products after installation. These relationships
enable the Company to reach a broad customer base,  while reducing  development,
support and product costs.

         The Company's  executive offices are located at 3210 Porter Drive, Palo
Alto, California 94304. The Company's telephone number is (415) 812-6000.


                                  RISK FACTORS

Fluctuations in Quarterly Operating Results; Future Operating Results Uncertain

         The Company's  quarterly  operating results have in the past varied and
may in the future vary significantly depending on a number of factors, including
the size  and  timing  of  significant  orders;  increased  competition;  market
acceptance of new products,  applications and product  enhancements;  changes in
pricing policies by the Company and its competitors;  the ability of the Company
to timely develop,  introduce and market new products,  applications and product
enhancements and to control costs; the Company's  success in expanding its sales
and marketing programs;  technological changes in the network storage management
market;  the mix of sales among the  Company's  channels;  deferrals of customer
orders in  anticipation of new products,  applications or product  enhancements;
changes in Company strategy; personnel changes; and general economic factors.

         The Company's  future  revenues are  difficult to predict.  The Company
operates with virtually no order backlog because its software products typically
are shipped shortly after orders are received. In addition, the Company does not
recognize revenues on sales to domestic distributors until the products are sold
through  to  end  users.  As a  result,  product  revenues  in any  quarter  are
substantially  dependent on orders booked and shipped and on sell-through to end
users in that quarter.  Revenues for any future quarter are not predictable with
any significant degree of certainty.  Product and software subscription revenues
are also difficult to forecast because the network storage  management market is
rapidly  evolving  and the  Company's  sales  cycle  varies  substantially  from
customer to customer.  Royalty and license revenues are substantially  dependent
upon sales by OEMs of their products that  incorporate  the Company's  software.
Accordingly,  royalty and license  revenues are subject to OEMs' product cycles,
which are also  difficult to predict.  Royalty and license  revenues are further
impacted by fluctuations in licensing activity from quarter-to-quarter,  because
initial license fees generally are non-recurring and recognized upon the signing
of the license  agreement.  The Company's  expense levels are based, in part, on
its   expectations  as  to  future   revenues.   If  revenue  levels  are  below
expectations,  operating results are likely to be adversely affected. Net income
may  be  disproportionately  affected  by a  reduction  in  revenues  because  a
proportionately  smaller  amount  of the  Company's  expenses  varies  with  its
revenues. As a result, the Company believes that period-to-period comparisons of
its  results of  operations  are not  necessarily  meaningful  and should not be
relied upon as  indications of future  performance.  Due to all of the foregoing
factors,  it is possible  that in some future  quarter the  Company's  operating
results may be below the  expectations  of public market analysts and investors.
In such  event,  the  price  of the  Company's  Common  Stock  would  likely  be
materially adversely affected.

Product Concentration

         The Company  currently  derives a substantial  majority of its revenues
from its  NetWorker  software  products  and related  services,  and the Company
expects that revenues from  NetWorker will continue to account for a majority of
the Company's  revenues for the foreseeable  future.  Broad market acceptance of
NetWorker is, therefore,  critical to the Company's future success. As a result,
a decline in unit prices of or demand for NetWorker, or failure to achieve broad
market acceptance of NetWorker, as a result of competition, technological change
or otherwise,  would have a material  adverse effect on the business,  operating
results and financial  condition of the Company.  The life cycle of NetWorker is
difficult  to  estimate  due in large  measure  to the recent  emergence  of the
Company's  market,   the  effect  of  new  products,   applications  or  product
enhancements,   technological   changes  in  the  network   storage   management
environment in which NetWorker  operates and future  competition.  The Company's
future financial performance will depend in part on the successful  development,
introduction  and market  acceptance of new products,  applications  and product
enhancements.  There can be no assurance  that the Company  will  continue to be
successful in marketing  NetWorker or any new products,  applications or product
enhancements.

Competition

         The network storage management market is intensely competitive,  highly
fragmented  and  characterized  by  rapidly  changing  technology  and  evolving
standards. Competitors vary in size and in the scope and breadth of the products
and  services  offered.  Increased  competition  is  likely  to  result in price
reductions,  reduced gross margins and loss of market share,  any of which could
materially  adversely  affect the  Company's  business,  operating  results  and
financial  condition.  Many of the Company's  current and potential  competitors
have significantly greater financial,  technical,  marketing and other resources
than the Company.  As a result,  they may be able to respond more quickly to new
or emerging  technologies  and changes in  customer  requirements,  or to devote
greater  resources  to the  development,  promotion,  sale and  support of their
products  than the  Company.  The Company also  expects  that  competition  will
increase  as a result of future  software  industry  consolidations,  which have
occurred in the network  storage  management  market in the past.  In  addition,
current and potential  competitors have established or may establish cooperative
relationships  among  themselves  or  with  third  parties.  Accordingly,  it is
possible that new  competitors  or alliances  among  competitors  may emerge and
rapidly acquire significant market share. In addition,  network operating system
vendors  could  introduce  new  or  upgrade   existing   operating   systems  or
environments  that  include  storage  management  functionality  offered  by the
Company's  products,  which could  render the  Company's  products  obsolete and
unmarketable. There can be no assurance that the Company will be able to compete
successfully against current or future competitors or that competitive pressures
faced  by the  Company  will  not  materially  adversely  affect  its  business,
operating results and financial condition.

Dependence on New Software Products; Rapid Technological Change

         The  network  storage  management  market  is  characterized  by  rapid
technological  change,  changing  customer needs,  frequent new software product
introductions  and evolving  industry  standards.  The  introduction of products
embodying new  technologies  and the emergence of new industry  standards  could
render the Company's existing products obsolete and unmarketable.  The Company's
future  success  will  depend  upon its  ability to develop  and  introduce  new
software products  (including new releases,  applications and enhancements) on a
timely  basis  that keep  pace  with  technological  developments  and  emerging
industry  standards  and address  the  increasingly  sophisticated  needs of its
customers.  There can be no  assurance  that the Company will be  successful  in
developing and marketing new products that respond to  technological  changes or
evolving industry standards,  that the Company will not experience  difficulties
that  could  delay or  prevent  the  successful  development,  introduction  and
marketing of these new products,  or that its new products will  adequately meet
the  requirements  of the  marketplace  and achieve  market  acceptance.  If the
Company is unable, for technological or other reasons,  to develop and introduce
new products in a timely  manner in response to changing  market  conditions  or
customer requirements,  the Company's business,  operating results and financial
condition will be materially adversely affected. The Company currently has plans
to  introduce  and market  several  potential  new  products  in the next twelve
months.  Some of the  Company's  competitors  currently  offer  certain of these
potential new products.  Due to the complexity of client/server software and the
difficulty in gauging the engineering effort required to produce these potential
new products,  such potential new products are subject to significant  technical
risks.  There can be no  assurance  that such  potential  new  products  will be
introduced on a timely basis or at all. In the past, the Company has experienced
delays  in  the  commencement  of  commercial  shipments  of its  new  products,
resulting in customer  frustrations  and delay or loss of product  revenues.  If
potential  new products  are delayed or do not achieve  market  acceptance,  the
Company's business, operating results and financial condition will be materially
adversely  affected.  The Company has also, in the past,  experienced  delays in
purchases of its products by customers  anticipating  the launch of new products
by the  Company.  There can be no assurance  that  material  order  deferrals in
anticipation of new product introductions will not occur.

         Software  products  as complex  as those  offered  by the  Company  may
contain  undetected  errors or failures when first introduced or as new versions
are released.  The Company has in the past discovered software errors in certain
of its new products after their  introduction and has experienced delays or lost
revenues  during the period  required  to correct  these  errors.  Although  the
Company has not experienced  material  adverse  effects  resulting from any such
errors to date,  there can be no assurance that,  despite testing by the Company
and by current and potential customers, errors will not be found in new products
after  commencement  of commercial  shipments,  resulting in loss of or delay in
market acceptance, which could have a material adverse effect upon the Company's
business, operating results and financial condition.

Risks Associated with Strategy of Expanding OEM Channel; Reliance on Resellers

         An  integral  part  of  the  Company's  strategy  is  to  increase  the
proportion of the Company's  customers  licensed  through OEMs.  There can be no
assurance  that such  customers  will  continue  to  account  for a  significant
percentage  of the  Company's  revenues in the future.  The Company is currently
investing,  and intends to continue to invest,  significant resources to develop
this channel,  which could materially  adversely affect the Company's  operating
margins.  There can be no assurance  that the Company will be  successful in its
efforts to increase the revenues  represented  by this  channel.  The Company is
dependent  upon its OEMs'  ability to develop  new  products,  applications  and
product  enhancements  on a timely  and  cost-effective  basis  that  will  meet
changing  customer  needs and respond to emerging  industry  standards and other
technological  changes.  There is no  assurance  that the  Company's  OEMs  will
effectively meet these technological  challenges.  These OEMs are not within the
control of the Company,  may incorporate into their products the technologies of
other  companies  in addition to those of the Company and are not  obligated  to
purchase  products from the Company.  In addition,  the Company's OEMs generally
have exclusive rights to the Company's technology on their respective platforms,
subject to certain minimum royalty  obligations.  There can be no assurance that
any OEM will  continue to carry the  Company's  products,  and the  inability to
recruit,  or the loss of, important OEMs could  materially  adversely affect the
Company's business, operating results and financial condition.

         The Company  also relies  significantly  on its  distributors,  systems
integrators  and  value  added  resellers  (collectively,  "resellers")  for the
marketing and  distribution  of its  products.  The  Company's  agreements  with
resellers  are  generally  not  exclusive and in many cases may be terminated by
either party without cause. Many of the Company's  resellers carry product lines
that are competitive  with those of the Company.  There can be no assurance that
these  resellers  will give a high  priority to the  marketing of the  Company's
products (they may, in fact, give a higher priority to other products, including
the products of  competitors)  or that they will continue to carry the Company's
products. Events or occurrences of this nature could materially adversely affect
the Company's business, operating results and financial condition. The Company's
results of operations could also be materially  adversely affected by changes in
reseller inventory strategies, which could occur rapidly, and in many cases, may
not be related to end user demand.  There can be no  assurance  that the Company
will retain any of its current  resellers,  nor can there be any assurance that,
in such event,  the Company will be successful in recruiting  replacement or new
organizations  to represent it. Any such changes in the  Company's  distribution
channels could  materially  adversely affect the Company's  business,  operating
results and financial condition.


<PAGE>


International Operations; Risks Associated with International Sales

         The Company believes that its continued growth and  profitability  will
require  further  expansion  of  its  international   operations.  In  order  to
successfully expand  international  sales, the Company must establish additional
foreign   operations,   hire   additional   personnel  and  recruit   additional
international resellers.  This will require significant management attention and
financial  resources  and  could  materially   adversely  affect  the  Company's
operating  margins.  To the extent  that the  Company is unable to effect  these
additions in a timely manner,  the Company's  growth,  if any, in  international
sales  will be  limited,  and the  Company's  business,  operating  results  and
financial condition could be materially adversely affected.  In addition,  there
can be no  assurance  that the  Company  will be able to  maintain  or  increase
international   market  demand  for  the  Company's   products.   The  Company's
international  sales are currently  denominated in U.S. dollars.  An increase in
the value of the U.S.  dollar  relative  to  foreign  currencies  could make the
Company's products more expensive and,  therefore,  potentially less competitive
in those markets.  In some markets,  localization  of the Company's  products is
essential to achieve market penetration. The Company may incur substantial costs
and experience delays in localizing its products,  and there can be no assurance
that any localized product will ever generate significant revenues. In addition,
the Company relies  significantly  on its  distributors  and other  resellers in
international  sales efforts.  Since these  distributors and other resellers are
not employees of the Company and  typically do not offer the Company's  products
exclusively,  there can be no  assurance  that they will  continue to market the
Company's  products.  Additional  risks inherent in the Company's  international
business   activities   generally  include   unexpected  changes  in  regulatory
requirements,  tariffs and other trade barriers, lack of acceptance of localized
products,  if any, in foreign  countries,  longer  accounts  receivable  payment
cycles,  difficulties in managing international operations,  potentially adverse
tax consequences including restrictions on the repatriation of earnings, and the
burdens  of  complying  with a wide  variety of  foreign  laws.  There can be no
assurance  that such  factors  will not have a  material  adverse  effect on the
Company's future international sales and, consequently,  the Company's business,
operating results and financial condition.

Management of Expanding Operations

         The Company has recently experienced a period of significant  expansion
of its  operations  that has placed a  significant  strain  upon its  management
systems and resources. In addition, the Company has recently hired a significant
number of  employees,  and plans to further  increase its total  headcount.  The
Company  also  plans to expand the  geographic  scope of its  customer  base and
operations.  This  expansion  has  resulted  and  will  continue  to  result  in
substantial demands on the Company's  management  resources.  From time to time,
the Company  receives  customer  complaints about the timeliness and accuracy of
customer  support.  Although the Company plans to add customer support personnel
in order to  address  current  customer  support  needs and  intends  to closely
monitor progress in this area, there can be no assurance that these efforts will
be  successful.  If the  Company's  efforts are not  successful,  the  Company's
business,   operating  results  and  financial  condition  could  be  materially
adversely  affected.  The Company's ability to compete effectively and to manage
future expansion of its operations, if any, will require the Company to continue
to  improve  its  financial  and  management  controls,  reporting  systems  and
procedures  on a timely  basis and expand,  train and manage its  employee  work
force.  There  can be no  assurance  that  the  Company  will  be  able to do so
successfully.  The  Company's  failure to do so could  have a  material  adverse
effect upon the Company's business, operating results and financial condition.

Dependence Upon Key Personnel

         The Company's future  performance also depends in significant part upon
the continued service of its key technical and senior management personnel, none
of whom is bound by an employment agreement.  The loss of the services of one or
more of the  Company's  officers  or other key  employees  could have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.  The Company's future success also depends on its continuing  ability
to attract and retain  highly  qualified  technical  and  managerial  personnel.
Competition  for such  personnel is intense,  and there can be no assurance that
the Company can retain its key technical and managerial employees or that it can
attract,  assimilate or retain other highly  qualified  technical and managerial
personnel in the future.


Dependence on Growth in the Network Storage Management Market; General Economic
     and Market Conditions

         All of the  Company's  business  is in the network  storage  management
market,  which is still an  emerging  market.  The  Company's  future  financial
performance  will  depend in large  part on  continued  growth in the  number of
organizations   adopting   network  storage   management   solutions  for  their
client/server computing environments.  There can be no assurance that the market
for network  storage  management  will continue to grow. If the network  storage
management  market fails to grow or grows more slowly than the Company currently
anticipates,  the Company's business,  operating results and financial condition
would be materially  adversely  affected.  During recent years,  segments of the
computer industry have experienced  significant economic downturns characterized
by decreased  product  demand,  production  over capacity,  price erosion,  work
slowdowns and layoffs.  The Company's  operations  may in the future  experience
substantial fluctuations from period-to-period as a consequence of such industry
patterns,  general economic conditions affecting the timing of orders from major
customers,  and  other  factors  affecting  capital  spending.  There  can be no
assurance  that such  factors  will not have a  material  adverse  effect on the
Company's business, operating results or financial condition.

Dependence on Proprietary Technology; Risks of Infringement

         The Company depends  significantly  upon  proprietary  technology.  The
Company relies on a combination of copyright and trademark laws,  trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights.  The Company  seeks to protect  its  software,  documentation  and other
written  materials  under trade  secret and  copyright  laws,  which afford only
limited  protection.  There can be no  assurance  that the Company  will develop
proprietary products or technologies that are patentable, that any issued patent
will  provide  the  Company  with  any  competitive  advantages  or will  not be
challenged  by third  parties,  or that the  patents  of others  will not have a
material  adverse  effect on the Company's  ability to do business.  Despite the
Company's efforts to protect its proprietary  rights,  unauthorized  parties may
attempt  to  copy  aspects  of the  Company's  products  or to  obtain  and  use
information that the Company regards as proprietary.  Policing  unauthorized use
of the Company's  products is  difficult,  and although the Company is unable to
determine the extent to which piracy of its software  products exists,  software
piracy can be expected to be a persistent problem. In selling its products,  the
Company  relies  primarily  on  "shrink  wrap"  licenses  that are not signed by
licensees,  and, therefore, such licenses may be unenforceable under the laws of
certain  jurisdictions.  In addition,  the laws of some foreign countries do not
protect the Company's proprietary rights to as great an extent as do the laws of
the  United  States.  There  can be no  assurance  that the  Company's  means of
protecting  its  proprietary  rights  will be  adequate  or that  the  Company's
competitors will not  independently  develop similar  technology,  duplicate the
Company's  products  or design  around  patents  issued to the  Company or other
intellectual property rights of the Company.

         There has also been  substantial  amounts of litigation in the software
industry  regarding  intellectual  property rights. The Company has from time to
time received claims that it is infringing third parties'  intellectual property
rights,  and there can be no assurance that third parties will not in the future
claim  infringement  by the Company with respect to current or future  products,
trademarks  or other  proprietary  rights.  The Company  expects  that  software
product  developers will  increasingly be subject to infringement  claims as the
number of products and competitors in the Company's  industry  segment grows and
the functionality of products in different industry segments overlaps.  Any such
claims,  with or  without  merit,  could be  time-consuming,  result  in  costly
litigation,  cause product  shipment delays or require the Company to enter into
royalty or  licensing  agreements.  Such  royalty or  licensing  agreements,  if
required,  may not be  available on terms  acceptable  to the Company or at all,
which  could  have a  material  adverse  effect  upon  the  Company's  business,
operating results and financial condition.

Product Liability

         The Company's license  agreements with its customers  typically contain
provisions  designed  to limit  the  Company's  exposure  to  potential  product
liability  claims.  In selling its  products,  the Company  relies  primarily on
"shrink wrap" licenses that are not signed by licensees,  and,  therefore,  such
licenses  may be  unenforceable  under the laws of certain  jurisdictions.  As a
result  of these and other  factors,  the  limitation  of  liability  provisions
contained  in  the  Company's  license  agreements  may  not be  effective.  The
Company's products can be used to manage data critical to organizations, and, as
a result, the sale and support of products by the Company may entail the risk of
product liability  claims. A successful  product liability claim brought against
the Company could have a material  adverse  effect upon the Company's  business,
operating results and financial condition.

Possible Volatility of Stock Price

         The trading  price of the  Company's  Common  Stock has been subject to
wide fluctuations in 1996. The trading price of the Company's Common Stock could
be  subject  to  wide  fluctuations  in the  future  in  response  to  quarterly
variations in operating results,  announcements of technological  innovations or
new  products,  applications  or  product  enhancements  by the  Company  or its
competitors,  changes in financial  estimates by  securities  analysts and other
events or factors. In addition, the stock market has experienced volatility that
has  particularly  affected the market prices of equity  securities of many high
technology  companies  and  that  often  has  been  unrelated  to the  operating
performance of such  companies.  These broad market  fluctuations  may adversely
affect the market price of the Company's Common Stock.

                             SELLING SECURITY HOLDER

         The  Reoffer  Prospectus  relates to shares of Common  Stock which have
been acquired by a certain key employee (the "Selling  Security  Holder") of the
Company,  pursuant  to a written  agreement  between the Company and such person
dated as of January 31, 1997.

         The following table sets forth certain  information with respect to the
Selling Security Holder as of April 4, 1997:



<TABLE>
                                                                                  Number of     Percentage of
                                                                                   Shares           Shares
                                          Number of Shares       Number of      Beneficially     Beneficially
     Selling                             Beneficially Owned    Shares to be      Owned After     Owned After
 Security Holder      Position with       as of May 1, 1997   Offered Hereby      Offering         Offering
                       the Company

<S>                                          <C>                <C>              <C>                <C>
Louis C. Cole      Chairman of the           822,683 (1)        837 shares       821,846 (1)        4.76%
                   Board, President
                   and Chief Executive
                   Officer
<FN>
(1)  Includes  821,846  shares held by The Louis and Jolene Cole 1988  Revocable
Trust, dated November 7, 1988, of which Mr. Cole is a trustee.
</FN>
</TABLE>


                              PLAN OF DISTRIBUTION

         The shares of Common Stock covered by this Reoffer Prospectus are being
registered by the Company for the account of the Selling  Security  Holder.  The
Company   understands   that  none  of  such  shares  will  be  offered  through
underwriters.

         Shares  of Common  Stock  covered  by this  Reoffer  Prospectus  may be
offered and sold from time to time by the Selling  Security  Holder  through the
Nasdaq  National  Market  System,  the   over-the-counter   market,   negotiated
transactions or otherwise,  at the prices  prevailing at the time of such sales,
at prices  relating  to such  prevailing  market  prices or at prices  otherwise
negotiated. To the Company's knowledge, no specific brokers or dealers have been
designated by the Selling  Security  Holder nor has any  agreement  been entered
into in respect of brokerage  commissions  or for the  exclusive or  coordinated
sale of any securities which may be offered pursuant to this Reoffer Prospectus.
The Selling Security Holder and any broker dealer through whom sales are made by
the Selling Security Holder may be regarded as "underwriters" within the meaning
of the  Securities  Act  although the Selling  Security  Holder  disclaims  such
status, and their compensation may be regarded as underwriter's compensation.

         The  Company  will not receive any of the  proceeds  from the  offering
hereunder.  All  expenses  of  registration  incurred  in  connection  with this
offering  are being borne by the  Company,  but all  selling and other  expenses
incurred by the Selling  Security Holder will be borne by such Selling  Security
Holder.

         On May 27,  1997,  the  closing  sales  price of  the Common Stock,  as
reported on the Nasdaq National Market System, was $19.75.


                       DOCUMENTS INCORPORATED BY REFERENCE

         The Company hereby  incorporates  by reference into this Prospectus the
following documents previously filed with the Commission:

         (a)      The Company's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1996; and

         (b)      The Company's  Registration  Statement No. 0-26130 on Form 8-A
                  filed with the SEC on May 19, 1995 pursuant to Section 12 of
                  the  Exchange  Act, in which there is described  the terms,
                  rights and provisions applicable to the Company's outstanding
                  Common Stock.

         All of such  documents are on file with the  Commission.  All documents
subsequently filed by the Company pursuant to Section 13(a),  13(c), 14 or 15(d)
of the Exchange Act,  prior to the filing of a  post-effective  amendment  which
indicates  that all securities to be offered  pursuant  hereto have been sold or
which  deregisters all such securities then remaining  unsold shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents.


                                 INDEMNIFICATION

         Section 145 of the Delaware General  Corporation Law authorizes a court
to award or a  corporation's  Board of  Directors  to grant  indemnification  to
directors   and   officers   in  terms   sufficiently   broad  to  permit   such
indemnification   under  certain   circumstances   for  liabilities   (including
reimbursement  for expenses  incurred)  arising  under the  Securities  Act. The
Company's  Bylaws  provide for  mandatory  indemnification  of its directors and
officers and  permissible  indemnification  of employees and other agents to the
maximum extent permitted by the Delaware General  Corporation Law. The Company's
Certificate  of  Incorporation  provides  that,  pursuant to Delaware  law,  its
directors shall not be liable for monetary damages for breach of their fiduciary
duty as directors  to the Company and its  stockholders.  This  provision in the
Certificate  of  Incorporation  does not  eliminate  the  fiduciary  duty of the
directors,  and,  in  appropriate  circumstances,  equitable  remedies  such  as
injunctive or other forms of  non-monetary  relief will remain  available  under
Delaware  law.  In  addition,  each  director  will  continue  to be  subject to
liability for breach of the  director's  duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct,  for knowing
violations  of law,  for  actions  leading to improper  personal  benefit to the
director  and for  payment of  dividends  or approval  of stock  repurchases  or
redemptions  that are unlawful  under  Delaware law. The provision also does not
affect a director's  responsibilities  under any other law,  such as the federal
securities laws or state or federal  environmental laws. The Company has entered
into   Indemnification   Agreements   with  its  officers  and  directors.   The
Indemnification  Agreements  provide the Company's  officers and directors  with
further  indemnification to the maximum extent permitted by the Delaware General
Corporation Law.

         Insofar as indemnification for liabilities arising under the Securities
Act  may  be  permitted  to  directors,  officers  or  persons  controlling  the
Registrant  pursuant  to the  foregoing  provisions,  the  Registrant  has  been
informed that in the opinion of the Commission such  indemnification  is against
public policy as expressed in the 1933 Act, and is, therefore, unenforceable.
[{"type": "S-8", "sequence": "1", "description": "FORM S-8 REGISTRATION STATEMENT", "secsgml_size_bytes": 63980}]
{"company-data": {"conformed-name": "LEGATO SYSTEMS INC", "cik": "0000859360", "assigned-sic": "7372", "irs-number": "943077394", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-28405", "film-number": "97618637"}, "business-address": {"street1": "3145 PORTER DR", "city": "PALO ALTO", "state": "CA", "zip": "94304", "phone": "4158126000"}, "mail-address": {"street1": "3210 PORTER DRIVE", "city": "PALO ALTO", "state": "CA", "zip": "94304"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT

                                      Under
                           The Securities Act of 1933

                              LEGATO SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                          94-3077394
 (State or other jurisdiction of                             (IRS Employer
  incorporation or organization)                          Identification No.)

                                      7372
                          (Primary Standard Industrial
                          Classification Code Number)

                                3210 Porter Drive
                           Palo Alto, California 94304
               (Address of principal executive offices) (Zip Code)

                              LEGATO SYSTEMS, INC.
                      1995 Stock Option/Stock Issuance Plan
                  Shares Issued Pursuant to a Written Agreement
                            (Full title of the Plan)

                                  Louis C. Cole
                      President and Chief Executive Officer
                              LEGATO SYSTEMS, INC.
                                3210 Porter Drive
                           Palo Alto, California 94304
                     (Name and address of agent for service)

                                 (415) 812-6000
          (Telephone number, including area code, of agent for service)

                         CALCULATION OF REGISTRATION FEE

                                                             Proposed Maximum    Proposed Maximum
                                             Amount to be     Offering Price        Aggregate          Amount of
  Title of Securities to be Registered      Registered(1)      per Share(2)     Offering Price(2)    Registration
                                                                                                          Fee
------------------------------------------ ------------------------------------ ------------------- ----------------
1995 Stock Option/Stock Issuance Plan
Options to Purchase Common Stock           508,151                 N/A                 N/A                N/A

Common Stock, $0.0001 par value            508,151 shares        $19.375           $9,845,425.625       $2,983.46

Written Agreement
Common Stock,  $0.0001 par value           837 shares            $19.375           $   16,216.875       $    4.91
(1)  This  Registration  Statement  shall  also cover any  additional  shares of
     Common  Stock  which  become  issuable  under the 1995  Stock  Option/Stock
     Issuance  Plan and the Written  Agreement by reason of any stock  dividend,
     stock split, recapitalization or other similar transaction effected without
     the receipt of consideration  which results in an increase in the number of
     the outstanding shares of Common Stock of Legato Systems, Inc.
(2)  Calculated  solely for purposes of this  offering  under Rule 457(h) of the
     Securities Act of 1933, as amended, on the basis of the average of the high
     and low  prices  per  share of  Common  Stock of Legato  Systems,  Inc.  as
     reported on the Nasdaq National Market on May 27, 1997.
EXPLANATORY NOTE

         Pursuant  to  General  Instruction  C of Form  S-8,  this  Registration
Statement  contains a prospectus  meeting the requirements of Part I of Form S-3
relating to the reoffer by a certain  individual of shares of Common Stock,  par
value $0.0001 per share, of Legato Systems,  Inc. acquired pursuant to a Written
Agreement.
LEGATO SYSTEMS, INC.

         FORM S-8 CROSS REFERENCE SHEET SHOWING LOCATION OF INFORMATION
                         REQUIRED BY PART I OF FORM S-3
Form S-3 Item Number                                          Location/Heading in Prospectus

1.    Forepart of Registration Statement and Outside          Cover page
         Front Cover page of Prospectus
2.    Inside Front and Outside Back Cover Page of             Available Information; Incorporation of
         Prospectus                                               Certain Information by Reference
3.    Summary Information, Risk Factors and Ratio of          Risk Factors
         Earnings to Fixed Charges
4.    Use of Proceeds                                         Not applicable
5.    Determination of Offering Price                         Not applicable
6.    Dilution                                                Not applicable
7.    Selling Security Holder                                 Selling Security Holder
8.    Plan of Distribution                                    Plan of Distribution
9.    Description of Securities to be Registered              Not Applicable
10.   Interests of Named Experts and Counsel                  Not Applicable
11.   Material Changes                                        Not Applicable
12.   Incorporation of Certain Information                    Documents Incorporated by Reference
13.   Disclosure of Commission Position on                    Indemnification
         Indemnification for Securities Act Liabilities
PART II

               Information Required in the Registration Statement

Item 3.  Incorporation of Documents by Reference

     Legato Systems,  Inc. (the "Registrant")  hereby  incorporates by reference
into this Registration  Statement the following documents  previously filed with
the Securities and Exchange Commission (the "SEC"):

     (a) The  Registrant's  Annual Report on Form 10-K for the fiscal year ended
December 31, 1996; and

     (b) The Registrant's  Registration  Statement No. 0-26130 on Form 8-A filed
with the SEC on May 19, 1995 pursuant to Section 12 of the  Securities  Exchange
Act of 1934, as amended (the "1934 Act"), in which there is described the terms,
rights and provisions applicable to the Registrant's outstanding Common Stock.

         All  reports  and  definitive  proxy or  information  statements  filed
pursuant to Section 13(a),  13(c), 14 or 15(d) of the 1934 Act after the date of
this  Registration  Statement  and  prior  to  the  filing  of a  post-effective
amendment which  indicates that all securities  offered hereby have been sold or
which  deregisters  all securities  then remaining  unsold shall be deemed to be
incorporated  by reference  into this  Registration  Statement  and to be a part
hereof from the date of filing of such documents.  Any statement  contained in a
document  incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration  Statement
to the extent that a statement  contained  herein or in any  subsequently  filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes  such statement.  Any such statement so modified or superseded  shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4.  Description of Securities

         Not Applicable.

Item 5.  Interests of Named Experts and Counsel

         Not Applicable.

Item 6.  Indemnification of Directors and Officers

         Section 145 of the Delaware General  Corporation Law authorizes a court
to award or a  corporation's  Board of  Directors  to grant  indemnification  to
directors   and   officers   in  terms   sufficiently   broad  to  permit   such
indemnification   under  certain   circumstances   for  liabilities   (including
reimbursement  for expenses  incurred) arising under the Securities Act of 1933,
as amended (the "1933  Act").  The  Registrant's  Bylaws  provide for  mandatory
indemnification of its directors and officers and permissible indemnification of
employees  and other  agents to the maximum  extent  permitted  by the  Delaware
General Corporation Law. The Registrant's  Certificate of Incorporation provides
that,  pursuant to Delaware law, its directors  shall not be liable for monetary
damages for breach of their  fiduciary  duty as directors to the  Registrant and
its  stockholders.  This provision in the Certificate of Incorporation  does not
eliminate   the  fiduciary   duty  of  the   directors,   and,  in   appropriate
circumstances,   equitable  remedies  such  as  injunctive  or  other  forms  of
non-monetary relief will remain available under Delaware law. In addition,  each
director will  continue to be subject to liability for breach of the  director's
duty of loyalty to the  Registrant  for acts or  omissions  not in good faith or
involving  intentional  misconduct,  for knowing  violations of law, for actions
leading  to  improper  personal  benefit  to the  director  and for  payment  of
dividends  or approval of stock  repurchases  or  redemptions  that are unlawful
under   Delaware  law.  The   provision   also  does  not  affect  a  director's
responsibilities  under any other law,  such as the federal  securities  laws or
state  or  federal   environmental   laws.   The  Registrant  has  entered  into
Indemnification  Agreements with its officers and directors. The Indemnification
Agreements  provide  the  Registrant's   officers  and  directors  with  further
indemnification  to  the  maximum  extent  permitted  by  the  Delaware  General
Corporation Law.

Item 7.  Exemption from Registration Claimed

         Not Applicable.

Item 8.  Exhibits

         Exhibit        Exhibit
         Number

            4           Instrument  Defining  Rights of  Stockholders.
                        Reference is made to  Registrant's Registration
                        Statement No. 0-26130 on Form 8-A, which is incorporated
                        herein by reference pursuant to Item 3(b) of this
                        Registration Statement.
            5           Opinion and consent of Gunderson Dettmer Stough
                        Villeneuve  Franklin & Hachigian, LLP.
           23.1         Consent of Coopers & Lybrand LLP,
                        Independent Accountants.
           23.2         Consent of  Gunderson  Dettmer  Stough  Villeneuve
                        Franklin &  Hachigian,  LLP is contained in Exhibit 5.
           24           Power of Attorney.  Reference is made to page II-3 of
                        this Registration Statement.
           99.1         Written Agreement with Louis C. Cole.

Item 9.  Undertakings

         A. The undersigned  Registrant hereby  undertakes:  (1) to file, during
any period in which offers or sales are being made, a  post-effective  amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the  prospectus any facts or events
arising after the  effective  date of this  Registration  Statement (or the most
recent  post-effective   amendment  thereof)  which,   individually  or  in  the
aggregate,  represent a fundamental  change in the information set forth in this
Registration  Statement  and (iii) to  include  any  material  information  with
respect  to  the  plan  of  distribution   not  previously   disclosed  in  this
Registration  Statement  or any  material  change  to such  information  in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not  apply  if the  information  required  to be  included  in a  post-effective
amendment by those  paragraphs  is contained  in periodic  reports  filed by the
Registrant  pursuant  to Section  13 or  Section  15(d) of the 1934 Act that are
incorporated  by reference into this  Registration  Statement;  (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment  shall be deemed to be a new  registration  statement  relating to the
securities  offered  therein and the  offering of such  securities  at that time
shall be deemed to be the initial bona fide  offering  thereof and (3) to remove
from  registration by means of a post-effective  amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1995
Stock Option/Stock Issuance Plan.

         B. The undersigned  Registrant  hereby undertakes that, for purposes of
determining  any liability  under the 1933 Act, each filing of the  Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

         C. Insofar as  indemnification  for liabilities  arising under the 1933
Act may be  permitted  to  directors,  officers  or  controlling  persons of the
Registrant  pursuant to the indemnification  provisions  summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the SEC, such
indemnification  is against  public policy as expressed in the 1933 Act, and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy  as  expressed  in the  1933  Act  and  will  be  governed  by the  final
adjudication of such issue.
SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the  requirements  for  filing  on Form  S-8,  and has duly  caused  this
Registration Statement to be signed on its behalf by the undersigned,  thereunto
duly  authorized,  in the City of Palo Alto,  State of California on this 2nd
day of June, 1997.

                                      LEGATO SYSTEMS, INC.

                                      /s/ Louis C. Cole
                                      By:
                                           Louis C. Cole
                                           President, Chief Executive Officer
                                             and Chairman of the Board

                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

         That the undersigned officers and directors of Legato Systems,  Inc., a
Delaware corporation, do hereby constitute and appoint Louis C. Cole and Stephen
C. Wise, and either of them, the lawful  attorneys-in-fact  and agents with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents,  and either one of them,  determine
may be necessary or advisable or required to enable said  corporation  to comply
with the  Securities  Act of 1933, as amended,  and any rules or  regulations or
requirements  of the Securities and Exchange  Commission in connection with this
Registration  Statement.  Without limiting the generality of the foregoing power
and authority,  the powers  granted  include the power and authority to sign the
names of the  undersigned  officers and  directors in the  capacities  indicated
below  to  this  Registration  Statement,  to  any  and  all  amendments,   both
pre-effective   and   post-effective,   and  supplements  to  this  Registration
Statement,  and to any and all  instruments or documents  filed as part of or in
conjunction  with this  Registration  Statement  or  amendments  or  supplements
thereof,  and either of the  undersigned  hereby  ratifies and confirms all that
said attorneys and agents,  or either one of them,  shall do or cause to be done
by virtue hereof. This Power of Attorney may be signed in several counterparts.

         IN WITNESS WHEREOF,  each of the undersigned has executed this Power of
Attorney as of the date indicated.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this  Registration  Statement has been signed below by the following  persons in
the capacities and on the dates indicated.

               Signature                       Title                              Date
/s/ Louis C. Cole              President, Chief Executive Officer          June 2, 1997
     -------------------------      and Chairman of the Board
             Louis C. Cole          (Principal Executive Officer)

     /s/ Stephen C. Wise            Chief Financial Officer, Vice President of  June 2, 1997
     -------------------------      Finance and Administration and
            Stephen C. Wise         Assistant Secretary (Principal Financial
                                    and Accounting Officer)

     /s/ Eric Benhamou
     -------------------------      Director                                    June 2, 1997
             Eric Benhamou

     /s/ Kevin A. Fong
     -------------------------      Director                                    June 2, 1997
             Kevin A. Fong

     /s/ David N. Strohm
     -------------------------      Director                                    May 13, 1997
            David N. Strohm

     /s/ Phillip E. White
     -------------------------      Director                                    June 2, 1997

           Phillip E. White
SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.

                                    EXHIBITS

                                       TO

                                    FORM S-8

                                      UNDER

                             SECURITIES ACT OF 1933

                              LEGATO SYSTEMS, INC.
EXHIBIT INDEX

  Exhibit        Exhibit
  Number
     4           Instrument Defining Rights of Stockholders.  Reference is made
                 to Registrant's Registration Statement No. 0-26130 on Form 8-A,
                 which is incorporated herein byreference pursuant to Item 3(b)
                 of this Registration Statement.
     5           Opinion and consent of Gunderson Dettmer Stough Villeneuve
                 Franklin & Hachigian, LLP.
   23.1          Consent of Coopers & Lybrand LLP, Independent Accountants
   23.2          Consent of Gunderson Dettmer Stough Villeneuve Franklin &
                 Hachigian, LLP is contained
                 in Exhibit 5.
    24           Power of Attorney.  Reference is made to page II-3 of this
                 Registration Statement.
   99.1          Written Agreement with Louis C. Cole.
EXHIBIT 5

                             Opinion and Consent of
         Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP

                                                  May 28, 1997

Legato Systems, Inc.
3210 Porter Drive
Palo Alto, CA  94304

         Re:      Legato Systems, Inc. Registration Statement
                  for Offering of 508,151 Shares of Common Stock
                  and Reoffering of 837 Shares of Common Stock

Ladies and Gentlemen:

         We  refer  to  your   registration  on  Form  S-8  (the   "Registration
Statement") under the Securities Act of 1933, as amended,  of (i) 508,151 shares
of  Common  Stock   available  for  issuance  under  the  Company's  1995  Stock
Option/Stock Issuance Plan and (ii) 837 shares of Common Stock under the Written
Agreement  between  the Company  and Louis C. Cole.  We advise you that,  in our
opinion,  when such shares have been issued and sold pursuant to the  applicable
provisions  of the  1995  Stock  Option/Stock  Issuance  Plan  and  the  Written
Agreement  between  the Company and Louis C. Cole,  and in  accordance  with the
Registration  Statement,  such  shares  will be validly  issued,  fully paid and
nonassessable shares of the Company's Common Stock.

         We hereby  consent to the  filing of this  opinion as an exhibit to the
Registration Statement.

                                       Very truly yours,

                                       Gunderson Dettmer Stough
                                       Villeneuve Franklin & Hachigian, LLP
EXHIBIT 23.1

            Consent of Coopers & Lybrand LLP, Independent Accountants

                       ONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the  incorporation by reference in the  registration  statement of
Legato  Systems,  Inc. and  Subsidiaries on Form S-8 of our report dated January
20, 1997, on our audits of the consolidated  financial  statements and financial
statement  schedule of Legato Systems,  Inc. and Subsidiaries as of December 31,
1996 and  1995,  and for the  years  ended  December  31,  1996,  1995 and 1994,
appearing in the Annual Report on Form 10-K of Legato  Systems,  Inc. filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1934.

                                                        COOPERS & LYBRAND L.L.P.

San Jose, California
May 28, 1997
EXHIBIT 99.1

                      Written Agreement with Louis C. Cole
                                    AGREEMENT

         Agreement  entered  into as of this 31st day of January,  1997  between
Legato Systems, Inc., a Delaware corporation ("Corporation"),  and Louis C. Cole
("Purchaser").

         Whereas, the Corporation wishes to retain the services of Purchaser and
Purchaser  wishes to be engaged by the  Corporation to perform  services and, in
consideration of the services to be performed by Purchaser,  the Corporation has
this day awarded  Purchaser the right to purchase  shares of the Common Stock of
the Corporation.

         NOW, THEREFORE, it is agreed as follows:

     D.  Award of  Shares.  Purchaser  has been  awarded  the right to  purchase
shares,  subject to and upon  terms and  conditions  identical  to the terms and
conditions applicable to the purchase of shares under the Corporation's Employee
Stock Purchase Plan.

     E. Successors and Assigns.  The provisions of this Agreement shall inure to
the benefit of, and be binding  upon,  the  successors,  administrators,  heirs,
legal representatives and assigns of Purchaser and the successors and assigns of
the Corporation.

     F. Governing Law. The interpretation,  performance, and enforcement of this
Agreement  shall be  governed  by the laws of the  State of  California  without
resort to that State's conflict-of-laws rules.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.

                                   LEGATO SYSTEMS, INC.

                                   By: /s/ Stephen C. Wise
                                   Title:   Chief Financial Officer

                                   /s/ Louis C. Cole

                                   Address: 3210 Porter Drive
                                   Palo Alto, CA 94304
REOFFER PROSPECTUS

                                   837 Shares

                              Legato Systems, Inc.

                                  Common Stock

         This  Reoffer  Prospectus  relates  to the  offer and sale of up to 837
shares of the Common  Stock,  par value $.0001 (the "Common  Stock"),  of Legato
Systems,  Inc.  (the  "Company"),  which may be offered from time to time by the
registered  stockholder  named herein (the  "Selling  Security  Holder").  It is
anticipated  that the  Selling  Security  Holder  will offer  shares for sale at
prevailing  prices on the Nasdaq National Market System on the date of sale. The
Company  will  receive  no part of the  proceeds  of sale  made  hereunder.  All
expenses of  registration  incurred in  connection  with this offering are being
borne by the Company, but all selling and other expenses incurred by the Selling
Security Holder will be borne by such Selling Security Holder.

         The  Company's  Common  Stock is quoted on the Nasdaq  National  Market
under the symbol LGTO.  On  May 27,  the average  of  the  high  and low selling
prices of the Common Stock was $19.375 per share.

         The Selling Security Holder and any broker executing  selling orders on
behalf of the Selling Security Holder may be deemed to be "underwriters"  within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
which event commissions received by such broker may be deemed to be underwriting
commissions under the Securities Act.

            THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD
            BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
                            THEIR ENTIRE INVESTMENT.
                     SEE "RISK FACTORS" BEGINNING ON PAGE 3.

    THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
     AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
               OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
                     TO THE CONTRARY IS A CRIMINAL OFFENSE.

         No  person  is  authorized  to give  any  information  or to  make  any
representations,  other than those contained in this  Prospectus,  in connection
with the offering  described herein,  and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any Selling Security Holder.  This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities  by any person in any  jurisdiction  in which it is unlawful for such
person to make such offer,  solicitation  or sale.  Neither the delivery of this
Prospectus nor any sale made hereunder shall under any  circumstances  create an
implication  that the  information  contained  herein is  correct as of any time
subsequent to the date hereof.

         The date of this Prospectus is June 3, 1997.
AVAILABLE INFORMATION

         The Company is subject to the informational  reporting  requirements of
the  Securities  Exchange Act of 1934,  as amended (the  "Exchange  Act") and in
accordance therewith files reports and other information with the Securities and
Exchange  Commission  (the  "Commission").  Such reports,  proxy and information
statements  and other  information  can be  inspected  and  copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices at 219 South Dearborn Street,  Chicago,
IL 60604; 26 Federal Plaza, New York, NY 10007; and 5757 Wilshire Boulevard, Los
Angeles, CA 90036, at prescribed rates. The Commission maintains a Web site that
contains  reports,  proxy  and  information  statements  and  other  information
regarding   companies   that  file   electronically   with  the   Commission  at
http://www.sec.gov.  The  Common  Stock of the  Company  is quoted on the Nasdaq
National Market System.  Reports,  proxy statements,  information statements and
other information  concerning the Company can be inspected at the offices of the
National  Association  of  Securities  Dealers,  Inc.  at 1735 K  Street,  N.W.,
Washington, D.C. 20006.

         A copy of any document  incorporated  by reference in the  Registration
Statement (not including  exhibits to the  information  that is  incorporated by
reference unless such exhibits are  specifically  incorporated by reference into
the information  that the  Registration  Statement  incorporates)  of which this
Reoffer  Prospectus  forms a part but which is not  delivered  with this Reoffer
Prospectus  will  be  provided  by the  Company  without  charge  to any  person
(including  any  beneficial  owner) to whom  this  Reoffer  Prospectus  has been
delivered upon the oral or written request of such person.  Such requests should
be directed to Rick Ruiz, Investor Relations,  Legato Systems, Inc., 3210 Porter
Drive,  Palo Alto,  California  94304.  The Company's  telephone  number at that
location is (415) 812-6000.

                                TABLE OF CONTENTS

                                                                           Page

THE COMPANY...................................................................3

RISK FACTORS..................................................................3

SELLING SECURITY HOLDER.......................................................9

PLAN OF DISTRIBUTION..........................................................9

DOCUMENTS INCORPORATED BY REFERENCE..........................................10

INDEMNIFICATION..............................................................10
THE COMPANY

         Legato  Systems,  Inc. (the "Company")  develops,  markets and supports
network storage  management  software products for  heterogeneous  client/server
computing environments. The Company believes it is currently a technology leader
in the network storage management  software market because of the heterogeneity,
scalability, performance and ease of use of its software products. The Company's
NetWorker  software  supports many storage  management  server platforms and can
accommodate  a variety of clients,  servers and storage  devices.  The Company's
long term strategy is to create an integrated set of solutions  centered  around
storage management that enhance and simplify network computing as a whole.

         The  Company  utilizes  multiple   distribution   channels,   including
resellers, OEMs and direct sales, as a part of the Company's strategy to achieve
comprehensive  coverage in the market.  The Company  licenses its source code to
leading computer system and software suppliers,  including Amdahl,  Banyan, Data
General,  Digital,  ICL,  Siemens  Nixdorf,  Silicon  Graphics,  Sony,  SunSoft,
Nihon-Unisys and Unisys, which port the products to their proprietary platforms,
sell the products  through their direct and indirect  distribution  channels and
provide primary support for the products after installation. These relationships
enable the Company to reach a broad customer base,  while reducing  development,
support and product costs.

         The Company's  executive offices are located at 3210 Porter Drive, Palo
Alto, California 94304. The Company's telephone number is (415) 812-6000.

                                  RISK FACTORS

Fluctuations in Quarterly Operating Results; Future Operating Results Uncertain

         The Company's  quarterly  operating results have in the past varied and
may in the future vary significantly depending on a number of factors, including
the size  and  timing  of  significant  orders;  increased  competition;  market
acceptance of new products,  applications and product  enhancements;  changes in
pricing policies by the Company and its competitors;  the ability of the Company
to timely develop,  introduce and market new products,  applications and product
enhancements and to control costs; the Company's  success in expanding its sales
and marketing programs;  technological changes in the network storage management
market;  the mix of sales among the  Company's  channels;  deferrals of customer
orders in  anticipation of new products,  applications or product  enhancements;
changes in Company strategy; personnel changes; and general economic factors.

         The Company's  future  revenues are  difficult to predict.  The Company
operates with virtually no order backlog because its software products typically
are shipped shortly after orders are received. In addition, the Company does not
recognize revenues on sales to domestic distributors until the products are sold
through  to  end  users.  As a  result,  product  revenues  in any  quarter  are
substantially  dependent on orders booked and shipped and on sell-through to end
users in that quarter.  Revenues for any future quarter are not predictable with
any significant degree of certainty.  Product and software subscription revenues
are also difficult to forecast because the network storage  management market is
rapidly  evolving  and the  Company's  sales  cycle  varies  substantially  from
customer to customer.  Royalty and license revenues are substantially  dependent
upon sales by OEMs of their products that  incorporate  the Company's  software.
Accordingly,  royalty and license  revenues are subject to OEMs' product cycles,
which are also  difficult to predict.  Royalty and license  revenues are further
impacted by fluctuations in licensing activity from quarter-to-quarter,  because
initial license fees generally are non-recurring and recognized upon the signing
of the license  agreement.  The Company's  expense levels are based, in part, on
its   expectations  as  to  future   revenues.   If  revenue  levels  are  below
expectations,  operating results are likely to be adversely affected. Net income
may  be  disproportionately  affected  by a  reduction  in  revenues  because  a
proportionately  smaller  amount  of the  Company's  expenses  varies  with  its
revenues. As a result, the Company believes that period-to-period comparisons of
its  results of  operations  are not  necessarily  meaningful  and should not be
relied upon as  indications of future  performance.  Due to all of the foregoing
factors,  it is possible  that in some future  quarter the  Company's  operating
results may be below the  expectations  of public market analysts and investors.
In such  event,  the  price  of the  Company's  Common  Stock  would  likely  be
materially adversely affected.

Product Concentration

         The Company  currently  derives a substantial  majority of its revenues
from its  NetWorker  software  products  and related  services,  and the Company
expects that revenues from  NetWorker will continue to account for a majority of
the Company's  revenues for the foreseeable  future.  Broad market acceptance of
NetWorker is, therefore,  critical to the Company's future success. As a result,
a decline in unit prices of or demand for NetWorker, or failure to achieve broad
market acceptance of NetWorker, as a result of competition, technological change
or otherwise,  would have a material  adverse effect on the business,  operating
results and financial  condition of the Company.  The life cycle of NetWorker is
difficult  to  estimate  due in large  measure  to the recent  emergence  of the
Company's  market,   the  effect  of  new  products,   applications  or  product
enhancements,   technological   changes  in  the  network   storage   management
environment in which NetWorker  operates and future  competition.  The Company's
future financial performance will depend in part on the successful  development,
introduction  and market  acceptance of new products,  applications  and product
enhancements.  There can be no assurance  that the Company  will  continue to be
successful in marketing  NetWorker or any new products,  applications or product
enhancements.

Competition

         The network storage management market is intensely competitive,  highly
fragmented  and  characterized  by  rapidly  changing  technology  and  evolving
standards. Competitors vary in size and in the scope and breadth of the products
and  services  offered.  Increased  competition  is  likely  to  result in price
reductions,  reduced gross margins and loss of market share,  any of which could
materially  adversely  affect the  Company's  business,  operating  results  and
financial  condition.  Many of the Company's  current and potential  competitors
have significantly greater financial,  technical,  marketing and other resources
than the Company.  As a result,  they may be able to respond more quickly to new
or emerging  technologies  and changes in  customer  requirements,  or to devote
greater  resources  to the  development,  promotion,  sale and  support of their
products  than the  Company.  The Company also  expects  that  competition  will
increase  as a result of future  software  industry  consolidations,  which have
occurred in the network  storage  management  market in the past.  In  addition,
current and potential  competitors have established or may establish cooperative
relationships  among  themselves  or  with  third  parties.  Accordingly,  it is
possible that new  competitors  or alliances  among  competitors  may emerge and
rapidly acquire significant market share. In addition,  network operating system
vendors  could  introduce  new  or  upgrade   existing   operating   systems  or
environments  that  include  storage  management  functionality  offered  by the
Company's  products,  which could  render the  Company's  products  obsolete and
unmarketable. There can be no assurance that the Company will be able to compete
successfully against current or future competitors or that competitive pressures
faced  by the  Company  will  not  materially  adversely  affect  its  business,
operating results and financial condition.

Dependence on New Software Products; Rapid Technological Change

         The  network  storage  management  market  is  characterized  by  rapid
technological  change,  changing  customer needs,  frequent new software product
introductions  and evolving  industry  standards.  The  introduction of products
embodying new  technologies  and the emergence of new industry  standards  could
render the Company's existing products obsolete and unmarketable.  The Company's
future  success  will  depend  upon its  ability to develop  and  introduce  new
software products  (including new releases,  applications and enhancements) on a
timely  basis  that keep  pace  with  technological  developments  and  emerging
industry  standards  and address  the  increasingly  sophisticated  needs of its
customers.  There can be no  assurance  that the Company will be  successful  in
developing and marketing new products that respond to  technological  changes or
evolving industry standards,  that the Company will not experience  difficulties
that  could  delay or  prevent  the  successful  development,  introduction  and
marketing of these new products,  or that its new products will  adequately meet
the  requirements  of the  marketplace  and achieve  market  acceptance.  If the
Company is unable, for technological or other reasons,  to develop and introduce
new products in a timely  manner in response to changing  market  conditions  or
customer requirements,  the Company's business,  operating results and financial
condition will be materially adversely affected. The Company currently has plans
to  introduce  and market  several  potential  new  products  in the next twelve
months.  Some of the  Company's  competitors  currently  offer  certain of these
potential new products.  Due to the complexity of client/server software and the
difficulty in gauging the engineering effort required to produce these potential
new products,  such potential new products are subject to significant  technical
risks.  There can be no  assurance  that such  potential  new  products  will be
introduced on a timely basis or at all. In the past, the Company has experienced
delays  in  the  commencement  of  commercial  shipments  of its  new  products,
resulting in customer  frustrations  and delay or loss of product  revenues.  If
potential  new products  are delayed or do not achieve  market  acceptance,  the
Company's business, operating results and financial condition will be materially
adversely  affected.  The Company has also, in the past,  experienced  delays in
purchases of its products by customers  anticipating  the launch of new products
by the  Company.  There can be no assurance  that  material  order  deferrals in
anticipation of new product introductions will not occur.

         Software  products  as complex  as those  offered  by the  Company  may
contain  undetected  errors or failures when first introduced or as new versions
are released.  The Company has in the past discovered software errors in certain
of its new products after their  introduction and has experienced delays or lost
revenues  during the period  required  to correct  these  errors.  Although  the
Company has not experienced  material  adverse  effects  resulting from any such
errors to date,  there can be no assurance that,  despite testing by the Company
and by current and potential customers, errors will not be found in new products
after  commencement  of commercial  shipments,  resulting in loss of or delay in
market acceptance, which could have a material adverse effect upon the Company's
business, operating results and financial condition.

Risks Associated with Strategy of Expanding OEM Channel; Reliance on Resellers

         An  integral  part  of  the  Company's  strategy  is  to  increase  the
proportion of the Company's  customers  licensed  through OEMs.  There can be no
assurance  that such  customers  will  continue  to  account  for a  significant
percentage  of the  Company's  revenues in the future.  The Company is currently
investing,  and intends to continue to invest,  significant resources to develop
this channel,  which could materially  adversely affect the Company's  operating
margins.  There can be no assurance  that the Company will be  successful in its
efforts to increase the revenues  represented  by this  channel.  The Company is
dependent  upon its OEMs'  ability to develop  new  products,  applications  and
product  enhancements  on a timely  and  cost-effective  basis  that  will  meet
changing  customer  needs and respond to emerging  industry  standards and other
technological  changes.  There is no  assurance  that the  Company's  OEMs  will
effectively meet these technological  challenges.  These OEMs are not within the
control of the Company,  may incorporate into their products the technologies of
other  companies  in addition to those of the Company and are not  obligated  to
purchase  products from the Company.  In addition,  the Company's OEMs generally
have exclusive rights to the Company's technology on their respective platforms,
subject to certain minimum royalty  obligations.  There can be no assurance that
any OEM will  continue to carry the  Company's  products,  and the  inability to
recruit,  or the loss of, important OEMs could  materially  adversely affect the
Company's business, operating results and financial condition.

         The Company  also relies  significantly  on its  distributors,  systems
integrators  and  value  added  resellers  (collectively,  "resellers")  for the
marketing and  distribution  of its  products.  The  Company's  agreements  with
resellers  are  generally  not  exclusive and in many cases may be terminated by
either party without cause. Many of the Company's  resellers carry product lines
that are competitive  with those of the Company.  There can be no assurance that
these  resellers  will give a high  priority to the  marketing of the  Company's
products (they may, in fact, give a higher priority to other products, including
the products of  competitors)  or that they will continue to carry the Company's
products. Events or occurrences of this nature could materially adversely affect
the Company's business, operating results and financial condition. The Company's
results of operations could also be materially  adversely affected by changes in
reseller inventory strategies, which could occur rapidly, and in many cases, may
not be related to end user demand.  There can be no  assurance  that the Company
will retain any of its current  resellers,  nor can there be any assurance that,
in such event,  the Company will be successful in recruiting  replacement or new
organizations  to represent it. Any such changes in the  Company's  distribution
channels could  materially  adversely affect the Company's  business,  operating
results and financial condition.
International Operations; Risks Associated with International Sales

         The Company believes that its continued growth and  profitability  will
require  further  expansion  of  its  international   operations.  In  order  to
successfully expand  international  sales, the Company must establish additional
foreign   operations,   hire   additional   personnel  and  recruit   additional
international resellers.  This will require significant management attention and
financial  resources  and  could  materially   adversely  affect  the  Company's
operating  margins.  To the extent  that the  Company is unable to effect  these
additions in a timely manner,  the Company's  growth,  if any, in  international
sales  will be  limited,  and the  Company's  business,  operating  results  and
financial condition could be materially adversely affected.  In addition,  there
can be no  assurance  that the  Company  will be able to  maintain  or  increase
international   market  demand  for  the  Company's   products.   The  Company's
international  sales are currently  denominated in U.S. dollars.  An increase in
the value of the U.S.  dollar  relative  to  foreign  currencies  could make the
Company's products more expensive and,  therefore,  potentially less competitive
in those markets.  In some markets,  localization  of the Company's  products is
essential to achieve market penetration. The Company may incur substantial costs
and experience delays in localizing its products,  and there can be no assurance
that any localized product will ever generate significant revenues. In addition,
the Company relies  significantly  on its  distributors  and other  resellers in
international  sales efforts.  Since these  distributors and other resellers are
not employees of the Company and  typically do not offer the Company's  products
exclusively,  there can be no  assurance  that they will  continue to market the
Company's  products.  Additional  risks inherent in the Company's  international
business   activities   generally  include   unexpected  changes  in  regulatory
requirements,  tariffs and other trade barriers, lack of acceptance of localized
products,  if any, in foreign  countries,  longer  accounts  receivable  payment
cycles,  difficulties in managing international operations,  potentially adverse
tax consequences including restrictions on the repatriation of earnings, and the
burdens  of  complying  with a wide  variety of  foreign  laws.  There can be no
assurance  that such  factors  will not have a  material  adverse  effect on the
Company's future international sales and, consequently,  the Company's business,
operating results and financial condition.

Management of Expanding Operations

         The Company has recently experienced a period of significant  expansion
of its  operations  that has placed a  significant  strain  upon its  management
systems and resources. In addition, the Company has recently hired a significant
number of  employees,  and plans to further  increase its total  headcount.  The
Company  also  plans to expand the  geographic  scope of its  customer  base and
operations.  This  expansion  has  resulted  and  will  continue  to  result  in
substantial demands on the Company's  management  resources.  From time to time,
the Company  receives  customer  complaints about the timeliness and accuracy of
customer  support.  Although the Company plans to add customer support personnel
in order to  address  current  customer  support  needs and  intends  to closely
monitor progress in this area, there can be no assurance that these efforts will
be  successful.  If the  Company's  efforts are not  successful,  the  Company's
business,   operating  results  and  financial  condition  could  be  materially
adversely  affected.  The Company's ability to compete effectively and to manage
future expansion of its operations, if any, will require the Company to continue
to  improve  its  financial  and  management  controls,  reporting  systems  and
procedures  on a timely  basis and expand,  train and manage its  employee  work
force.  There  can be no  assurance  that  the  Company  will  be  able to do so
successfully.  The  Company's  failure to do so could  have a  material  adverse
effect upon the Company's business, operating results and financial condition.

Dependence Upon Key Personnel

         The Company's future  performance also depends in significant part upon
the continued service of its key technical and senior management personnel, none
of whom is bound by an employment agreement.  The loss of the services of one or
more of the  Company's  officers  or other key  employees  could have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.  The Company's future success also depends on its continuing  ability
to attract and retain  highly  qualified  technical  and  managerial  personnel.
Competition  for such  personnel is intense,  and there can be no assurance that
the Company can retain its key technical and managerial employees or that it can
attract,  assimilate or retain other highly  qualified  technical and managerial
personnel in the future.

Dependence on Growth in the Network Storage Management Market; General Economic
     and Market Conditions

         All of the  Company's  business  is in the network  storage  management
market,  which is still an  emerging  market.  The  Company's  future  financial
performance  will  depend in large  part on  continued  growth in the  number of
organizations   adopting   network  storage   management   solutions  for  their
client/server computing environments.  There can be no assurance that the market
for network  storage  management  will continue to grow. If the network  storage
management  market fails to grow or grows more slowly than the Company currently
anticipates,  the Company's business,  operating results and financial condition
would be materially  adversely  affected.  During recent years,  segments of the
computer industry have experienced  significant economic downturns characterized
by decreased  product  demand,  production  over capacity,  price erosion,  work
slowdowns and layoffs.  The Company's  operations  may in the future  experience
substantial fluctuations from period-to-period as a consequence of such industry
patterns,  general economic conditions affecting the timing of orders from major
customers,  and  other  factors  affecting  capital  spending.  There  can be no
assurance  that such  factors  will not have a  material  adverse  effect on the
Company's business, operating results or financial condition.

Dependence on Proprietary Technology; Risks of Infringement

         The Company depends  significantly  upon  proprietary  technology.  The
Company relies on a combination of copyright and trademark laws,  trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights.  The Company  seeks to protect  its  software,  documentation  and other
written  materials  under trade  secret and  copyright  laws,  which afford only
limited  protection.  There can be no  assurance  that the Company  will develop
proprietary products or technologies that are patentable, that any issued patent
will  provide  the  Company  with  any  competitive  advantages  or will  not be
challenged  by third  parties,  or that the  patents  of others  will not have a
material  adverse  effect on the Company's  ability to do business.  Despite the
Company's efforts to protect its proprietary  rights,  unauthorized  parties may
attempt  to  copy  aspects  of the  Company's  products  or to  obtain  and  use
information that the Company regards as proprietary.  Policing  unauthorized use
of the Company's  products is  difficult,  and although the Company is unable to
determine the extent to which piracy of its software  products exists,  software
piracy can be expected to be a persistent problem. In selling its products,  the
Company  relies  primarily  on  "shrink  wrap"  licenses  that are not signed by
licensees,  and, therefore, such licenses may be unenforceable under the laws of
certain  jurisdictions.  In addition,  the laws of some foreign countries do not
protect the Company's proprietary rights to as great an extent as do the laws of
the  United  States.  There  can be no  assurance  that the  Company's  means of
protecting  its  proprietary  rights  will be  adequate  or that  the  Company's
competitors will not  independently  develop similar  technology,  duplicate the
Company's  products  or design  around  patents  issued to the  Company or other
intellectual property rights of the Company.

         There has also been  substantial  amounts of litigation in the software
industry  regarding  intellectual  property rights. The Company has from time to
time received claims that it is infringing third parties'  intellectual property
rights,  and there can be no assurance that third parties will not in the future
claim  infringement  by the Company with respect to current or future  products,
trademarks  or other  proprietary  rights.  The Company  expects  that  software
product  developers will  increasingly be subject to infringement  claims as the
number of products and competitors in the Company's  industry  segment grows and
the functionality of products in different industry segments overlaps.  Any such
claims,  with or  without  merit,  could be  time-consuming,  result  in  costly
litigation,  cause product  shipment delays or require the Company to enter into
royalty or  licensing  agreements.  Such  royalty or  licensing  agreements,  if
required,  may not be  available on terms  acceptable  to the Company or at all,
which  could  have a  material  adverse  effect  upon  the  Company's  business,
operating results and financial condition.

Product Liability

         The Company's license  agreements with its customers  typically contain
provisions  designed  to limit  the  Company's  exposure  to  potential  product
liability  claims.  In selling its  products,  the Company  relies  primarily on
"shrink wrap" licenses that are not signed by licensees,  and,  therefore,  such
licenses  may be  unenforceable  under the laws of certain  jurisdictions.  As a
result  of these and other  factors,  the  limitation  of  liability  provisions
contained  in  the  Company's  license  agreements  may  not be  effective.  The
Company's products can be used to manage data critical to organizations, and, as
a result, the sale and support of products by the Company may entail the risk of
product liability  claims. A successful  product liability claim brought against
the Company could have a material  adverse  effect upon the Company's  business,
operating results and financial condition.

Possible Volatility of Stock Price

         The trading  price of the  Company's  Common  Stock has been subject to
wide fluctuations in 1996. The trading price of the Company's Common Stock could
be  subject  to  wide  fluctuations  in the  future  in  response  to  quarterly
variations in operating results,  announcements of technological  innovations or
new  products,  applications  or  product  enhancements  by the  Company  or its
competitors,  changes in financial  estimates by  securities  analysts and other
events or factors. In addition, the stock market has experienced volatility that
has  particularly  affected the market prices of equity  securities of many high
technology  companies  and  that  often  has  been  unrelated  to the  operating
performance of such  companies.  These broad market  fluctuations  may adversely
affect the market price of the Company's Common Stock.

                             SELLING SECURITY HOLDER

         The  Reoffer  Prospectus  relates to shares of Common  Stock which have
been acquired by a certain key employee (the "Selling  Security  Holder") of the
Company,  pursuant  to a written  agreement  between the Company and such person
dated as of January 31, 1997.

         The following table sets forth certain  information with respect to the
Selling Security Holder as of April 4, 1997:

                                                                                  Number of     Percentage of
                                                                                   Shares           Shares
                                          Number of Shares       Number of      Beneficially     Beneficially
     Selling                             Beneficially Owned    Shares to be      Owned After     Owned After
 Security Holder      Position with       as of May 1, 1997   Offered Hereby      Offering         Offering
                       the Company
Louis C. Cole      Chairman of the           822,683 (1)        837 shares       821,846 (1)        4.76%
                   Board, President
                   and Chief Executive
                   Officer
(1)  Includes  821,846  shares held by The Louis and Jolene Cole 1988  Revocable
Trust, dated November 7, 1988, of which Mr. Cole is a trustee.
PLAN OF DISTRIBUTION

         The shares of Common Stock covered by this Reoffer Prospectus are being
registered by the Company for the account of the Selling  Security  Holder.  The
Company   understands   that  none  of  such  shares  will  be  offered  through
underwriters.

         Shares  of Common  Stock  covered  by this  Reoffer  Prospectus  may be
offered and sold from time to time by the Selling  Security  Holder  through the
Nasdaq  National  Market  System,  the   over-the-counter   market,   negotiated
transactions or otherwise,  at the prices  prevailing at the time of such sales,
at prices  relating  to such  prevailing  market  prices or at prices  otherwise
negotiated. To the Company's knowledge, no specific brokers or dealers have been
designated by the Selling  Security  Holder nor has any  agreement  been entered
into in respect of brokerage  commissions  or for the  exclusive or  coordinated
sale of any securities which may be offered pursuant to this Reoffer Prospectus.
The Selling Security Holder and any broker dealer through whom sales are made by
the Selling Security Holder may be regarded as "underwriters" within the meaning
of the  Securities  Act  although the Selling  Security  Holder  disclaims  such
status, and their compensation may be regarded as underwriter's compensation.

         The  Company  will not receive any of the  proceeds  from the  offering
hereunder.  All  expenses  of  registration  incurred  in  connection  with this
offering  are being borne by the  Company,  but all  selling and other  expenses
incurred by the Selling  Security Holder will be borne by such Selling  Security
Holder.

         On May 27,  1997,  the  closing  sales  price of  the Common Stock,  as
reported on the Nasdaq National Market System, was $19.75.

                       DOCUMENTS INCORPORATED BY REFERENCE

         The Company hereby  incorporates  by reference into this Prospectus the
following documents previously filed with the Commission:

         (a)      The Company's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1996; and

         (b)      The Company's  Registration  Statement No. 0-26130 on Form 8-A
                  filed with the SEC on May 19, 1995 pursuant to Section 12 of
                  the  Exchange  Act, in which there is described  the terms,
                  rights and provisions applicable to the Company's outstanding
                  Common Stock.

         All of such  documents are on file with the  Commission.  All documents
subsequently filed by the Company pursuant to Section 13(a),  13(c), 14 or 15(d)
of the Exchange Act,  prior to the filing of a  post-effective  amendment  which
indicates  that all securities to be offered  pursuant  hereto have been sold or
which  deregisters all such securities then remaining  unsold shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents.

                                 INDEMNIFICATION

         Section 145 of the Delaware General  Corporation Law authorizes a court
to award or a  corporation's  Board of  Directors  to grant  indemnification  to
directors   and   officers   in  terms   sufficiently   broad  to  permit   such
indemnification   under  certain   circumstances   for  liabilities   (including
reimbursement  for expenses  incurred)  arising  under the  Securities  Act. The
Company's  Bylaws  provide for  mandatory  indemnification  of its directors and
officers and  permissible  indemnification  of employees and other agents to the
maximum extent permitted by the Delaware General  Corporation Law. The Company's
Certificate  of  Incorporation  provides  that,  pursuant to Delaware  law,  its
directors shall not be liable for monetary damages for breach of their fiduciary
duty as directors  to the Company and its  stockholders.  This  provision in the
Certificate  of  Incorporation  does not  eliminate  the  fiduciary  duty of the
directors,  and,  in  appropriate  circumstances,  equitable  remedies  such  as
injunctive or other forms of  non-monetary  relief will remain  available  under
Delaware  law.  In  addition,  each  director  will  continue  to be  subject to
liability for breach of the  director's  duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct,  for knowing
violations  of law,  for  actions  leading to improper  personal  benefit to the
director  and for  payment of  dividends  or approval  of stock  repurchases  or
redemptions  that are unlawful  under  Delaware law. The provision also does not
affect a director's  responsibilities  under any other law,  such as the federal
securities laws or state or federal  environmental laws. The Company has entered
into   Indemnification   Agreements   with  its  officers  and  directors.   The
Indemnification  Agreements  provide the Company's  officers and directors  with
further  indemnification to the maximum extent permitted by the Delaware General
Corporation Law.

         Insofar as indemnification for liabilities arising under the Securities
Act  may  be  permitted  to  directors,  officers  or  persons  controlling  the
Registrant  pursuant  to the  foregoing  provisions,  the  Registrant  has  been
informed that in the opinion of the Commission such  indemnification  is against
public policy as expressed in the 1933 Act, and is, therefore, unenforceable.