
                                  SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:
|_|  Preliminary Proxy Statement           |_|  Confidential, For Use of the
|X|  Definitive Proxy Statement                 Commission Only (as
                                                permitted by
                                                Rule 14a-6(e)(2))
|_|  Definitive Additional Materials
|_|  Soliciting Material Pursuant to Rule-14a-11(c)-or Rule-14a-12

                                   ACCOM, INC.


                (Name of Registrant as Specified in Its Charter)


    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
|X|  No fee required.
|_|  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
     (1)      Title of each class of securities to which transaction applies:
     (2)      Aggregate number of securities to which transaction applies:
     (3)      Per unit price or other underlying value of transaction computed
              pursuant to Exchange Act Rule 0-11 (set forth the amount on which
              the filing fee is calculated and state how it was determined):
     (4)      Proposed maximum aggregate value of transaction:
     (5)      Total fee paid:

|_|  Fee paid previously with preliminary materials.
|_|  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously. Identify the previous filing by registration statement number,
     or the form or schedule and the date of its filing.
     (1)      Amount Previously Paid:
     (2)      Form, Schedule or Registration Statement No.:
     (3)      Filing Party:
     (4)      Date Filed:

<PAGE>


                                   ACCOM, INC.
                               1490 O'Brien Drive
                              Menlo Park, CA 94025


Dear Fellow Stockholders:

     You are cordially  invited to attend the Annual Meeting of  Stockholders of
Accom,  Inc.  ("Accom" or the  "Company").  The Annual  Meeting  will be held on
Thursday,  June 14,  2001,  at 9:00 a.m. at the  Company's  principal  executive
offices in Menlo Park, California.

     At the Annual  Meeting,  you will be asked to consider and to vote upon the
proposals  regarding:  (i) the election of two Class 2 directors of the Company,
(ii) an increase of the number of shares of Common  Stock  reserved for issuance
under a stock option plan of the Company;  and (iii) the ratification of Ernst &
Young LLP as  independent  auditors  of the  Company  for the fiscal  year ended
December 31, 2001. The enclosed Proxy Statement more fully describes the details
of the business to be conducted at the Annual Meeting.

     After  careful   consideration,   the  Company's  Board  of  Directors  has
unanimously approved each proposal and recommends that you vote IN FAVOR OF each
proposal.

     After reading the Proxy  Statement,  please mark, sign, date and return the
enclosed  proxy card in the reply  envelope  by no later  than June 8, 2001,  if
possible.  If you  decide  to attend  the  Annual  Meeting,  please  notify  the
Secretary  of the Company  that you wish to vote in person,  and your proxy will
not be voted. YOUR SHARES CANNOT BE VOTED UNLESS YOU MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY OR UNLESS YOU ATTEND THE ANNUAL MEETING IN PERSON.

     A copy of the Accom, Inc. 2000 Annual Report on Form 10-K also is enclosed.

     We look forward to seeing you at the Annual Meeting.

                                         Sincerely yours,


                                         /s/ JUNAID SHEIKH
                                         -----------------

                                         Junaid Sheikh
                                         Chairman of the Board of Directors,
                                         President and Chief Executive Officer
Menlo Park, California
April 27, 2001


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

                                    IMPORTANT

Please  mark,  date and sign the enclosed  proxy and return it at your  earliest
convenience  in the  enclosed  envelope  so that if you are unable to attend the
Annual Meeting your shares may be voted.

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

<PAGE>


                                   ACCOM, INC.

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

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD JUNE 14, 2001

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

     The  Annual  Meeting  of  Stockholders  of  Accom,  Inc.  ("Accom"  or  the
"Company")  will be held at the Company's  principal  executive  offices at 1490
O'Brien Drive, Menlo Park, California 94025, on Thursday, June 14, 2001, at 9:00
a.m. The Annual Meeting will be held for the following purposes:

1.   To elect two Class 2  directors  of the  Company to hold  office  until the
     expiration  of their  respective  terms of office  in 2004 and until  their
     respective successors are duly elected and qualified;

2.   To  approve  an  increase  by  2,000,000  of the  number  of  shares of the
     Company's Common Stock reserved for issuance under the Company's 1995 Stock
     Option/Stock Issuance Plan;

3.   To ratify the  appointment of Ernst & Young LLP as independent  auditors of
     the Company for the Company's 2001 fiscal year; and

4.   To  transact  such other  business as may  properly  come before the Annual
     Meeting or any adjournment thereof.

     The  foregoing  items of  business  are more fully  described  in the Proxy
Statement  accompanying  this  Notice.  The record  date for  determining  those
stockholders  entitled to notice of and to vote at the Annual Meeting and any of
its adjournments is April 27, 2001. A complete list of the stockholders entitled
to vote at the Annual Meeting will be available for inspection at the offices of
the Company for at least ten days prior to the Annual Meeting.

     All  stockholders  are cordially  invited to attend the Annual Meeting.  To
assure  your   representation   at  the  meeting,   please  carefully  read  the
accompanying Proxy Statement.  The Proxy Statement further describes the matters
to be voted upon at the Annual Meeting.

     Whether you plan on attending the Annual Meeting or not,  please sign, date
and  return the  enclosed  proxy card in the reply  envelope  provided.  If your
shares are  registered  in different  names or at different  addresses,  you may
receive more than one Proxy Statement.  If that happens,  you should return each
proxy card to assure that all of your  shares  will be voted.  If you attend the
Annual   Meeting   and  vote  by  ballot,   your  proxy  vote  will  be  revoked
automatically,  and only your vote at the Annual  Meeting  will be counted.  The
prompt  return of your proxy card will assist the Company in  preparing  for the
Annual Meeting.

                                    By Order of the Board of Directors,


                                    /s/ DONALD K. MCCAULEY
                                    ----------------------

                                    Donald K. McCauley,
                                    Secretary

Menlo Park, California
April 27, 2001

<PAGE>


                                   ACCOM, INC.

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

                                 PROXY STATEMENT
                         ANNUAL MEETING OF STOCKHOLDERS
                                  JUNE 14, 2001

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


     This Proxy Statement  solicits  proxies on behalf of the Board of Directors
of Accom, Inc. ("Accom" or the "Company") to be voted upon at the Annual Meeting
of Stockholders on Thursday, June 14, 2001 (the "Annual Meeting") and any of its
adjournments.  The Annual  Meeting  will be held at 9:00 a.m.  at the  Company's
principal executive offices at 1490 O'Brien Drive, Menlo Park, California 94025.
These proxy  materials  are  expected to be first mailed to  stockholders  on or
about May 9, 2001. The specific proposals to be considered and acted upon at the
Annual Meeting are described in this Proxy Statement.

                             REVOCABILITY OF PROXIES

     Any  stockholder  giving a proxy pursuant to this  solicitation  may revoke
such proxy at any time prior to its  exercise  by  providing  written  notice of
revocation to the Secretary of the Company at the Company's  principal executive
offices, by providing a duly executed proxy bearing a later date or by attending
the meeting and voting in person. The mailing address of the Company's principal
executive offices is 1490 O'Brien Drive, Menlo Park, California 94025.

                                     VOTING

     Stockholders  of  record  at the close of  business  on April 27,  2001 are
entitled to notice of and to vote at the Annual  Meeting.  As of April 27, 2001,
the Company had 10,198,277 shares of the Company's Common Stock ("Common Stock")
outstanding  and entitled to vote and  approximately  99 stockholders of record,
including  several  holders  who are  nominees  for an  undetermined  number  of
beneficial owners.  Each holder of Common Stock is entitled to one vote for each
share held as of the record  date.  The  holders of a majority  of the shares of
Common Stock  outstanding  on the record date,  whether  present in person or by
proxy,  will  constitute a quorum at the Annual Meeting and its  adjournments or
postponements, if any.

     All votes will be tabulated by the inspector of election  appointed for the
Annual Meeting.  The inspector will separately tabulate affirmative and negative
votes, abstentions and broker non-votes. Shares abstained or subject to a broker
non-vote are counted as present for the purpose of  determining  the presence or
absence  of a quorum.  For  proposals  other  than the  election  of  directors,
abstentions are counted in tabulations of the votes cast on a proposal presented
to  stockholders  and  generally  have the same  effect  as a vote  against  the
proposal,  whereas broker  non-votes are not counted for purposes of determining
whether a proposal has been approved.  With regard to the election of directors,
votes may be cast in favor of the director or withheld.  Because  directors  are
elected by  plurality,  abstentions  from  voting and broker  non-votes  will be
entirely  excluded  from the vote and will have no effect on its  outcome.  If a
quorum is present at the Annual Meeting, the two nominees receiving the greatest
number of votes will be elected as two directors of the Company.

     Each proxy  submitted by a stockholder  will be voted FOR: (i) the election
of the two Class 2 director  nominees  named herein  (Proposal  No. 1); (ii) the
increase  by  2,000,000  of the number of shares of Common  Stock  reserved  for
issuance under the Company's 1995 Stock Option/Stock Issuance Plan (Proposal No.
2); and (iii) the  ratification of Ernst & Young LLP as independent  auditors of
the Company  for 2001  (Proposal  No. 3) unless the  stockholder  has  otherwise
directed in the proxy. The Company's  directors and executive officers currently
hold shares representing  approximately 53% of the Company's  outstanding Common
Stock,  and these  stockholders  have  indicated  that  they  intend to vote all
eligible  shares of voting stock over which they exercise voting for approval of
each of the proposals described in this Proxy Statement.

<PAGE>


     If a  stockholder  has  submitted  a valid proxy  directing  how the shares
represented by the proxy are to be voted, such shares will be voted according to
the  stockholder's  direction.  A stockholder has the power to revoke his or her
proxy at any time  before it is voted at the  Annual  Meeting  by  submitting  a
written notice of revocation to the Secretary of the Company or by filing a duly
executed  proxy  bearing  a  later  date.  A  proxy  will  not be  voted  if the
stockholder  who executed it is present at the Annual Meeting and elects to vote
the shares represented by the proxy in person.

     The  Company's  Board of  Directors  reserves  the  right to  withhold  any
proposal  described in this Proxy Statement from a vote at the Annual Meeting if
the Board deems a vote on such proposal to be contrary to the best  interests of
the Company and its  stockholders.  In such an event, the proposal withheld will
be neither adopted nor defeated.

                                  SOLICITATION

     The cost of soliciting these proxies consists of the printing, handling and
mailing of the proxy cards and related materials and the actual expense incurred
by brokerage  houses,  custodians,  nominees and fiduciaries in forwarding proxy
materials  to the  beneficial  owners of stock.  These costs will be paid by the
Company.  To assure a majority vote will be present in person or by proxy at the
Annual  Meeting,  certain  officers,  directors,  regular  employees  and  other
representatives  of the  Company  may  need to  solicit  proxies  by  telephone,
facsimile or electronic means or in person.  These persons will receive no extra
compensation  for their  services.  The  Company  reserves  the right to have an
outside  solicitor conduct the solicitation of proxies and to pay such solicitor
for its services.

     The Company's Annual Report on Form 10-K for fiscal 2000 has been mailed to
all stockholders entitled to notice of and to vote at the Annual Meeting. Except
as set forth in the section  entitled  "Incorporation  by Reference"  below, the
Annual  Report  is  not  incorporated  into  this  Proxy  Statement  and  is not
considered proxy soliciting material.

                                       2

<PAGE>

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

                                 PROPOSAL NO. 1

                          ELECTION OF CLASS 2 DIRECTORS

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

     The Company's  Board of Directors  (the  "Board") is classified  into three
classes.  Each class has a staggered term of three years.  Each director  serves
until the Company's  annual meeting of  stockholders  at which  directors of his
class are to be elected and until his  successor is duly elected and  qualified.
The term of each Class 2 director expires at the Annual Meeting.  Therefore, the
stockholders  are  being  asked to elect  two Class 2  directors  at the  Annual
Meeting.  The nominees are listed below.  Both of the nominees  listed below are
incumbent directors.

     If a quorum is present at the Annual  Meeting,  the two nominees  receiving
the greatest  number of votes will be elected as the two Class 2 directors.  The
Board  unanimously  recommends a vote IN FAVOR OF the  nominees  that are listed
below. Except to the extent that authority to vote for any directors is withheld
in a proxy,  shares  represented by proxies will be voted FOR such nominees.  In
the event that either of the  nominees for  director  should,  before the Annual
Meeting,  become unable to serve if elected,  shares represented by proxies will
be voted for such  substitute  nominees as may be  recommended  by the Company's
existing Board, unless other directions are given in the proxies. Proxies cannot
be voted for more than two persons.  Each of the nominees has consented to serve
as a director if elected. To the Company's knowledge,  both of the nominees will
be available to serve.

Information with Respect to Nominees for Class 2 Directors

<TABLE>
     Set forth  below is  information  regarding  the two  nominees  for Class 2
directors.  This  information  was  furnished  by  them  as to  their  principal
occupations at present and for the last five years,  certain other directorships
held by them,  the year in which they became  directors of the Company and their
ages as of April  27,  2001.  There are no  family  relationships  among the two
nominees and any directors or executive officers of the Company.
<CAPTION>

                                                                         Director      Class/End of Term of
     Nominees                  Position with the Company        Age        Since            Director*
     --------                  -------------------------        ---        -----            ---------
<S>                             <C>                              <C>       <C>             <C>
Thomas E. Fanella               Director                         54        1997            Class 2/2001
David A. Lahar                  Director                         43        1998            Class 2/2001

<FN>
------------------
*    If a nominee is elected,  the end of his next term as  director  will be at
     the Company's Annual Meeting of Stockholders in 2004.
</FN>
</TABLE>

Business Experience of Nominees for Class 2 Directors

     Thomas E.  Fanella has served on the Board since March 1997.  Since  August
1988, Mr. Fanella has been President and Chief Executive  Officer of KTEH Public
Television Channel 54 in San Jose, California. Mr. Fanella is also a director of
the Catholic  Television  Network,  the Pacific Mountain Network and the Silicon
Valley Forum.

     David A. Lahar has served on the Board since February 1998. Since September
1992,  Mr.  Lahar  has  been a  Managing  Director  of  EOS  Capital,  Inc.,  an
investment,  venture capital and consulting firm. Since July 1999, Mr. Lahar has
been a director,  Executive  Vice  President and  Co-founder of QualPro Corp., a
supplier of aerospace  components and  fabrication  services.  From 1992 to June
1996, Mr. Lahar was the President of Aurora  Electronics,  Inc., a company which
he co-founded and which is a provider of spare parts  distribution  services and
electronics recycling and recovery services to computer  manufacturers and field
service  providers.  From 1986 to 1992, Mr. Lahar was a Managing Director in the
Investment Banking Division of PaineWebber Incorporated.

                                       3

<PAGE>


Information with Respect to Other Directors

<TABLE>
     Set forth below is information regarding the directors of the Company whose
terms of  office  continue  beyond  the  Annual  Meeting  and who are not up for
reelection at the Annual Meeting.  This  information was furnished by them as to
their  principal  occupations  at present and for the last five  years,  certain
other directorships held by them, the year in which they became directors of the
Company and their ages as of April 27, 2001.  There are no family  relationships
among any such directors or any of the executive officers of the Company.
<CAPTION>

                                                                               Director      Class/End of Term of
        Director Name                Position with the Company        Age        Since             Director
        -------------                -------------------------        ---        -----             --------
<S>                             <C>                                    <C>       <C>             <C>
Junaid Sheikh                   President, Chief Executive Officer     47        1988            Class 3/2002
                                and Chairman of the Board
Lionel M. Allan                 Director                               57        1995            Class 1/2003
Michael Luckwell                Director                               58        1999            Class 3/2002
Eugene M. Matalene, Jr.         Director                               53        1999            Class 1/2003
</TABLE>

Business Experience of Other Directors

     Junaid  Sheikh has served as the  Chairman of the Board since June 1988 and
as the Company's  President and Chief Executive Officer since November 1991. Mr.
Sheikh was also the  President  and  Chairman of the Board of Directors of Axial
Systems  Corporation,  a maker  of  on-line  editing  systems,  from May 1990 to
October 1991.

     Lionel M. Allan has served on the Board since April 1995.  Since 1992,  Mr.
Allan has been President of Allan Advisors, Inc., a board of directors and legal
consulting  firm.  Mr. Allan has served as a director of KTEH Public  Television
Channel 54 in San Jose,  California,  since 1988 and was a past  Chairman of the
Board of KTEH.  He has served as a director of Catalyst  Semiconductor,  Inc., a
semiconductor  company,  since August 1995, and a director of Global  Motorsport
Group, Inc., a motorcycle products company, from June 1994 to December 1998.

     Michael  Luckwell has served on the Board since May 1999.  Since 1986,  Mr.
Luckwell's principal occupation has been as an individual investor and a manager
of his personal investments.  In addition,  for six months in 1995, Mr. Luckwell
served as the Chief Executive of Riverside Plc, a company based in England which
operated health and fitness centers.  Since December 1999, Mr. Luckwell has been
a  director  of  Convergence  Holdings  Plc,  a company  publicly  traded on the
Alternative  Investment Market,  London, and based in England.  Mr. Luckwell has
been a  director  of HIT  Entertainment  Plc, a  publicly  traded  entertainment
company based in England,  since May 1993.  In 1970,  Mr.  Luckwell  founded The
Moving  Picture  Company,  a  leading  European  video  facility  and  film  and
television  production  company.  In 1983, The Moving Picture Company was merged
with  Carlton  Communications  Plc,  and Mr.  Luckwell  served  as the  Managing
Director of Carlton until 1986.

     Eugene M.  Matalene,  Jr. has served on the Board since  March 1999.  Since
April 1997, Mr.  Matalene has served as President of Strata  Capital  Management
Corp., a merchant bank. He was a Managing Director of Furman Selz, an investment
bank,  from June  1996 to April  1997 and a  Managing  Director  of  PaineWebber
Incorporated,  an  investment  bank,  from 1989 to 1996.  From 1990 until August
1999, Mr. Matalene was a director of American Bankers  Insurance Group,  Inc., a
specialty insurance products company ("American Bankers").

Arrangements  in Connection  with the Election of Directors  Other than the
Two Nominees

     On March 12, 1999, the Company issued Senior Subordinated Convertible Notes
due March 12, 2004 (the "Convertible  Notes") in the aggregate  principal amount
of $3,500,000 to a group of six investors  that was led by American  Bankers and
that includes Mr.  Matalene.  So long as American Bankers holds either shares or
Convertible  Notes  representing  at least 50% of the Common Stock issuable upon
conversion of the Convertible Notes,  American Bankers has the right to nominate
an  individual  as a member  of the  Company's  management  slate  of  directors
submitted for election to the Board.  American Bankers nominated Mr. Matalene, a
director  of  American  Bankers,  who has served as a member of the Board  since
March 1999.

                                       4

<PAGE>

     On December 10, 1998, the Company  entered into a Stock Purchase  Agreement
with Michael Luckwell,  pursuant to which Mr. Luckwell  purchased  $1,500,000 of
Common Stock.  Pursuant to the Stock Purchase  Agreement,  Mr.  Luckwell has the
right to be nominated as a member of the Company's management slate of directors
submitted for election to the Board.  Mr. Luckwell  requested to be appointed to
the Board and has served as a member of the Board since May 1999.

Compensation of Directors

     Of the Company's six directors,  one director is a salaried employee of the
Company.  Directors  who  are  employees  of  the  Company  do not  receive  any
additional compensation or benefits for their service as directors.

     The  five  remaining  non-employee  directors  are  compensated  for  their
services through the issuance of stock options.  When first elected or appointed
as directors,  non-employee directors are granted non-statutory stock options to
purchase 10,000 shares of Common Stock.  Then,  after each Annual Meeting,  each
non-employee  director  currently  receives  options to purchase 5,000 shares of
Common Stock,  provided the non-employee director has served on the Board for at
least six months.  All such options expire 10 years from the date of grant, have
an exercise  price at the fair market  value of the Common  Stock on the date of
grant and are  immediately  exercisable.  The  Company  does not have a right to
repurchase the shares issuable upon exercise of the options.

     In accordance with the Company's standard arrangements,  the Company issued
5,000 options to each of Messrs.  Allan,  Fanella,  Lahar, Luckwell and Matalene
after the Company's Annual Meeting on June 15, 2000. See "Certain  Relationships
and Related Transactions" below for a discussion of certain transactions between
the Company and certain members of the Board.

Board and Committees Meetings

     The Board held a total of four  meetings in fiscal  2000.  The Board has an
Audit  Committee  and a  Compensation  Committee.  The  Board  does  not  have a
nominating committee.

     The   Audit   Committee   represents   the   Board   in   discharging   its
responsibilities relating to the accounting,  reporting, and financial practices
of the Company  and has  general  responsibility  for  surveillance  of internal
controls  and  accounting  and  audit  activities  of  the  Company,   including
evaluations  of  the  Company's   independent  auditors  and  reviews  of  audit
procedures,  results of the annual audit and accompanying management letters, if
any. The Audit  Committee is comprised of three members:  Mr. Allan as Chairman,
Mr.  Fanella and Mr.  Luckwell.  During fiscal 2000,  four meetings of the Audit
Committee were held.

     The  members  of the Audit  Committee  are  independent  as  defined by the
appropriate listing standards of the National Association of Securities Dealers.
The Board has adopted an Audit Committee  Charter. A copy of the Audit Committee
Charter is attached to this Proxy Statement as Appendix A.

     The Compensation  Committee makes  recommendations  to the Board concerning
the compensation of the Company's  officers and directors and the administration
of the Company's 1995 Stock  Option/Stock  Issuance Plan, the Company's Employee
Stock Purchase Plan and the Company's 1997 Non-Executive  Stock Option Plan. The
Compensation  Committee is comprised of Mr. Luckwell as Chairman,  Mr. Lahar and
Mr. Matalene. During fiscal 2000, the Compensation Committee met two times.

     During fiscal 2000, each Board member attended 75% or more of the aggregate
number of  meetings  of the Board and  meetings  of the  committees  on which he
served that were held during the period for which he was a director or committee
member.

     The third paragraph of this Section,  "Board and Committees  Meetings," and
the Audit Committee Charter are not soliciting  materials,  are not deemed filed
with the Securities and Exchange  Commission and are not to be  incorporated  by
reference in any filing of the Company under the  Securities  Act of 1933 or the
Securities  Exchange  Act of 1934,  whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.

                                       5

<PAGE>

Report of the Audit Committee

     The Audit Committee  reviews the Company's  financial  reporting process on
behalf of the Board. Management has the primary responsibility for the financial
statements and the reporting  process.  The Company's  independent  auditors are
responsible for expressing an opinion on the conformity of the Company's audited
financial statements to generally accepted accounting principles.

     In this  context,  the Audit  Committee  has  reviewed and  discussed  with
management and the independent  auditors the audited financial  statements.  The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing  Standards No. 61  (Communication  with
Audit  Committees).  The  Audit  Committee  has  received  from the  independent
auditors the written disclosures required by Independence  Standards Board No. 1
(Independence  Discussions with Audit  Committees) and discussed with them their
independence  from the  Company  and its  management.  In  addition,  the  Audit
Committee has considered whether the independent auditors provision of non-audit
services to the Company is compatible with the auditor's independence.

     In reliance on the reviews  and  discussions  referred to above,  the Audit
Committee recommended to the Board, and the Board has approved, that the audited
financial statements be included in the Company's Annual Report on SEC Form 10-K
for the year ended December 31, 2000 for filing with the Securities and Exchange
Commission.

                                               The Audit Committee

                                               Lionel M. Allan, Chairman
                                               Thomas E. Fanella
                                               Michael Luckwell

     This  Report of the Audit  Committee  is not  soliciting  material,  is not
deemed  filed  with the  Securities  and  Exchange  Commission  and is not to be
incorporated  by reference in any filing of the Company under the Securities Act
of 1933 or the Securities Exchange Act of 1934, whether made before or after the
date hereof and irrespective of any general  incorporation  language in any such
filing.


Fees Billed to the Company By Ernst & Young LLP for Fiscal 2000

     Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional
services for the audit of the Company's  consolidated  financial  statements for
fiscal 2000 and the review of the consolidated  financial statements included in
the Company's Forms 10-Q for fiscal 2000 were $228,000.

     Financial Information Systems Design and Implementation Fees. There were no
fees billed by Ernst & Young LLP for financial  information  systems  design and
implementation for fiscal 2000.

     All Other  Fees.  The  aggregate  fees  billed to the Company for all other
professional  services  rendered  by  Ernst & Young  LLP for  fiscal  2000  were
$147,200.


                 EXECUTIVE COMPENSATION AND RELATED INFORMATION

Report of the Compensation Committee

     During fiscal 2000, the Compensation  Committee had general  responsibility
for establishing the compensation  payable to the Company's  executive  officers
and other key executives and had the sole and exclusive  authority to administer
the Company's  1995 Stock  Option/Stock  Issuance Plan (the "Stock Option Plan")
and other stock option plans under which grants may be made to such individuals.
From September 15, 1996 until the beginning of fiscal 2000,  such functions were
performed by the Board.

     General  Compensation  Policy.  Under the  supervision of the  Compensation
Committee,  the Company's  compensation policy is designed to attract and retain
qualified key executives critical to the Company's growth and long-term success.
It is the  objective  of the  Compensation  Committee  to have a portion of each
executive's  compensation  contingent upon the Company's  performance as well as
upon the individual's performance. Accordingly,

                                       6

<PAGE>

each executive  officer's  compensation  package is comprised of three elements:
(i) base salary  which  reflects  individual  performance  and  expertise,  (ii)
variable  and  discretionary  bonus  awards  payable  in  cash  and  tied to the
achievement  of certain  performance  goals for the Company or the executive and
(iii)  long-term,  stock-based  incentive awards that are designed to strengthen
the mutuality of interests between the executive  officers and the stockholders.
The summary below  describes in more detail the factors  which the  Compensation
Committee  considers in establishing each of the three primary components of the
compensation package provided to the executive officers.

     Base Salary. The level of base salary is established primarily on the basis
of the individual's  qualifications and relevant experience, the strategic goals
for which he has  responsibility,  the  compensation  levels at  companies  that
compete with the Company for business and  executive  talent and the  incentives
necessary to attract and retain qualified management. Base salary is reevaluated
each year to take into account the  individual's  performance  and to maintain a
competitive  salary structure.  Company  performance does not play a significant
role in the determination of base salary.

     Cash-Based   Incentive   Compensation.   Cash  bonuses  are  awarded  on  a
discretionary  basis to  executive  officers  on the basis of their  success  in
achieving  designated  individual  goals and the Company's  success in achieving
company-wide goals.

     Long-Term Incentive Compensation. The Company has utilized the Stock Option
Plan to provide  executives and other key employees with  incentives to maximize
long-term  stockholder  values.  Awards  under  this  plan  by the  Compensation
Committee  take the form of  stock  options  designed  to give the  recipient  a
significant  equity stake in the Company and thereby closely align his interests
with those of the stockholders. Factors considered in making such awards include
the individual's  position in the Company, his performance and responsibilities,
and  internal  comparability  considerations.   In  addition,  the  Compensation
Committee takes into account each individual's position with the Company and his
existing  holdings of unvested  options.  Each option grant allows the executive
officer to acquire shares of Common Stock at a fixed price per share,  typically
the fair market value on the date of grant,  over a specified  period of time of
up to 10 years.  The  options  typically  vest in periodic  installments  over a
four-year period,  contingent upon the executive officer's continued  employment
with the Company. Accordingly, the option will provide a return to the executive
officer only if he remains in the Company's service, and then only if the market
price of the Common Stock appreciates over the option term.

     CEO Compensation. In setting the compensation payable during fiscal 2000 to
the Company's Chief Executive Officer, Junaid Sheikh, the Compensation Committee
used the same  factors  as  described  above  for the  executive  officers.  The
Compensation  Committee  established a combination  compensation package for Mr.
Sheikh,  including  a base  salary  and stock  option  grants in line with those
received  by  other   executives  of   comparably-sized   companies  in  similar
industries.  Mr. Sheikh's  compensation  package for fiscal 2000 also included a
discretionary performance bonus. The Compensation Committee awarded Mr. Sheikh a
discretionary  performance  bonus of  $161,500  in cash in  February  2000.  The
Compensation  Committee so awarded Mr.  Sheikh in  recognition  of Mr.  Sheikh's
significant  efforts related to the Company's sale of  substantially  all assets
related to the  Company's  ELSET  virtual  set product  line and  certain  other
related assets.

                                                  The Compensation Committee

                                                  Michael Luckwell, Chairman
                                                  David A. Lahar
                                                  Eugene M. Matalene, Jr.

     This Report of the Compensation  Committee is not soliciting  material,  is
not deemed filed with the  Securities  and Exchange  Commission and is not to be
incorporated  by reference in any filing of the Company under the Securities Act
of 1933 or the Securities Exchange Act of 1934, whether made before or after the
date hereof and irrespective of any general  incorporation  language in any such
filing.

                                       7

<PAGE>


Compensation Committee Interlocks and Insider Participation

     No member of the Compensation Committee and none of the Company's executive
officers has a relationship  that would constitute an interlocking  relationship
with executive officers and directors of another entity. Mr. Sheikh, Chairman of
the Board, is also President and Chief Executive Officer of the Company.  At the
request of the Compensation  Committee,  Mr. Sheikh  participated in some of the
deliberations  of,  provide  information  to, and  respond to  questions  of the
Compensation  Committee.  Mr. Sheikh, however, is not member of the Compensation
Committee,  is not  entitled  to vote on any  matters  before  the  Compensation
Committee  and  did  not  participate  in  any  decisions  of  the  Compensation
Committee.

     On November 1, 2000, the Company engaged EOS Capital,  Inc. as a consultant
and  financial  advisor  to assist  the Board with  strategic,  competitive  and
financial  strategy  and with  formulating  criteria  with  respect to potential
acquisition,  merger or sale partners.  As compensation  for such services,  the
Company paid EOS Capital a retainer of $100,000,  agreed to pay the success fees
as may be  negotiated  in the future  between  EOS  Capital  and the Company and
agreed to  reimburse  EOS Capital for its related  out-of-pocket  expenses.  Mr.
Lahar, a director of the Company and a member of the Compensation  Committee, is
a managing  director  and the sole equity  owner of EOS  Capital.  See  "Certain
Relationships and Related Transactions."

Stock Performance Graph

<TABLE>
     The  following  graph shows a comparison of  cumulative  total  stockholder
returns for the  Company,  the Nasdaq Total Return  Index,  and the  Hambrecht &
Quist Technology Index for the period commencing  September 30, 1995 to the last
day of the Company's  fiscal year on December 31, 2000.  (The following table is
supplied in accordance with Rule 304 (d) of Regulation S-T.)
<CAPTION>
                                    9/30/95    9/30/96     9/30/97     9/30/98     12/31/98    12/31/99    12/31/00
                                    -------    -------     -------     -------     --------    --------    --------
<S>                                 <C>        <C>         <C>         <C>         <C>         <C>         <C>
Accom, Inc.                         $100.00    $ 22.86     $ 30.06     $  4.34     $  7.20     $  7.89     $  2.74

NASDAQ Total Return Index           $100.00    $118.74     $163.00     $165.58     $215.77     $399.86     $240.38

Hambrecht & Quist Technology        $100.00    $109.77     $163.67     $152.07     $214.66     $479.41     $309.92
Index
</TABLE>

     This Section, "Stock Performance Graph," is not soliciting material, is not
deemed  filed  with the  Securities  and  Exchange  Commission  and is not to be
incorporated  by reference in any filing of the Company under the Securities Act
of 1933 or the Securities Exchange Act of 1934, whether made before or after the
date hereof and irrespective of any general  incorporation  language in any such
filing.

                                       8

<PAGE>

Summary of Cash and Certain Other Compensation

<TABLE>
     The following Summary Compensation Table sets forth the compensation earned
by the  Company's  Chief  Executive  Officer  and the  four  other  highest-paid
executive  officers  whose  salary  and bonus for  fiscal  2000 was in excess of
$100,000  (collectively,  the "Named  Officers")  for  services  rendered in all
capacities  to the  Company for that year.  The Company  changed its fiscal year
from September 30 to December 31 in December 1998. As a result,  the table below
reflects  compensation  information for the fiscal year ended December 31, 2000,
the fiscal year ended  December 31, 1999,  the calendar year ended  December 31,
1998 and the fiscal year ended September 30, 1998.
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                                     Annual               Long-Term
                                                 Fiscal or        Compensation          Compensation
                                      Fiscal     Calendar        --------------        --------------
                                       Year        Year                                  Securities        All Other
Name and Present                      Ended       Ended      Salary        Bonus         Underlying      Compensation
Principal Position                   Sept. 30    Dec. 31       ($)        ($) (1)        Options (#)          ($)
------------------                   --------    -------       ---        -------        -----------          ---
<S>                                   <C>          <C>      <C>          <C>             <C>            <C>
Junaid Sheikh.......................               2000     $175,000     $161,500              0        $  2,491 (2)
  President, Chief Executive Officer               1999     $175,000     $      0              0        $  1,986 (3)
  and Chairman of the Board                        1998     $176,973     $      0        397,286 (4)    $  2,782 (5)
                                      1998                  $170,528     $      0        147,286 (4)    $  2,722 (6)

Donald K. McCauley..................               2000     $165,266     $      0              0        $  2,753 (7)
  Senior Vice President Finance and                1999     $160,000     $      0              0        $ 45,232 (8)
  Chief Financial Officer (9)                      1998     $  8,513     $      0        100,000        $  1,016 (10)

Ian Craven..........................               2000     $155,000     $      0              0        $  1,393 (11)
  Senior Vice President, Engineering               1999     $145,000     $ 13,800              0        $  1,371 (12)
                                                   1998     $145,000     $  2,000         98,125 (13)   $  1,458 (14)
                                      1998                  $141,596     $  2,000         88,125 (13)   $  1,449 (6)

Phillip Bennett.....................               2000     $170,000     $      0                       $  1,569 (15)
  Executive Vice President,                        1999     $150,000     $ 53,835              0        $    981 (16)
  Technology and Engineering (17)                  1998     $ 7,981      $      0              0        $      0

William T. Ludwig...................               2000     $130,346     $ 40,000              0        $    950 (18)
  Vice President, Sales (19)                       1999     $113,812     $ 40,000              0        $    841 (20)
                                                   1998     $      0     $      0        100,000        $      0
<FN>

---------------
(1)  Represents bonus compensation earned in such fiscal or calendar year.
(2)  Represents  standard life  insurance and key man insurance  premiums in the
     amounts  of $540 and  $1,485,  respectively,  paid by the  Company  for the
     benefit of the named officer and a holiday gift valued at $466.
(3)  Represents  standard life  insurance and key man insurance  premiums in the
     amounts of $792 and $873, respectively, paid by the Company for the benefit
     of the named office and a holiday gift valued at $321.
(4)  Includes  options to purchase  87,286  shares of the Common Stock that were
     canceled on May 15, 1998 and repriced to $1.03125 per share.
(5)  Represents  standard life  insurance and key man insurance  premiums in the
     amounts  of $612 and  $2,170,  respectively,  paid by the  Company  for the
     benefit of the named Officer.
(6)  Represents  key man insurance  premiums paid by the Company for the benefit
     of the named Officer.
(7)  Represents standard life insurance premiums in the amount of $2,247 paid by
     the Company for the benefit of the named  officer and a holiday gift valued
     at $506.
(8)  Represents standard life insurance premiums in the amount of $1,911 paid by
     the  Company  for the benefit of the named  officer,  a one-year,  one-time
     allowance  paid for  business use of personal  automobile  in the amount of
     $18,000, a signing bonus in the amount of $25,000 and a holiday gift valued
     at $321.
(9)  Mr. McCauley became an employee of the Company in December 1998 and did not
     earn any compensation prior thereto.
(10) Represents an allowance paid for business use of personal automobile.
(11) Represents  standard life  insurance and key man insurance  premiums in the
     amounts of $468 and $201, respectively, paid by the Company for the benefit
     of the named officer and a holiday gift valued at $724.

                                       9

<PAGE>

(12) Represents  standard life  insurance and key man insurance  premiums in the
     amounts of $633 and $417, respectively, paid by the Company for the benefit
     of the named office and a holiday gift valued at $321.
(13) Includes  options to purchase  58,125  shares of the Common Stock that were
     canceled on May 15, 1998 and repriced to $1.03125 per share.
(14) Represents  standard life  insurance and key man insurance  premiums in the
     amounts of $490 and $968, respectively, paid by the Company for the benefit
     of the named officer.
(15) Represents  standard life  insurance and key man insurance  premiums in the
     amounts of $522 and $557, respectively, paid by the Company for the benefit
     of the named officer and a holiday gift valued at $490.
(16) Represents  standard life insurance  premiums in the amount of $660 paid by
     the Company for the benefit of the named  officer and a holiday gift valued
     at $321.
(17) Mr.  Bennett became an employee of the Company in December 1998 and did not
     earn any compensation prior thereto.
(18) Represents  standard life insurance  premiums in the amount of $469 paid by
     the Company for the benefit of the named  officer and a holiday gift valued
     at $481.
(19) Mr.  Ludwig  became an employee of the Company in December 1998 and did not
     earn any compensation prior thereto.
(20) Represents  standard life insurance  premiums in the amount of $520 paid by
     the Company for the benefit of the named  officer and a holiday gift valued
     at $321.
</FN>
</TABLE>

Option Exercises and Holdings

<TABLE>
     The table below sets forth  information  concerning the exercise of options
during fiscal 2000 and the  unexercised  options held as of the end of such year
by the Named Officers.  No stock appreciation  rights were exercised during such
fiscal year or outstanding as of the end of that fiscal year.
<CAPTION>

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

                                                                           Number of
                                                                     Securities Underlying      Value of Unexercised
                                        Shares        Aggregate      Unexercised Options at    In-the-Money Options at
                                      Acquired On  Value Realized        Year End (#).            Year End ($) (1).
                    Name             Exercise (#)       ($)        Exercisable/Unexercisable  Exercisable/Unexercisable
                    ----             ------------       ---        -------------------------  -------------------------
<S>                                     <C>            <C>                <C>       <C>                <C>  <C>
Junaid Sheikh.....................         0             $0               254,786 / 142,500            $0 / $0
   President, Chief Executive
   Officer and Chairman of the Board

Donald K. McCauley................         0             $0                 50,000 / 50,000            $0 / $0
   Senior Vice President, Finance
   and Chief Financial Officer

Ian Craven........................         0             $0                 81,875 / 16,250            $0 / $0
   Senior Vice President,
   Engineering

Phillip Bennett...................         0             $0                          0 / 0             $0 / $0
   Executive Vice President,
   Technology and Engineering

William T. Ludwig.................      31,250         $69,531             18,750 / 50,000             $0 / $0
   Vice President, Sales
<FN>
---------------
(1)  Market  price at the end of fiscal 2000 ($0.24) less  exercise  price.  For
     purposes of this  calculation,  the year-end  market price of the shares is
     deemed to be the closing  sale price of the Common Stock as reported on the
     Over-the-Counter Bulletin Board on December 31, 2000.
</FN>
</TABLE>

                                       10

<PAGE>

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     The members of the Board, the executive officers of the Company and persons
who hold more than ten percent of the  Company's  outstanding  Common  Stock are
subject  to the  reporting  requirements  of  Section  16(a)  of the  Securities
Exchange Act of 1934.  These such  individuals are required to file reports with
respect to their  ownership of and  transactions  in the  Company's  securities.
Officers,  directors and greater than ten percent  stockholders  are required to
furnish the Company with copies of all such  reports they file.  Based solely on
its  review  of  the  copies  of  such   forms   received   by  it,  or  written
representations from certain reporting persons that no Forms 5 were required for
those  persons,  the  Company  believes  that,  during  fiscal  2000 all  filing
requirements applicable to its officers, directors, and greater than ten-percent
beneficial owners were complied with, except that: (i) Mr. Ludwig, the Company's
Vice President, Sales, failed to timely file an end-of-month report on Form 4 to
reflect the exercise of certain employee stock option and related acquisition of
Common Stock but Mr.  Ludwig has since  reported the  transaction  on Form 5 and
(ii) Mr. Donald William Petersen,  the Company's Vice President,  Manufacturing,
failed to timely file an  end-of-month  report on Form 4 to reflect his exercise
of employee stock option and subsequent  disposition of the Common Stock but Mr.
Petersen has since reported the transaction on Form 5.

                                       11

<PAGE>

                            COMMON STOCK OWNERSHIP OF
                    CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
     The  following  table sets forth certain  information  known to the Company
with  respect to the  beneficial  ownership of Common Stock as of March 30, 2001
by: (i) all persons who are beneficial  owners of five percent or more of Common
Stock, (ii) each director,  (iii) each executive officer of the Company and (iv)
all current directors and executive officers as a group.
<CAPTION>

           Name and Address, if Required,                         Shares                   Percent of Shares
                 of Beneficial Owner                    Beneficially Owned (1)(2)      Beneficially Owned (1)(2)
                 -------------------                    -------------------------      -------------------------
<S>                                                              <C>                             <C>
Michael Luckwell (3)...............................              3,433,750                       33.6%
    26 Catherine Place
    London SW1E 6HF United Kingdom

American Bankers Insurance Group, Inc. (4).........              3,000,000                       22.7%
    11222 Quail Roost Drive
    Miami, FL 33157

El Dorado Ventures and affiliated entities (5).......              988,782                        9.7%
    2400 Sand Hill Road
    Suite 100
    Menlo Park, CA 94025

Scitex Digital Video, Inc. (6).....................              1,000,000                        8.9%
    c/o Scitex Corporation Ltd.
    P.O. Box 330
    Herzilya B 46103 Israel

Junaid Sheikh (7)..................................              1,199,751                       11.4%
    President, Chief Executive Officer,
    and Chairman of the Board

Phillip Bennett (8)................................                750,000                        7.4%
    Executive Vice President, Technology
    and Engineering

Ian Craven (9).....................................                164,197                        1.6%
    Senior Vice President, Engineering

William T. Ludwig (10).............................                 60,416                         *
    Vice President, Sales

Donald K. McCauley (11)............................                 60,416                         *
    Senior Vice President, Finance and
    Chief Financial Officer

Lionel M. Allan (12)...............................                178,722                        1.7%
    Director

David A. Lahar (13)................................                120,000                        1.2%
    Director

Eugene M. Matalene, Jr.(14)........................                115,000                        1.1%
    Director

Thomas E. Fanella (15).............................                 22,500                         *
    Director

All executive officers and directors ..............              6,272,383                       56.7%
    as a group (12 persons) (16)

<FN>
------------
*       Less than one percent (1%).
</FN>
</TABLE>

                                       12

<PAGE>

(1)  Except  as  indicated  in the  footnotes  to this  table  and  pursuant  to
     applicable community property laws, the Company believes that persons named
     in the table have sole  voting  and  investment  power with  respect to all
     shares of Common Stock held by such person.

(2)  The number of shares of Common Stock beneficially owned includes the shares
     issuable  pursuant to stock options  which may be exercised  within 60 days
     after March 30, 2001.  Shares issuable  pursuant to such options are deemed
     outstanding for computing the percentage of the person holding such options
     but are not outstanding for computing the percentage of any other person.

(3)  Includes 15,000 shares issuable upon currently  exercisable options held by
     Mr. Luckwell.

(4)  Includes the shares  issuable upon  conversion  of the Senior  Subordinated
     Convertible  Note due  March  12,  2004 (the  "Convertible  Notes")  in the
     aggregate principal amount of $3,000,000 held by American Bankers Insurance
     Group,  Inc. The  Convertible  Notes  convert into that number of shares as
     calculated by dividing the outstanding principal amount of such Convertible
     Notes by a conversion  price of $1.00,  subject to adjustment.  As of March
     30,  2001,  the  $3,000,000  Convertible  Note  held  by  American  Bankers
     Insurance Group, Inc. converts into 3,000,000 shares.

(5)  Reflects  share  ownership  as of March 30,  2000,  based on the  Company's
     records.

(6)  Includes a currently  exercisable warrant to purchase 250,000 shares of the
     Common  Stock at $1.00 per share and a  currently  exercisable  warrant  to
     purchase  750,000  shares  of the  Common  Stock at $3.00 per  share.  Both
     warrants  terminate  upon the earlier to occur of (i)  December 10, 2008 or
     (ii) an acquisition or change in control of the Company.

(7)  Includes  287,077  shares  issuable  pursuant to stock  options held by Mr.
     Sheikh which may be  exercised  currently or within 60 days after March 30,
     2001. Also includes  912,674 shares owned  indirectly by Mr. Sheikh and Mr.
     Sheikh's wife as Trustees of the Sheikh Revocable Trust.

(8)  Includes  650,000 shares subject to a repurchase  right of the Company,  at
     the issuance price,  which lapses in equal monthly increments over a period
     of three years,  beginning  December  1998.  As of March 30, 2001,  162,515
     shares were subject to repurchase.

(9)  Includes  88,541  shares  issuable  pursuant to stock  options  held by Mr.
     Craven which may be  exercised  currently or within 60 days after March 30,
     2001.

(10) Includes  29,166  shares  issuable  pursuant to stock  options  held by Mr.
     Ludwig which may be  exercised  currently or within 60 days after March 30,
     2001.

(11) Represents 60,416 shares issuable upon currently  exercisable  options held
     by Mr. McCauley.

(12) Includes 65,850 shares issuable upon currently  exercisable options held by
     Mr. Allan.  Also includes  100,416 shares owned indirectly by Mr. Allan and
     Mr.  Allan's  wife as Trustees  of the Allan 1995  Living  Trust and 12,456
     shares  owned  indirectly  by Mr.  Allan as the  beneficiary  of the  Allan
     Advisors, Inc. Profit Sharing Plan FBO Lionel M. Allan.

(13) Includes 20,000 shares issuable upon currently  exercisable options held by
     Mr. Lahar.  Also includes  100,000 shares owned  indirectly by Mr. Lahar as
     trustee of the EOS Capital Profit Sharing Plan.

(14) Includes 15,000 shares issuable upon currently  exercisable options held by
     Mr.  Matalene.  Also includes the shares  issuable  upon  conversion of the
     Convertible Notes in the aggregate principal amount of $100,000 held by Mr.
     Matalene.  The  Convertible  Notes  convert  into that  number of shares as
     calculated by dividing the outstanding principal amount of such Convertible
     Notes by a conversion  price of $1.00,  subject to adjustment.  As of March
     30, 2001, the $100,000  Convertible Note held by Mr. Matalene converts into
     100,000 shares.

(15) Represents 22,500 shares issuable upon currently  exercisable  options held
     by Mr. Fanella.

(16) Includes  771,181 shares  issuable  pursuant to stock options held by which
     may be exercised  currently  or within 60 days after March 30,  2001.  Also
     includes 100,000 shares issuable upon conversion of Convertible  Notes. See
     footnotes above.

                                       13

<PAGE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On November 1, 2000, the Company engaged EOS Capital,  Inc. as a consultant
and  financial  advisor  to assist  the Board with  strategic,  competitive  and
financial  strategy  and with  formulating  criteria  with  respect to potential
acquisition,  merger or sale partners.  As compensation  for such services,  the
Company paid EOS Capital a retainer of $100,000,  agreed to pay the success fees
as may be  negotiated  in the future  between  EOS  Capital  and the Company and
agreed to  reimburse  EOS Capital for its related  out-of-pocket  expenses.  Mr.
Lahar,  a director of the  Company,  is a managing  director and the sole equity
owner of EOS Capital.  The fees for these  services were  negotiated on an arm's
length basis,  and the Company believes that such terms and amounts are at least
as favorable as the Company could have obtained from third parties.

     On  March  12,  1999,  the  Company  issued  the  Convertible  Notes in the
aggregate principal amount of $3,500,000 to a group of investors led by American
Bankers.  Mr. Matalene was one such investor and purchased a Convertible Note in
the  principal  amount of $100,000.  The  Convertible  Notes  currently  have an
interest  rate of 8%,  and in  fiscal  2000,  Mr.  Matalene  was paid  $7,822 in
interest  under  the  Convertible  Notes.  Mr.  Matalene's  Convertible  Note is
currently convertible into 100,000 shares of Common Stock. Upon the consummation
of the issuance of the  Convertible  Notes in March 1999, Mr.  Matalene earned a
$87,500  consulting  fee to be paid by the Company for his financial  consulting
services.  Mr. Matalene,  who became a director of the Company upon the issuance
of the Notes, is a director and stockholder of American Bankers.

     In  connection  with the  issuance of the  Convertible  Notes,  the Company
retained EOS Capital to provide financial consulting services. Upon consummation
of the  issuance  of  the  Convertible  Notes,  EOS  Capital  earned  a  $87,500
consulting fee to be paid by the Company for its services. Both of the financial
consulting fees paid to Mr. Matalene and EOS Capital were negotiated on an arm's
length  basis,  and the Company  believes  that such amount and the terms of the
agreement  with Mr.  Matalene  and EOS Capital are at least as  favorable as the
Company could have obtained from third parties.

     Between  November 3, 1999 and March 30,  2001,  the  Company  and  American
Bankers amended the Convertible  Notes and entered into waivers of the Company's
violations of certain  covenants  related to the Convertible  Notes. The Company
paid Mr.  Matalene a fee of $52,500 for his  assistance  in  obtaining  American
Bankers' waiver of January 29, 2001.

     On  December 7, 1998,  the Company  entered  into  agreements  with each of
Messrs. Allan and Lahar, directors of the Company, pursuant to which the Company
issued 100,000 shares of Common Stock,  subject to repurchase rights, to each of
them  primarily  in  recognition  of their  significant  efforts  related to the
Company's acquisition by of the assets of Scitex Digital Video, Inc. In exchange
for the shares  sold to Mr.  Allan in  December  1998,  Mr.  Allan  delivered  a
non-recourse  promissory  note in the amount of $65,000  with an  interest  rate
equal to the prime rate of Comerica Bank as adjusted quarterly.  Effective as of
June 20, 1999,  the Company and Mr. Allan  terminated  the Company's  repurchase
right with respect to Mr.  Allan's  100,000  shares,  vested all such shares and
amended Mr. Allan's promissory note to provide the Company with recourse against
the  assets of Mr.  Allan in the event of his  default.  The  largest  aggregate
amount of  indebtedness  outstanding  at any time during  fiscal 2000 under such
note was $73,101.  Mr. Allan fully paid off all principal and interest due under
the note on June 19, 2000.

     In exchange for the shares sold to Mr. Lahar, a director of the Company, in
December  1998, Mr. Lahar  delivered a non-recourse  promissory in the amount of
$65,000  with an  interest  rate  equal to the prime  rate of  Comerica  Bank as
adjusted  quarterly.  Effective as of June 20,  1999,  the Company and Mr. Lahar
amended Mr.  Lahar's  promissory  note to make the principal and interest due on
September 1, 1999 and to provide the Company with recourse against the assets of
Mr. Lahar in the event of his default. The Company and Mr. Lahar also terminated
the Company's  repurchase  right with respect to Mr. Lahar's  100,000 shares and
vested all such shares. The largest aggregate amount of indebtedness outstanding
at any time during fiscal 2000 under such note was $70,766. Mr. Lahar fully paid
off all principal and interest due under the note on February 15, 2000.

     On December 4, 1998,  the Company  entered into an  agreement  with Phillip
Bennett,  as an inducement to Mr.  Bennett to join the Company as Executive Vice
President,  Technology and Engineering.  The agreement  provided for the sale by
the Company to Mr.  Bennett of 750,000  shares of Common Stock.  Of such shares,
650,000  were  sold  in  consideration  of  the  delivery  by Mr.  Bennett  of a
non-recourse promissory note. Effective as of June 20, 1999, the

                                       14

<PAGE>


Company and Mr.  Bennett  amended the  non-recourse  promissory  note to fix the
note's interest rate at 5.5% and to require accrued  interest to be paid monthly
in advance. The largest aggregate amount of indebtedness outstanding at any time
during the fiscal 2000 under such note was $508,265.  As of April 27, 2001,  the
amount outstanding under such note was $502,034.

     Since 1992,  the  Company  has  retained  Lionel  Allan,  a director of the
Company,  as a consultant for legal and other business  related  matters.  These
services  are in addition to his  services  as a director  of the  Company.  The
Company currently pays Mr. Allan $4,000 per month for such consulting  services.
Such amount was  negotiated  on an arm's length  basis and the Company  believes
that such amount and the terms of the  agreement  with Mr. Allan are at least as
favorable as the Company could have obtained from third parties.

     Each of El Dorado  Ventures,  Michael  Luckwell  and  American  Bankers are
entitled to certain  registration  rights with respect to the Common Stock owned
by such  stockholder.  See "Common Stock Ownership of Certain  Beneficial Owners
and Management." The Company's Certificate of Incorporation limits the liability
of directors to the maximum extent permitted by the Delaware General Corporation
Law. The  Company's  Bylaws also provide that the Company  shall  indemnify  its
directors,  officers,  employees and agents in such circumstances.  In addition,
the Company has entered into  indemnification  agreements  with its officers and
directors.

                                       15

<PAGE>

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

                                 PROPOSAL NO. 2

             AMENDMENT TO THE 1995 STOCK OPTION/STOCK ISSUANCE PLAN
                TO INCREASE AUTHORIZED SHARES UNDER BY 2,000,000

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

     The Board has unanimously approved an increase by 2,000,000 (from 2,196,468
to  4,196,468)  of the number of shares of Common  Stock  reserved  for issuance
under the  Company's  1995 Stock  Option/Stock  Issuance Plan (the "Stock Option
Plan").

     As of March 30, 2001, the Company had a total of 2,196,468 shares of Common
Stock reserved for issuance under the Stock Option Plan. Of such shares, 141,803
were  available  for the grant of new options and other  awards  under the Stock
Option Plan. The proposed  2,000,000 shares would result in a total of 4,196,468
shares of Common Stock reserved for issuance under the Stock Option Plan, and of
such shares, 2,141,803 would be available for the grant of new options and other
awards under the Stock Option Plan.

     The Board believes that an increase in the number of shares  reserved under
the Stock Option Plan would benefit the Company and its  stockholders  by giving
the  Company a means to attract  new and  retain  current  employees.  The Board
believes  that the 141,803  shares  available  under the Stock Option Plan as of
March 30,  2001 are  insufficient  for these  purposes.  Awards  under the Stock
Option Plan to new and  current  employees  are the  Company's  primary  form of
long-term incentive compensation.  Such awards provide employees with incentives
to maximize long-term  stockholder values and help to align employee's interests
with those of the stockholders.

     The  proposed  amendment  affects only the number of shares of Common Stock
reserved  under the Stock Option Plan and does not apply to any other portion of
the Stock Option Plan. If the stockholders  approve the proposed amendment,  the
Company  intends to register  the  additional  2,000,000  shares of Common Stock
under the Securities Act of 1933 as soon as  practicable  after the  stockholder
approval.

Summary of 1995 Stock Option/Stock Issuance Plan, as Amended

     The Stock  Option Plan is the  successor  equity  incentive  program to the
Company's  Restated 1990 Stock Option Plan (the "Prior Plan").  The Stock Option
Plan was adopted by the Board on July 25, 1995 and approved by the  stockholders
on September  14,  1995.  The Stock Option Plan was amended on October 29, 1998.
The Stock Option Plan was further  amended on July 20, 1999,  and such amendment
was approved by stockholders on July 20, 1999.

     The  Company  initially  authorized  2,000,000  shares of Common  Stock for
issuance under the Stock Option Plan, plus an additional  number of shares equal
to 1% of the  number  of shares of Common  Stock and  Common  Stock  equivalents
outstanding on the first day of 1996, 1997 and 1998. The initial 2,000,000 share
reserve was  comprised of (i) the shares which  remained  available for issuance
under the Prior  Plan,  including  the  shares  subject to  outstanding  options
thereunder,  plus (ii) an additional increase of approximately 1,260,000 shares.
As of March 30,  2001,  there were  257,877  outstanding  shares of Common Stock
issued pursuant to the Stock Option Plan and outstanding options under the Stock
Option Plan options to purchase 1,796,788 shares of Common Stock.

     The  objective of the Stock Option Plan is to provide an incentive  for key
employees,   including   officers  and   directors   who  are   employees,   and
non-employees,   including  non-employee   directors,  of  the  Company  or  its
subsidiaries  to remain in the  service of the  Company by  providing  them with
opportunities  to  acquire  an  economic  interest  in the  future  success  and
prosperity of the Company and its subsidiaries.

     The Stock Option Plan is divided into three  separate  components:  (i) the
Discretionary  Option Grant Program,  (ii) the Stock Issuance  Program and (iii)
the  Automatic  Option  Grant  Program.  Under the  Discretionary  Option  Grant
Program,  employees and  consultants  may, at the discretion of the Stock Option
Plan's  administrator,  be granted options to purchase shares of Common Stock at
an  exercise  price not less than 85% of their  fair  market  value on the grant
date. Under the Stock Issuance  Program,  such persons may, at the discretion of
the Stock Option Plan's administrator, be

                                       16

<PAGE>

issued shares of Common Stock directly, through the purchase of such shares at a
price not less than 85% of their fair market value at the time of issuance or as
a bonus tied to the  performance of services.  Under the Automatic  Option Grant
Program,  automatic  grants  will be  made at  periodic  intervals  to  eligible
non-employee  Board  members to purchase  shares of Common  Stock at an exercise
price equal to 100% of their fair market value on the grant date.

     The  Discretionary  Option Grant Program and the Stock Issuance Program are
administered by the  Compensation  Committee,  which is the Plan  Administrator.
Under  those  programs,  the  Plan  Administrator  has  complete  discretion  to
determine  which  eligible  individuals  are to receive  option  grants or stock
issuances,  the time or times when such option grants or stock  issuances are to
be made, the number of shares subject to each such grant or issuance, the status
of any granted  option as either an incentive  stock  option or a  non-statutory
stock  option under the Federal tax laws,  the vesting  schedule to be in effect
for the  option  grant or stock  issuance  and the  maximum  term for  which any
granted option is to remain  outstanding.  However,  no participant in the Stock
Option Plan may receive  options or other rights for more than 300,000 shares of
Common Stock per calendar year, and only Company employees may receive incentive
stock options.  As of March 30, 2000, there were  approximately  110 individuals
eligible  under the  Discretionary  Option Grant Program and the Stock  Issuance
Program

     Each of those programs  provides that, in the event the Company is acquired
by merger,  consolidation  or asset sale,  the shares of Common Stock  purchased
subject to a right of  repurchase  under the Stock Option Plan will  immediately
vest in full, except to the extent the Company's  repurchase rights with respect
to those  shares are to be assigned to the  acquiring  entity,  and options will
accelerate  to the extent not assumed by the acquiring  entity.  They also allow
the Plan Administrator discretion to provide for the acceleration of one or more
outstanding options under the Stock Option Plan (including options  incorporated
from the Prior Plan) and the vesting of shares  subject to  outstanding  options
upon the occurrence of certain hostile takeovers.  Such accelerated  vesting may
be  conditioned  upon the  subsequent  termination  of the  affected  optionee's
service.

     Stock   appreciation   rights  are   authorized   for  issuance  under  the
Discretionary  Option Grant  Program which provide the holders with the election
to surrender their outstanding options for an appreciation distribution from the
Company equal to the excess of (i) the fair market value of the vested shares of
Common Stock subject to the surrendered  option over (ii) the aggregate exercise
price payable for such shares. Such appreciation rights distribution may be made
in cash or in shares of Common Stock.

     The Plan  Administrator  has the  authority to cancel  outstanding  options
under the Discretionary  Option Grant Program  (including  options  incorporated
from the Prior  Plan) in return  for the  grant of new  options  for the same or
different  number of option  shares with an exercise  price per share based upon
the fair market value of the Common Stock on the new grant date.

     Under the Automatic Option Grant Program,  when an individual first becomes
a non-employee  member of the Board, he receives a 10,000-share  option grant on
the date he joins the Board  provided he has not been in the prior employ of the
Company. In addition,  at each Annual Stockholders  Meeting, each individual who
is to continue to serve as a  non-employee  member of the Board after the Annual
Meeting  currently  receives an additional option grant to purchase 5,000 shares
of Common Stock,  whether or not such individual has been in the prior employ of
the Company,  so long as such  individual  has served on the Board for more than
six months.  All options  granted under the  Automatic  Option Grant Program are
immediately  vested and exercisable  and not subject to any repurchase  right of
the Company. As of March 30, 2000, the Company had five non-employee directors.

     The Board may amend or modify the Stock  Option Plan at any time,  provided
that the terms of the  Automatic  Option  Grant  Program may not be amended more
than once every six months,  other than to the extent  necessary  to comply with
applicable federal tax rules and regulations. Notwithstanding the foregoing, the
Board cannot, without the approval of the stockholders,  (i) materially increase
the maximum number of shares issuable under the Stock Option Plan, the number of
shares for which options may be granted under the Automatic Option Grant Program
or the maximum number of shares for which any one person may be granted options,
separately  exercisable stock appreciation rights and direct stock issuances per
calendar year, except for permissible adjustment in the event of certain changes
in  the  Company's  capitalization,   (ii)  materially  modify  the  eligibility
requirements for Stock Option Plan  participation  or (iii) materially  increase
the benefits accruing to Stock Option Plan  participants.  The Stock Option Plan
will terminate on July 24, 2005, unless sooner terminated by the Board.

     Options  issued under the Stock  Option Plan  typically  may be  exercised,
subject  to  the  grant  terms  and   conditions   as  determined  by  the  Plan
Administrator,  by  giving  written  notice  of  exercise  to the  Company  that
specifies  the number of shares of Common  Stock as to which the option is being
exercised and by tendering payment to the

                                       17

<PAGE>

Company of the purchase price.  Generally,  the form of payment for shares to be
issued  upon  the  exercise  of an  option  may,  in  the  Plan  Administrator's
discretion,  consist entirely or in any combination of cash, check, a commitment
to pay by a broker or shares held by the optionee or issuable  upon  exercise of
the option,  or such other  consideration  and method of payment permitted under
any laws to which the Company is subject.

New Plan Benefits

     The Compensation  Committee allocates benefits under the Stock Option Plan.
As of April 27, 2001, no benefits or amounts relating to the additional benefits
from the proposed  2,000,000 share increase,  including  options under the Stock
Option Plan,  have been granted to,  received by or allocated to any individuals
under such  plan.  Options to be  granted  under the Stock  Option  Plan are not
determinable  other  than for the  Non-Employee  Directors  Group.  Based on the
current number of five non-employee directors and assuming the Class 2 Directors
nominated in this Proxy  Statement are  reelected,  options  covering a total of
25,0000  shares of Common  Stock will be granted to the  Non-Employee  Directors
Group under the Automatic Option Grant Program in fiscal 2001.

<TABLE>
     The following table summarizes: (i) the number of options granted under the
Stock Option Plan to the  individuals or groups  specified below in fiscal 2000,
(ii) the weighted average exercise price of such option grants and (iii) options
held by the individuals and groups specified below as of March 30, 2001:
<CAPTION>
                                                                      Weighted Average
                                                 Options Granted     Exercise Price of         Currently
              Name and Position                 (Number of Shares)   Options Granted($)       Outstanding
              -----------------                 ------------------   ------------------       -----------
<S>                                                  <C>                   <C>                <C>
Junaid Sheikh,.............................               0                  NA                 447,286 (1)
   President, Chief Executive Officer,
   and Chairman of the Board

Donald K. McCauley.........................               0                  NA                 120,000 (2)
   Senior Vice President, Finance and
   Chief Financial Officer

Ian Craven.................................               0                  NA                 128,125 (3)
   Senior Vice President, Engineering

Phillip Bennett............................               0                  NA                  40,000 (4)
   Executive Vice President,
   Technology and Engineering

William T. Ludwig..........................               0                  NA                  98,750 (5)
   Vice President, Sales

Lionel M. Allan, Director..................           5,000 (6)            $1.06                 65,850

Thomas E. Fanella, Director................           5,000 (6)            $1.06                 22,500

David A. Lahar, Director...................           5,000 (6)            $1.06                 20,000

Eugene M. Matalene, Jr., Director..........           5,000 (6)            $1.06                 15,000

Michael Luckwell, Director.................           5,000 (6)            $1.06                 15,000

All executive officers as a group .........               0                  NA               1,065,126
   (7 persons)

All non-executive directors  ..............          25,000 (6)            $1.06                138,350
   as a group (5 persons)

All non-executive officer employees........          98,000                $0.87                474,981
   as a group (approximately 66 persons)
<FN>

---------------
(1)  Includes options for 50,000 shares granted under the  Discretionary  Option
     Grant Program on January 4, 2001.
(2)  Includes options for 20,000 shares granted under the  Discretionary  Option
     Grant Program on January 4, 2001.
(3)  Includes options for 30,000 shares granted under the  Discretionary  Option
     Grant Program on January 4, 2001.
(4)  Includes options for 40,000 shares granted under the  Discretionary  Option
     Grant Program on January 4, 2001.
(5)  Includes options for 30,000 shares granted under the  Discretionary  Option
     Grant Program on January 4, 2001.

                                       18

<PAGE>

(6)  Granted under the Automatic Grant Program on June 15, 2000.
</FN>
</TABLE>

     On March 30,  2001,  the closing sale price of the Common Stock as reported
on the Over-the-Counter Bulletin Board was $0.42.

Tax Treatment

     THE FOLLOWING SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS
FOR GENERAL INFORMATIONAL PURPOSES AND MAY NOT BE APPLICABLE TO ALL INDIVIDUALS.
PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS FOR A DETERMINATION AS TO THE
SPECIFIC TAX CONSEQUENCES APPLICABLE TO THEM.

     Options.  Options  granted  under the option  plan may be either  incentive
options,  which satisfy the  requirements of Section 422 of the Internal Revenue
Code,  or  non-qualified  stock  options,  which are not  intended to meet those
requirements.  The  federal  income tax  treatment  for the two types of options
differs as is described below.

     No taxable  regular income is recognized by the optionee at the time of the
option  grant,  and no taxable  income is generally  recognized  at the time the
option is exercised.  The difference between the fair market value of the shares
underlying the option on the exercise date and the exercise price will, however,
be a preference item for purposes of the  alternative  minimum tax. The optionee
will  recognize  taxable  income  in the year in which the purchased  shares are
sold or otherwise made the subject of disposition.

     For  Federal  income  tax  purposes,  dispositions  are  divided  into  two
categories:  qualifying and  disqualifying.  The optionee will make a qualifying
disposition  of the purchased  shares if the sale or other  disposition  of such
shares is made more than two years  after the date the option for the shares was
granted and more than one year after the option was  exercised  for such shares.
Unless both of these  requirements  are satisfied,  a disqualifying  disposition
will result.

     Upon a qualifying  disposition of the shares, the optionee will recognize a
long-term  capital gain in an amount equal to the excess of the amount  realized
upon the sale or other  disposition  of the  purchased  shares over the exercise
price  paid for such  shares.  If there is a  disqualifying  disposition  of the
shares, then the excess of the fair market value of those shares on the date the
option was exercised (or the sale price,  if lower) over the exercise price paid
for the  shares  will  be  taxable  as  ordinary  income.  Any  additional  gain
recognized upon the disposition will be a capital gain.

     If the optionee makes a disqualifying  disposition of the purchased shares,
then the Company  will be entitled  to an income tax  deduction  for the taxable
year in which such disposition occurs equal to the amount of ordinary income the
optionee  recognized on such disposition.  In no other instance will the Company
be allowed a business expense deduction with respect to the optionee's  exercise
or disposition of the purchased shares.

     No  taxable  income  is  recognized  by an  optionee  upon  the  grant of a
non-qualified  option. The optionee will, in general,  recognize ordinary income
in the year in which the  option is  exercised,  equal to the excess of the fair
market  value of the  purchased  shares on the  exercise  date over the exercise
price paid for the shares,  and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.

     Shares.  Special  provisions  of the  Internal  Revenue  Code  apply to the
acquisition  of common  stock under a  non-qualified  option,  if the  purchased
shares are subject to repurchase by the Company. These special provisions may be
summarized as follows:

     If the  shares  acquired  upon  exercise  of the  non-qualified  option are
subject to repurchase by the Company at the original exercise price in the event
of the optionee's  termination  of service prior to vesting in such shares,  the
optionee will not recognize any taxable  income at the time of exercise but will
have to report as ordinary  income,  as and when the Company's  repurchase right
lapses,  an amount equal to the excess of the fair market value of the shares on
the date the Company's  repurchase right lapses with respect to such shares over
the exercise price paid for the shares.

     The  optionee  may,  however,  elect under  Section  83(b) of the  Internal
Revenue  Code to  include  as  ordinary  income in the year of  exercise  of the
non-qualified  option an amount  equal to the excess of the fair market value of
the

                                       19

<PAGE>

purchased  shares on the  exercise  date  (determined  as if the shares were not
subject to the Company's repurchase right) over the exercise price paid for such
shares.  If a valid  Section  83(b)  election  is made  within 30 days after the
exercise date, the optionee will not recognize any additional income as and when
the Company's repurchase right lapses.

     The Company will be entitled to a business  expense  deduction equal to the
amount of  ordinary  income  recognized  by the  optionee  with  respect  to the
exercised non-qualified option. The deduction will in general be allowed for the
Company's  taxable  year in which  such  ordinary  income is  recognized  by the
optionee.

     Stock Appreciation  Rights. An optionee who is granted a stock appreciation
right will recognize ordinary income in the year of exercise equal to the amount
of the  appreciation  distribution.  The Company  will be entitled to a business
expense  deduction  equal to the  appreciation  distribution  for the  Company's
taxable year in which the ordinary income is recognized by the optionee.

     Limitation  on  Company's  Deduction.  Section  162(m)  of  the  Code  will
generally  limit to $1,000,000  the Company's  federal  income tax deduction for
compensation  paid in any year to its chief  executive  officer  and each of its
four highest paid executive  officers,  to the extent that such  compensation is
not  "performance  based." Under Treasury  regulations,  a stock option will, in
general,  qualify as "performance based" compensation if it: (i) has an exercise
price of not less than the fair market value of the underlying stock on the date
of grant,  (ii) is  granted  under a plan that  limits  the number of shares for
which options may be granted to an employee during a specified  period and meets
certain  other  requirements,  which  plan  is  approved  by a  majority  of the
stockholders  entitled to vote thereon,  and (iii) is granted by a  compensation
committee  consisting solely of at least two independent  directors.  If a stock
option to an executive referred to above is not "performance  based," the amount
that  would  otherwise  be  deductible  by the  Company in respect of such stock
option  will  be  disallowed  to  the  extent  that  the  executive's  aggregate
non-performance based compensation paid in the relevant year exceeds $1,000,000.

Accounting Treatment

     The Company applies Accounting  Principles Board Opinion No. 25 (Accounting
for Stock Issued to Employees) ("APB Opinion 25") and related interpretations in
accounting for stock options.  Statement of Financial  Accounting  Standards No.
123  requires  companies  which use APB Opinion 25  accounting  to disclose  the
impact,  if any, that use of a fair value option  valuation  model would have on
net income.  If an option is issued to an employee for an exercise price that is
less than fair market value of the Common Stock on the date of grant, charges to
earnings will be made at the time of the grant of any options to the extent,  if
any,  that the  aggregate  fair market  value of the Common Stock on the date of
grant exceeds the exercise price.

     Any  expense  will be  accruable  by the  Company  over the period that the
option shares or issued shares are to vest.  Option grants or stock issuances to
employees  with  exercise or issue prices not less than the fair market value of
the shares on the grant or issue  date will not  result in any direct  charge to
the Company's  earnings.  However,  as discussed  above, the fair value of those
options is  required to be  disclosed  in the notes to the  Company's  financial
statements, and the Company must also disclose, in the pro-forma footnote to the
Company's  financial  statements,  the impact those  options would have upon the
Company's  reported earnings were the fair value of those options at the time of
grant treated as compensation expense. Whether or not granted at a discount, the
number of  outstanding  options  may be a factor in  determining  the  Company's
earnings per share on a fully-diluted basis.

Vote Required and Board Recommendation

     The affirmative  vote of a majority of the shares  outstanding and entitled
to vote at the Annual Meeting,  at which a quorum representing a majority of all
outstanding  shares of Common  Stock is present and  entitled  to vote,  will be
required to amend the Stock  Option Plan to increase  its  authorized  shares by
2,000,000.  If the  stockholders  do not so approve the  amendment  to the Stock
Option Plan to increase the authorized  shares by 2,000,000,  the maximum number
of shares issuable under Stock Option Plan will remain at 2,196,468.

     The Board  unanimously  recommends a vote IN FAVOR OF the  amendment to the
Stock  Option Plan to increate the  authorized  shares by  2,000,000.  The Board
believes the Company and its  stockholder  will benefit form the increase in the
number of authorized shares under the Stock Option Plan.

                                       20

<PAGE>

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

                                 PROPOSAL NO. 3

                         RATIFICATION OF APPOINTMENT OF
                              INDEPENDENT AUDITORS

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


     The  firm of Ernst & Young  LLP  served  as  independent  auditors  for the
Company for the year ended  December  31, 2000.  The Board has selected  Ernst &
Young LLP to continue in this capacity during fiscal 2001. The Company is asking
the stockholders to ratify the appointment by the Board of Ernst & Young LLP, as
independent auditors, to audit the consolidated financial statements the Company
for the fiscal year ending  December 31, 2001 and to perform  other  appropriate
services.

     A  representative  of Ernst & Young LLP is  expected  to be  present at the
Annual Meeting and to respond to  stockholders'  questions.  The  representative
will be given an opportunity to make a brief statement.

     The Board unanimously recommends a vote IN FAVOR OF the ratification of the
appointment of Ernst & Young LLP as the Company's  independent  auditors for the
fiscal year ending December 31, 2001. In the event that a majority of the shares
voted  at the  Annual  Meeting  do not  vote  for the  ratification,  the  Audit
Committee  and the Board will  reconsider  whether  or not to retain  that firm.
Under all circumstances,  the Audit Committee and the Board retain the corporate
authority to change the auditors at a later date.

                                       21

<PAGE>

                                 OTHER BUSINESS

     The Board is not  aware of any other  matter  which  may be  presented  for
action at the  Annual  Meeting  other than the  matters  set forth in this Proxy
Statement.  Should any other matter requiring a vote of the stockholders  arise,
it is intended  that the persons  named as proxy  holders on the enclosed  proxy
card will vote the  shares  represented  thereby in  accordance  with their best
judgment in the interest of the Company. Discretionary authority with respect to
such other matters is granted by the execution of the enclosed proxy.

                              STOCKHOLDER PROPOSALS

     Under the rules of the Securities and Exchange Commission, the deadline for
stockholders to submit proposals to be considered for inclusion in the Company's
Proxy  Statement for the next year's Annual Meeting of  Stockholders is expected
to be January 9, 2002.  Such  proposals  may be included  in next  year's  Proxy
Statement if they comply with certain rules and  regulations  promulgated by the
Securities  and  Exchange  Commission.  Stockholder  proposals  submitted to the
Company after March 16, 2002 may be considered  untimely to be voted upon at the
Company's next Annual Meeting.

                           INCORPORATION BY REFERENCE

     According to the provisions of Schedule 14A under the  Securities  Exchange
Act of 1934, the following  portion of a document is  incorporated by reference:
"Executive  Officers of the Company" from Part I of the Company's  Annual Report
on Form 10-K for the year ended December 31, 2000.

                        ADDITIONAL INFORMATION AVAILABLE

     THE COMPANY  WILL  PROVIDE  WITHOUT  CHARGE,  UPON  REQUEST,  A COPY OF THE
COMPANY'S  ANNUAL  REPORT ON FORM 10-K FOR THE YEAR  ENDED  DECEMBER  31,  2000,
INCLUDING FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUEST SHOULD
BE SENT TO THE ATTENTION OF THE CHIEF  FINANCIAL  OFFICER AT ACCOM,  INC.,  1490
O'BRIEN DRIVE, MENLO PARK, CALIFORNIA 94025, OR TELEPHONED TO (650) 328-3818.

                                         By Order of the Board of Directors,


                                         /s/ DONALD K. MCCAULEY
                                         ----------------------
                                         Donald K. McCauley
                                         Secretary

Dated:  April 27, 2001

                                       22

<PAGE>

                                   APPENDIX A

                                   ACCOM, INC.

                         CHARTER OF THE AUDIT COMMITTEE
                            OF THE BOARD OF DIRECTORS

This  Charter  governs the  operations  of the Audit  Committee  of the Board of
Directors  of Accom,  Inc.  The Audit  Committee  shall  review and reassess the
Charter at least annually and obtain approval of the Board of Directors.

     1. Members.  The Board of Directors  shall appoint an Audit Committee of at
least three  members,  consisting  entirely of  "independent"  directors  of the
Board,  and shall  designate  one member as  chairperson.  For purposes  hereof,
"independent"   shall  mean  a  director  who  meets  the  NASD   definition  of
"independence."

        On or before June 1, 2001,  each member of the Company's Audit Committee
must be  financially  literate,  and at least one member of the Audit  Committee
shall  have  accounting  or  related  financial  management  expertise,  both as
provided in the NASD rules.

     2.  Purposes,  Duties,  and  Responsibilities.  The Audit  Committee  shall
represent the Board of Directors in discharging its responsibilities relating to
the  accounting,  reporting,  and  financial  practices  of the  Company and its
subsidiaries, and shall have general responsibility for surveillance of internal
controls  and   accounting   and  audit   activities  of  the  Company  and  its
subsidiaries. Specifically, the Audit Committee shall:

     (i)     Recommend  to the Board of  Directors,  and  evaluate,  the firm of
             independent certified public accountants to be appointed as auditor
             of the Company,  which firm shall be ultimately  accountable to the
             Board of Directors through the Audit Committee;

     (ii)    Review with the independent auditor its audit procedures, including
             the scope,  fees and timing of the  audit,  and the  results of the
             annual audit examination and any accompanying management letters;

     (iii)   Review with the independent  auditor the written statement from the
             auditor,  required by Independence  Standards Board Standard No. 1,
             concerning any relationships between the auditor and the Company or
             any other  relationships that may adversely affect the independence
             of the auditor and, based on such review,  assess the  independence
             of the auditor;

     (iv)    Review the  financial  statements  to be included in the  Company's
             Annual  Report on Form 10-K and  discuss  with  management  and the
             independent   auditor  the  Company's   annual  audited   financial
             statements,  including a discussion of management and the auditor's
             judgment as to the quality of the Company's accounting  principles;
             the  reasonableness  of  significant  judgments  and the clarity of
             disclosures in the financial statements;

     (v)     Review  with  management  and the  independent  auditor the interim
             financial  statements and other matters required to be communicated
             to the Audit Committee by the independent  auditors under generally
             accepted accounting standards;

     (vi)    Recommend  to the Board of Directors  whether,  based on the review
             and  discussions  described in paragraphs  (iii) through (v) above,
             the financial statements should be included in the Annual Report on
             Form 10-K;

     (vii)   Review the adequacy of the Company's internal controls;

     (viii)  Review  significant  changes  in  the  accounting  policies  of the
             Company and  accounting  and financial  reporting rule changes that
             may have a significant impact on the Company's financial reports;


                                      A-1

<PAGE>

     (ix)    Review material pending legal proceedings involving the Company and
             other contingent liabilities; and

     (x)     Review the  adequacy  of the Audit  Committee  Charter on an annual
             basis, and recommend  changes if the Committee  determines  changes
             are appropriate.

     The Audit  Committee,  in carrying  out its  responsibilities  believes its
policies  and  procedures  should  remain  flexible,  in order to best  react to
changing  conditions  and  circumstances.  The Audit  Committee  should take the
appropriate  actions to set the overall  corporate  tone for  quality  financial
reporting, sound business risk practices, and ethical behavior.

     3.  Meetings.  The  Audit  Committee  shall  meet as often as may be deemed
necessary or appropriate in its judgment, generally four times each year, either
in person or telephonically. The Audit Committee shall meet in executive session
with the  independent  auditors at least  annually.  The Audit  Committee  shall
report to the full Board of  Directors  with  respect to its  meetings and shall
make such reports to shareholders  as are required by applicable  regulations or
as are deemed advisable in the Committee's judgment. The majority of the members
of the Audit Committee shall constitute a quorum.

                                       A-2

<PAGE>

                                   APPENDIX B

                                   ACCOM, INC.
                      1995 STOCK OPTION/STOCK ISSUANCE PLAN
                             AND AMENDMENTS THERETO


                                   ACCOM, INC.
                      1995 STOCK OPTION/STOCK ISSUANCE PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS

         I. PURPOSE OF THE PLAN

         This 1995 Stock  Option/Stock  Issuance Plan is intended to promote the
interests of Accom, Inc., a Delaware corporation,  by providing eligible persons
with the opportunity to acquire a proprietary  interest,  or otherwise  increase
their  proprietary  interest,  in the  Corporation  as an incentive  for them to
remain in the service of the Corporation.

         Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.

         II. STRUCTURE OF THE PLAN

                  A. The Plan  shall  be  divided  into  three  separate  equity
programs:

                           (i) the  Discretionary  Option  Grant  Program  under
which  eligible  persons may, at the  discretion of the Plan  Administrator,  be
granted options to purchase shares of Common Stock,

                           (ii) the Stock Issuance  Program under which eligible
persons may, at the  discretion of the Plan  Administrator,  be issued shares of
Common Stock directly,  either through the immediate  purchase of such shares or
as a bonus for services  rendered the Corporation (or any Parent or Subsidiary),
and

                           (iii) the Automatic  Option Grant Program under which
Eligible  Directors  shall  automatically  receive  option  grants  at  periodic
intervals to purchase shares of Common Stock.

                  B. The  provisions of Articles One and Five shall apply to all
equity programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

         III. ADMINISTRATION OF THE PLAN

                  A.  The  Primary  Committee  shall  have  sole  and  exclusive
authority  to  administer  the  Discretionary  Option  Grant and Stock  Issuance
Programs with respect to Section 16 Insiders. No non-employee Board member shall
be eligible to serve on the Primary Committee if such individual has, during the
twelve  (12)-month  period  immediately   preceding  the  date  of  his  or  her
appointment  to the  Committee or (if shorter)  the period  commencing  with the
Section  12(g)  Registration  Date  and  ending  with  the  date  of  his or her
appointment to the Primary  Committee,  received an option grant or direct stock
issuance under the Plan or any stock option, stock appreciation,  stock bonus or
other stock plan of the Corporation  (or any Parent or  Subsidiary),  other than
pursuant to the Automatic Option Grant Program.

                  B. Administration of the Discretionary  Option Grant and Stock
Issuance  Programs with respect to all other persons  eligible to participate in
these  programs  may,  at the  Board's  discretion,  be  vested  in the  Primary
Committee  or a  Secondary  Committee,  or the  Board  may  retain  the power to
administer  these programs with respect to all such persons.  The members of the
Secondary  Committee may be  individuals  who are Employees  eligible to receive

                                      B-1
<PAGE>

discretionary  option  grants or direct  stock  issuances  under the Plan or any
stock  option,  stock  appreciation,  stock  bonus  or other  stock  plan of the
Corporation (or any Parent or Subsidiary).

                  C. Members of the Primary Committee or any Secondary Committee
shall  serve  for such  period of time as the  Board  may  determine  and may be
removed by the Board at any time.  The Board may also at any time  terminate the
functions of any  Secondary  Committee  and  reassume  all powers and  authority
previously delegated to such committee.

                  D.  Each Plan  Administrator  shall,  within  the scope of its
administrative  functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance  Programs and to make such  determinations  under, and issue such
interpretations  of, the provisions of such programs and any outstanding options
or stock issuances  thereunder as it may deem necessary or advisable.  Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and  binding on all  parties who have an interest in the
Discretionary  Option Grant or Stock Issuance  Program under its jurisdiction or
any option or stock issuance thereunder.

                  E. Service on the Primary Committee or the Secondary Committee
shall constitute  service as a Board member,  and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee.  No member of the Primary Committee
or the Secondary  Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.

                  F.  Administration of the Automatic Option Grant Program shall
be  self-executing  in accordance  with the terms of that  program,  and no Plan
Administrator shall exercise any discretionary  functions with respect to option
grants made thereunder.

         IV. ELIGIBILITY

                  A. The persons  eligible to participate  in the  Discretionary
Option Grant and Stock Issuance Programs are as follows:

                           (i) Employees,

                           (ii)  non-employee  members of the Board  (other than
those serving as members of the Primary  Committee) or the board of directors of
any Parent or Subsidiary, and

                           (iii) consultants and other independent  advisors who
provide services to the Corporation (or any Parent or Subsidiary).

                  B.  Each Plan  Administrator  shall,  within  the scope of its
administrative  jurisdiction  under the Plan,  have full authority to determine,
(i) with  respect to the option  grants  under the  Discretionary  Option  Grant
Program,  which eligible persons are to receive option grants, the time or times
when such  option  grants are to be made,  the number of shares to be covered by
each such grant,  the status of the granted option as either an Incentive Option
or a Non-Statutory  Option,  the time or times at which each option is to become
exercisable,  the vesting  schedule (if any) applicable to the option shares and
the  maximum  term for which the option is to remain  outstanding  and (ii) with
respect to stock  issuances  under the Stock  Issuance  Program,  which eligible
persons are to receive stock  issuances,  the time or times when such  issuances
are to be made,  the  number of shares  to be  issued to each  Participant,  the
vesting schedule (if any) applicable to the issued shares and the  consideration
to be paid for such shares.

                  C. The Plan Administrator  shall have the absolute  discretion
either to grant  options  in  accordance  with the  Discretionary  Option  Grant
Program or to effect  stock  issuances  in  accordance  with the Stock  Issuance
Program.

                  D. The  individuals  eligible to  participate in the Automatic
Option Grant  Program  shall be (i) those  individuals  who are first elected or
appointed as  non-employee  Board members  after the Section 12(g)  Registration
Date, whether through  appointment by the Board or election by the Corporation's
stockholders  and (ii)

                                      B-2
<PAGE>

those individuals who continue to serve as non-employee  Board members after one
or more Annual  Stockholders  Meetings held after the Section 12(g) Registration
Date. A non-employee  Board member who has previously  been in the employ of the
Corporation  (or any Parent or  Subsidiary)  shall not be eligible to receive an
option  grant under the  Automatic  Option  Grant  Program at the time he or she
first becomes a non-employee Board member, but such individual shall be eligible
to receive  periodic option grants under the Automatic Option Grant Program upon
his or her continued  service as a  non-employee  Board member  following one or
more Annual Stockholders Meetings.

         V. STOCK SUBJECT TO THE PLAN

                  A. The  stock  issuable  under  the Plan  shall be  shares  of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the  Corporation  on the open market.  The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall  initially  not exceed
2,000,000  shares.  Such authorized share reserve is comprised of (i) the number
of shares which remained available for issuance,  as of the Plan Effective Date,
under the Predecessor  Plan as last approved by the  Corporation's  stockholders
prior to such date,  including  the shares  subject to the  outstanding  options
incorporated  into the Plan and any other shares which would have been available
for future option  grants under the  Predecessor  Plan,  plus (ii) an additional
increase of 1,258,036 shares authorized by the Board under the Plan,  subject to
stockholder approval.

                  B. The number of shares of Common Stock available for issuance
under the Plan shall  automatically  increase  on the first  trading  day of the
1996, 1997 and 1998 calendar years by an amount equal to one percent (1%) of the
shares of Common Stock  outstanding on December 31 of the immediately  preceding
calendar  year;  but in no event shall any such annual  increase  exceed 500,000
shares.  No  Incentive  Options  may be granted  on the basis of the  additional
shares of Common Stock resulting from such annual increases.

                  C. The maximum  number of shares of Common  Stock which may be
issued  pursuant to Incentive  Options  granted  under the Plan shall not exceed
2,000,000 shares.

                  D.  No one  person  participating  in  the  Plan  may  receive
options,  separately  exercisable  stock  appreciation  rights and direct  stock
issuances  for more  than  300,000  shares of Common  Stock per  calendar  year,
beginning with the 1995 calendar year.

                  E. Shares of Common Stock subject to outstanding options shall
be  available  for  subsequent  issuance  under the Plan to the  extent  (i) the
options (including any options incorporated from the Predecessor Plan) expire or
terminate  for any reason  prior to  exercise  in full or (ii) the  options  are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
All shares  issued  under the Plan  (including  shares  issued upon  exercise of
options incorporated from the Predecessor Plan), whether or not those shares are
subsequently  repurchased by the Corporation  pursuant to its repurchase  rights
under the Plan, shall reduce on a share-for-share  basis the number of shares of
Common Stock  available  for  subsequent  issuance  under the Plan. In addition,
should the  exercise  price of an option  under the Plan  (including  any option
incorporated  from the Predecessor  Plan) be paid with shares of Common Stock or
should shares of Common Stock  otherwise  issuable under the Plan be withheld by
the Corporation in satisfaction of the withholding  taxes incurred in connection
with the  exercise  of an option or the  vesting of a stock  issuance  under the
Plan, then the number of shares of Common Stock available for issuance under the
Plan  shall be  reduced  by the gross  number of shares  for which the option is
exercised or which vest under the stock  issuance,  and not by the net number of
shares of Common Stock issued to the holder of such option or stock issuance.

                  F. Should any change be made to the Common  Stock by reason of
any stock  split,  stock  dividend,  recapitalization,  combination  of  shares,
exchange of shares or other change  affecting the outstanding  Common Stock as a
class  without  the   Corporation's   receipt  of   consideration,   appropriate
adjustments  shall be made to (i) the maximum  number and/or class of securities
issuable under the Plan,  (ii) the maximum number and/or class of securities for
which the share reserve is to increase automatically each year, (iii) the number
and/or  class of  securities  for which any one person  may be granted  options,
separately  exercisable stock appreciation rights and direct stock issuances per
calendar year,  (iv) the number and/or class of securities  for which  automatic
option  grants  are to be  subsequently  made per  Eligible  Director  under the
Automatic Option Grant Program and (v) the number and/or class of securities and
the exercise price per share in effect under each outstanding  option (including
any option  incorporated  from the  Predecessor  Plan) in order to  prevent  the
dilution or enlargement of benefits  thereunder.  The adjustments  determined by
the Plan Administrator shall be final, binding and conclusive.

                                      B-3
<PAGE>

                                   ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM

         I. OPTION TERMS

         Each option  shall be  evidenced  by one or more  documents in the form
approved by the Plan Administrator;  provided,  however, that each such document
shall  comply  with the terms  specified  below.  Each  document  evidencing  an
Incentive  Option shall,  in addition,  be subject to the provisions of the Plan
applicable to such options.

                  A. Exercise Price.

                           1. The exercise price per share shall be fixed by the
Plan  Administrator but shall not be less than eighty-five  percent (85%) of the
Fair Market Value per share of Common Stock on the option grant date.

                           2. The exercise  price shall become  immediately  due
upon exercise of the option and shall, subject to the provisions of Section I of
Article Five and the documents  evidencing the option, be payable in one or more
of the forms specified below:

                                    (i)  cash  or  check  made  payable  to  the
Corporation,

                                    (ii)  shares  of Common  Stock  held for the
requisite period necessary to avoid a charge to the  Corporation's  earnings for
financial  reporting  purposes  and valued at Fair Market  Value on the Exercise
Date, or

                                    (iii) to the extent the option is  exercised
for vested shares,  through a special sale and remittance  procedure pursuant to
which the Optionee shall concurrently  provide irrevocable written  instructions
to (a) a  Corporation-designated  brokerage firm to effect the immediate sale of
the  purchased  shares and remit to the  Corporation,  out of the sale  proceeds
available  on the  settlement  date,  sufficient  funds to cover  the  aggregate
exercise  price payable for the purchased  shares plus all  applicable  Federal,
state and local  income and  employment  taxes  required  to be  withheld by the
Corporation  by reason of such exercise and (b) the  Corporation  to deliver the
certificates  for the purchased  shares directly to such brokerage firm in order
to complete the sale transaction.

                           Except  to  the  extent  such  sale  and   remittance
procedure is utilized,  payment of the exercise  price for the purchased  shares
must be made on the Exercise Date.

                  B.  Exercise  and  Term  of  Options.  Each  option  shall  be
exercisable  at such time or times,  during  such  period and for such number of
shares as shall be  determined  by the Plan  Administrator  and set forth in the
documents evidencing the option.  However, no option shall have a term in excess
of ten (10) years measured from the option grant date.

                  C. Effect of Termination of Service.

                           1. The following provisions shall govern the exercise
of any  options  held by the  Optionee  at the time of  cessation  of Service or
death:

                                    (i) Any  option  outstanding  at the time of
the Optionee's  cessation of Service for any reason shall remain exercisable for
such period of time thereafter as shall be determined by the Plan  Administrator
and set forth in the documents  evidencing the option,  but no such option shall
be exercisable after the expiration of the option term.

                                    (ii) Any option  exercisable  in whole or in
part by the Optionee at the time of death may be  subsequently  exercised by the
personal  representative of the Optionee's estate or by the person or persons to
whom the option is transferred  pursuant to the Optionee's will or in accordance
with the laws of descent and distribution.

                                      B-4
<PAGE>

                                    (iii)  During  the  applicable  post-Service
exercise period,  the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is  exercisable  on the date of
the  Optionee's  cessation of Service.  Upon the  expiration  of the  applicable
exercise  period or (if earlier)  upon the  expiration  of the option term,  the
option shall  terminate  and cease to be  outstanding  for any vested shares for
which the option has not been exercised.  However, the option shall, immediately
upon the Optionee's cessation of Service,  terminate and cease to be outstanding
to the  extent  it is not  exercisable  for  vested  shares  on the date of such
cessation of Service.

                                    (iv)  Should  the   Optionee's   Service  be
terminated for  Misconduct,  then all  outstanding  options held by the Optionee
shall terminate immediately and cease to be outstanding.

                                    (v)  In   the   event   of  an   Involuntary
Termination following a Corporate Transaction,  the provisions of Section III of
this Article Two shall govern the period for which the  outstanding  options are
to remain  exercisable  following the Optionee's  cessation of Service and shall
supersede any provisions to the contrary in this section.

                           2. The Plan Administrator  shall have the discretion,
exercisable  either at the time an option is  granted  or at any time  while the
option remains outstanding, to:

                                    (i)  extend the period of time for which the
option is to remain  exercisable  following the Optionee's  cessation of Service
from the period  otherwise in effect for that option to such  greater  period of
time as the Plan  Administrator  shall deem appropriate,  but in no event beyond
the expiration of the option term, and/or

                                    (ii)  permit  the  option  to be  exercised,
during the applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is  exercisable at
the time of the Optionee's  cessation of Service but also with respect to one or
more  additional  installments in which the Optionee would have vested under the
option had the Optionee continued in Service.

                  D. Stockholder  Rights.  The holder of an option shall have no
stockholder  rights with respect to the shares  subject to the option until such
person shall have  exercised  the option,  paid the exercise  price and become a
holder of record of the purchased shares.

                  E. Repurchase Rights.  The Plan  Administrator  shall have the
discretion to grant options which are  exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation  shall have the right to repurchase,  at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable  (including the period and procedure for exercise and
the appropriate  vesting schedule for the purchased shares) shall be established
by the  Plan  Administrator  and  set  forth  in the  document  evidencing  such
repurchase right.

                  F. Limited  Transferability of Options. During the lifetime of
the Optionee, the option shall be exercisable only by the Optionee and shall not
be assignable or  transferable  other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Statutory Option may
be  assigned in  accordance  with the terms of a  Qualified  Domestic  Relations
Order.  The  assigned  option may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to such Qualified Domestic
Relations  Order.  The terms  applicable  to the  assigned  option  (or  portion
thereof) shall be the same as those in effect for the option  immediately  prior
to such  assignment  and  shall be set  forth in such  documents  issued  to the
assignee as the Plan Administrator may deem appropriate.

         II. INCENTIVE OPTIONS

         The terms specified below shall be applicable to all Incentive Options.
Except as modified by the  provisions of this Section II, all the  provisions of
Articles  One, Two and Five shall be applicable  to Incentive  Options.  Options
which are specifically designated as Non-Statutory Options when issued under the
Plan shall not be subject to the terms of this Section II.

                  A.  Eligibility.  Incentive  Options  may only be  granted  to
Employees.

                                      B-5
<PAGE>

                  B. Exercise  Price.  The exercise price per share shall not be
less  than one  hundred  percent  (100%) of the Fair  Market  Value per share of
Common Stock on the option grant date.

                  C. Dollar  Limitation.  The aggregate Fair Market Value of the
shares of Common Stock  (determined as of the respective date or dates of grant)
for which one or more  options  granted to any  Employee  under the Plan (or any
other option plan of the  Corporation or any Parent or  Subsidiary)  may for the
first time become  exercisable as Incentive  Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become  exercisable
for the first time in the same calendar  year,  the foregoing  limitation on the
exercisability  of such  options as  Incentive  Options  shall be applied on the
basis of the order in which such options are granted.

                  D.  10%  Stockholder.  If any  Employee  to whom an  Incentive
Option is granted is a 10% Stockholder,  then the exercise price per share shall
not be less than one  hundred ten  percent  (110%) of the Fair Market  Value per
share of Common  Stock on the option  grant date,  and the option term shall not
exceed five (5) years measured from the option grant date.

         III. CORPORATE TRANSACTION/CHANGE IN CONTROL

                  A. In the event of any Corporate Transaction, each outstanding
option  shall   automatically   accelerate  so  that  each  such  option  shall,
immediately  prior to the effective  date of the Corporate  Transaction,  become
fully  exercisable  for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as  fully-vested
shares of Common Stock.  However,  an outstanding option shall not so accelerate
if and to the  extent:  (i) such  option is, in  connection  with the  Corporate
Transaction,  either to be  assumed  by the  successor  corporation  (or  parent
thereof) or to be replaced  with a comparable  option to purchase  shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash  incentive  program of the  successor  corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate  Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The  determination of option  comparability  under
clause (i) above shall be made by the Plan Administrator,  and its determination
shall be final, binding and conclusive.

                  B. All  outstanding  repurchase  rights  shall also  terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall  immediately  vest in full,  in the  event of any  Corporate  Transaction,
except to the  extent:  (i) those  repurchase  rights are to be  assigned to the
successor  corporation  (or parent  thereof) in connection  with such  Corporate
Transaction or (ii) such accelerated  vesting is precluded by other  limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

                  C.  Immediately  following the  consummation  of the Corporate
Transaction,   all   outstanding   options  shall  terminate  and  cease  to  be
outstanding,  except to the extent  assumed  by the  successor  corporation  (or
parent thereof).

                  D. Each option which is assumed in connection with a Corporate
Transaction  shall be appropriately  adjusted,  immediately after such Corporate
Transaction,  to apply to the number and class of  securities  which  would have
been issuable to the Optionee in consummation of such Corporate  Transaction had
the option  been  exercised  immediately  prior to such  Corporate  Transaction.
Appropriate  adjustments  shall  also be made to (i) the  number  and  class  of
securities  available  for issuance  under the Plan on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.

                  E. Any options  which are assumed or replaced in the Corporate
Transaction  and do not otherwise  accelerate  at that time shall  automatically
accelerate (and any of the Corporation's  outstanding repurchase rights which do
not  otherwise  terminate  at  the  time  of  the  Corporate  Transaction  shall
automatically  terminate  and the  shares  of  Common  Stock  subject  to  those
terminated  rights shall  immediately  vest in full) in the event the Optionee's
Service should  subsequently  terminate by reason of an Involuntary  Termination
within  eighteen  (18) months  following the  effective  date of such  Corporate
Transaction.   Any  options  so  accelerated   shall  remain   exercisable   for
fully-vested  shares until the earlier of (i) the  expiration of the option term
or (ii) the  expiration of the one (1)-year  period  measured from the effective
date of the Involuntary Termination.

                                      B-6
<PAGE>

                  F.  The  Plan   Administrator   shall  have  the   discretion,
exercisable  either at the time the  option is  granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of one
or more  outstanding  options  (and  the  automatic  termination  of one or more
outstanding repurchase rights with the immediate vesting of the shares of Common
Stock  subject to those  rights) upon the  occurrence  of a Change in Control or
(ii)  condition  any  such  option  acceleration  (and  the  termination  of any
outstanding  repurchase rights) upon the subsequent  Involuntary  Termination of
the Optionee's Service within a specified period following the effective date of
such Change in Control.  Any options  accelerated in connection with a Change in
Control  shall  remain  fully   exercisable   until  the  expiration  or  sooner
termination of the option term.

                  G.  The  portion  of  any  Incentive  Option   accelerated  in
connection  with a  Corporate  Transaction  or Change in  Control  shall  remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar limitation is not exceeded. To the extent such dollar limitation
is exceeded,  the  accelerated  portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.

                  H. The grant of options under the  Discretionary  Option Grant
Program  shall  in no way  affect  the  right  of  the  Corporation  to  adjust,
reclassify,  reorganize or otherwise change its capital or business structure or
to merge, consolidate,  dissolve,  liquidate or sell or transfer all or any part
of its business or assets.

         IV. CANCELLATION AND REGRANT OF OPTIONS

         The Plan Administrator  shall have the authority to effect, at any time
and from time to time,  with the consent of the  affected  option  holders,  the
cancellation of any or all outstanding  options under the  Discretionary  Option
Grant Program (including  outstanding options  incorporated from the Predecessor
Plan) and to grant in  substitution  new options  covering the same or different
number of shares of Common  Stock but with an exercise  price per share based on
the Fair Market Value per share of Common Stock on the new option grant date.

         V. STOCK APPRECIATION RIGHTS

                  A. The Plan Administrator  shall have full power and authority
to grant to selected Optionees tandem stock  appreciation  rights and/or limited
stock appreciation rights.

                  B. The following  terms shall govern the grant and exercise of
tandem stock appreciation rights:

                           (i) One or more  Optionees  may be granted the right,
exercisable upon such terms as the Plan  Administrator  may establish,  to elect
between the exercise of the underlying option for shares of Common Stock and the
surrender of that option in exchange for a distribution  from the Corporation in
an amount  equal to the  excess  of (a) the Fair  Market  Value  (on the  option
surrender  date) of the  number of shares in which the  Optionee  is at the time
vested under the surrendered  option (or surrendered  portion  thereof) over (b)
the aggregate exercise price payable for such shares.

                           (ii) No such  option  surrender  shall  be  effective
unless  it is  approved  by  the  Plan  Administrator.  If the  surrender  is so
approved,  then the  distribution to which the Optionee shall be entitled may be
made in  shares of  Common  Stock  valued  at Fair  Market  Value on the  option
surrender  date,  in cash,  or partly in shares and partly in cash,  as the Plan
Administrator shall in its sole discretion deem appropriate.

                           (iii) If the  surrender  of an option is  rejected by
the Plan  Administrator,  then the  Optionee  shall retain  whatever  rights the
Optionee had under the surrendered  option (or surrendered  portion  thereof) on
the option  surrender date and may exercise such rights at any time prior to the
later of (a) five (5) business days after the receipt of the rejection notice or
(b) the last day on which the option is otherwise exercisable in accordance with
the terms of the  documents  evidencing  such  option,  but in no event may such
rights be exercised more than ten (10) years after the option grant date.

                  C. The following  terms shall govern the grant and exercise of
limited stock appreciation rights:

                           (i) One or more  Section 16  Insiders  may be granted
limited stock appreciation rights with respect to their outstanding options.

                                      B-7
<PAGE>

                           (ii) Upon the occurrence of a Hostile Take-Over, each
such  individual  holding  one  or  more  options  with  such  a  limited  stock
appreciation  right  in  effect  for at  least  six (6)  months  shall  have the
unconditional  right  (exercisable  for a thirty (30)-day period  following such
Hostile  Take-Over)  to surrender  each such option to the  Corporation,  to the
extent the option is at the time  exercisable for vested shares of Common Stock.
In  return  for the  surrendered  option,  the  Optionee  shall  receive  a cash
distribution  from the  Corporation  in an amount equal to the excess of (A) the
Take-Over Price of the shares of Common Stock which are at the time vested under
each surrendered option (or surrendered  portion thereof) over (B) the aggregate
exercise  price payable for such shares.  Such cash  distribution  shall be paid
within five (5) days following the option surrender date.

                           (iii) Neither the approval of the Plan  Administrator
nor the consent of the Board shall be  required in  connection  with such option
surrender and cash distribution.

                           (iv)  The  balance  of  the  option  (if  any)  shall
continue in full force and effect in accordance  with the  documents  evidencing
such option.

                                  ARTICLE THREE

                             STOCK ISSUANCE PROGRAM

         I. STOCK ISSUANCE TERMS

         Shares of Common Stock may be issued under the Stock  Issuance  Program
through direct and immediate  issuances  without any intervening  option grants.
Each such stock issuance shall be evidenced by a Stock Issuance  Agreement which
complies with the terms specified below.

                  A. Purchase Price.

                           1. The purchase price per share shall be fixed by the
Plan Administrator,  but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the stock issuance date.

                           2. Subject to the  provisions of Section I of Article
Five,  shares of Common Stock may be issued under the Stock Issuance Program for
one or both of the following items of consideration which the Plan Administrator
may deem appropriate in each individual instance:

                                    (i)  cash  or  check  made  payable  to  the
Corporation, or

                                    (ii)   past   services   rendered   to   the
Corporation (or any Parent or Subsidiary).

                  B. Vesting Provisions.

                           1.  Shares of  Common  Stock  issued  under the Stock
Issuance Program may, in the discretion of the Plan Administrator,  be fully and
immediately  vested upon issuance or may vest in one or more  installments  over
the Participant's period of Service or upon attainment of specified  performance
objectives.  The  elements of the vesting  schedule  applicable  to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:

                                    (i) the Service  period to be  completed  by
the Participant or the performance objectives to be attained,

                                    (ii) the number of installments in which the
shares are to vest,

                                    (iii) the  interval  or  intervals  (if any)
which are to lapse between installments, and

                                      B-8
<PAGE>

                                    (iv)  the  effect  which  death,   Permanent
Disability or other event  designated by the Plan  Administrator is to have upon
the  vesting  schedule,  shall  be  determined  by the  Plan  Administrator  and
incorporated into the Stock Issuance Agreement.

                           2. Any new,  substituted or additional  securities or
other  property  (including  money paid other than as a regular  cash  dividend)
which  the  Participant  may  have the  right to  receive  with  respect  to the
Participant's  unvested  shares of Common Stock by reason of any stock dividend,
stock  split,  recapitalization,  combination  of shares,  exchange of shares or
other change  affecting  the  outstanding  Common  Stock as a class  without the
Corporation's  receipt of consideration  shall be issued subject to (i) the same
vesting requirements  applicable to the Participant's  unvested shares of Common
Stock and (ii) such escrow  arrangements  as the Plan  Administrator  shall deem
appropriate.

                           3. The Participant shall have full stockholder rights
with respect to any shares of Common Stock issued to the  Participant  under the
Stock  Issuance  Program,  whether or not the  Participant's  interest  in those
shares is vested. Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such shares.

                           4. Should the Participant  cease to remain in Service
while holding one or more unvested shares of Common Stock issued under the Stock
Issuance  Program or should the  performance  objectives  not be  attained  with
respect to one or more such unvested  shares of Common Stock,  then those shares
shall be immediately  surrendered to the Corporation for  cancellation,  and the
Participant  shall  have no further  stockholder  rights  with  respect to those
shares.  To the extent the  surrendered  shares  were  previously  issued to the
Participant for  consideration  paid in cash or cash  equivalent  (including the
Participant's purchase-money  indebtedness),  the Corporation shall repay to the
Participant the cash  consideration  paid for the  surrendered  shares and shall
cancel the unpaid principal  balance of any outstanding  purchase-money  note of
the Participant attributable to such surrendered shares.

                           5. The Plan Administrator may in its discretion waive
the surrender and  cancellation  of one or more unvested  shares of Common Stock
(or other assets  attributable  thereto)  which would  otherwise  occur upon the
cessation  of the  Participant's  Service or the  non-completion  of the vesting
schedule  applicable  to such shares.  Such waiver shall result in the immediate
vesting of the Participant's  interest in the shares of Common Stock as to which
the waiver applies.  Such waiver may be effected at any time,  whether before or
after the Participant's cessation of Service or the attainment or non-attainment
of the applicable performance objectives.

         II. CORPORATE TRANSACTION/CHANGE IN CONTROL

                  A. All of the  outstanding  repurchase  rights under the Stock
Issuance  Program shall  terminate  automatically,  and all the shares of Common
Stock subject to those terminated  rights shall immediately vest in full, in the
event of any Corporate  Transaction,  except to the extent (i) those  repurchase
rights  are  assigned  to the  successor  corporation  (or  parent  thereof)  in
connection with such Corporate  Transaction or (ii) such accelerated  vesting is
precluded by other limitations imposed in the Stock Issuance Agreement.

                  B. Any  repurchase  rights that are assigned in the  Corporate
Transaction shall  automatically  terminate,  and all the shares of Common Stock
subject to those terminated  rights shall immediately vest in full, in the event
the  Participant's  Service  should  subsequently  terminate  by  reason  of  an
Involuntary Termination within eighteen (18) months following the effective date
of such Corporate Transaction.

                  C.  The  Plan   Administrator   shall  have  the   discretion,
exercisable  either at the time the  unvested  shares  are issued or at any time
while the Corporation's repurchase right remains outstanding, to (i) provide for
the automatic  termination of one or more outstanding  repurchase rights and the
immediate vesting of the shares of Common Stock subject to those rights upon the
occurrence of a Change in Control or (ii) condition any such accelerated vesting
upon the subsequent Involuntary  Termination of the Participant's Service within
a specified period following the effective date of such Change in Control.

                                      B-9
<PAGE>

         III. SHARE ESCROW/LEGENDS

         Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's  interest in such shares vests
or may be issued directly to the  Participant  with  restrictive  legends on the
certificates evidencing those unvested shares.

                                  ARTICLE FOUR

                         AUTOMATIC OPTION GRANT PROGRAM


         I. OPTION TERMS

                  A.  Grant  Dates.  Option  grants  shall be made on the  dates
specified below:

                           1. Each  Eligible  Director  who is first  elected or
appointed as a  non-employee  Board member after the Section 12(g)  Registration
Date shall  automatically  be granted on the date of such  initial  election  or
appointment  (as the case may be) a  Non-Statutory  Option  to  purchase  10,000
shares of Common Stock.

                           2. On the date of each Annual  Stockholders  Meeting,
beginning with the 1996 Annual  Meeting,  each  individual who is to continue to
serve as an  Eligible  Director  after  such  meeting,  shall  automatically  be
granted,  whether or not such  individual is standing for re-election as a Board
member at that Annual Meeting, a Non-Statutory  Option to purchase an additional
2,500  shares  of  Common  Stock,  provided  such  individual  has  served  as a
non-employee  Board member for at least six (6) months prior to the date of such
Annual Meeting. There shall be no limit on the number of such 2,500-share option
grants any one  Eligible  Director  may receive  over his or her period of Board
service.

                  B. Exercise Price.

                           1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.

                           2. The exercise price shall be payable in one or more
of the  alternative  forms  authorized  under  the  Discretionary  Option  Grant
Program.  Except  to the  extent  the sale and  remittance  procedure  specified
thereunder is utilized,  payment of the exercise price for the purchased  shares
must be made on the Exercise Date.

                  C.  Option  Term.  Each  option  shall have a term of ten (10)
years measured from the option grant date.

                  D.  Exercise  and  Vesting of Options.  Each  option  shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the  exercise  price  paid per share,  upon the  Optionee's  cessation  of Board
service prior to vesting in those shares. Each initial grant shall vest, and the
Corporation's  repurchase  right shall lapse,  in a series of four (4) equal and
successive  annual  installments over the Optionee's period of continued service
as a Board member,  with the first such  installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
Each annual  grant  shall vest,  and the  Corporation's  repurchase  right shall
lapse, upon the Optionee's  completion of one (1) year of Board service measured
from the option grant date.

                  E.  Effect of  Termination  of Board  Service.  The  following
provisions  shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:

                           (i) The  Optionee  (or,  in the  event of  Optionee's
death,  the personal  representative  of the Optionee's  estate or the person or
persons to whom the option is transferred  pursuant to the Optionee's will or in
accordance  with the  laws of  descent  and  distribution)  shall  have a twelve
(12)-month period following the date of such cessation of Board service in which
to exercise each such option.

                                      B-10
<PAGE>

                           (ii) During the twelve  (12)-month  exercise  period,
the option may not be  exercised  in the  aggregate  for more than the number of
shares of Common  Stock for which the option is  exercisable  at the time of the
Optionee's cessation of Board service.

                           (iii) Should the  Optionee  cease to serve as a Board
member by reason of death or Permanent  Disability,  then all shares at the time
subject to the option shall immediately vest so that such option may, during the
twelve (12)-month  exercise period following such cessation of Board service, be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock.

                           (iv) In no event shall the option remain  exercisable
after the  expiration  of the option  term.  Upon the  expiration  of the twelve
(12)-month  exercise  period or (if earlier)  upon the  expiration of the option
term,  the option shall  terminate  and cease to be  outstanding  for any vested
shares for which the option has not been exercised.  However,  the option shall,
immediately upon the Optionee's cessation of Board service,  terminate and cease
to be outstanding to the extent it is not  exercisable  for vested shares on the
date of such cessation of Board service.

         II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

                  A. In the event of any  Corporate  Transaction,  the shares of
Common Stock at the time subject to each  outstanding  option but not  otherwise
vested  shall  automatically  vest  in  full so that  each  such  option  shall,
immediately  prior to the effective  date of the Corporate  Transaction,  become
fully  exercisable  for all of the shares of Common Stock at the time subject to
such  option  and may be  exercised  for all or any  portion  of such  shares as
fully-vested shares of Common Stock.  Immediately  following the consummation of
the Corporate Transaction, each automatic option grant shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

                  B. In  connection  with any Change in  Control,  the shares of
Common Stock at the time subject to each  outstanding  option but not  otherwise
vested  shall  automatically  vest  in  full so that  each  such  option  shall,
immediately  prior to the effective date of the Change in Control,  become fully
exercisable  for all of the shares of Common  Stock at the time  subject to such
option  and  may  be  exercised  for  all or  any  portion  of  such  shares  as
fully-vested  shares of Common Stock. Each such option shall remain  exercisable
for such fully-vested  option shares until the expiration or sooner  termination
of the option term or the surrender of the option in  connection  with a Hostile
Take-Over.

                  C. Upon the  occurrence of a Hostile  Take-Over,  the Optionee
shall have a thirty  (30)-day  period in which to surrender  to the  Corporation
each  automatic  option  held by him or her for a  period  of at  least  six (6)
months. The Optionee shall in return be entitled to a cash distribution from the
Corporation  in an amount equal to the excess of (i) the Take-Over  Price of the
shares of Common Stock at the time subject to the surrendered option (whether or
not the Optionee is otherwise at the time vested in those  shares) over (ii) the
aggregate  exercise price payable for such shares.  Such cash distribution shall
be paid  within  five (5) days  following  the  surrender  of the  option to the
Corporation. No approval or consent of the Board shall be required in connection
with such option surrender and cash distribution.

                  D. The grant of  options  under  the  Automatic  Option  Grant
Program  shall  in no way  affect  the  right  of  the  Corporation  to  adjust,
reclassify,  reorganize or otherwise change its capital or business structure or
to merge, consolidate,  dissolve,  liquidate or sell or transfer all or any part
of its business or assets.

         III. AMENDMENT OF THE AUTOMATIC OPTION GRANT PROGRAM

         The  provisions of this Automatic  Option Grant Program,  together with
the option grants outstanding  thereunder,  may not be amended at intervals more
frequently than once every six (6) months, other than to the extent necessary to
comply with applicable Federal income tax laws and regulations.

                                      B-11
<PAGE>

         IV. REMAINING TERMS

         The remaining  terms of each option granted under the Automatic  Option
Grant  Program  shall be the same as the terms in effect for option  grants made
under the Discretionary Option Grant Program.

                                  ARTICLE FIVE

                                  MISCELLANEOUS

         I. FINANCING

                  A.  The  Plan   Administrator   may  permit  any  Optionee  or
Participant  to pay the option  exercise  price under the  Discretionary  Option
Grant Program or the purchase  price for shares issued under the Stock  Issuance
Program by delivering a promissory note payable in one or more installments. The
terms of any such  promissory note (including the interest rate and the terms of
repayment)  shall  be  established  by  the  Plan   Administrator  in  its  sole
discretion.  Promissory  notes may be  authorized  with or without  security  or
collateral.  In all events,  the maximum  credit  available  to the  Optionee or
Participant may not exceed the sum of (i) the aggregate option exercise price or
purchase price payable for the purchased shares plus (ii) any Federal, state and
local  income and  employment  tax  liability  incurred  by the  Optionee or the
Participant in connection with the option exercise or share purchase.

                  B. The Plan  Administrator  may, in its discretion,  determine
that one or more such  promissory  notes shall be subject to  forgiveness by the
Corporation  in whole or in part upon such terms as the Plan  Administrator  may
deem appropriate.

         II. TAX WITHHOLDING

                  A. The  Corporation's  obligation to deliver  shares of Common
Stock upon the  exercise  of options  or stock  appreciation  rights or upon the
issuance  or  vesting  of such  shares  under the Plan  shall be  subject to the
satisfaction  of all applicable  Federal,  state and local income and employment
tax withholding requirements.

                  B. The Plan Administrator may, in its discretion,  provide any
or all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan  (other  than the  options  granted  or the  shares  issued  under  the
Automatic  Option Grant Program) with the right to use shares of Common Stock in
satisfaction  of all or part of the Taxes incurred by such holders in connection
with the exercise of their  options or the vesting of their  shares.  Such right
may be provided to any such holder in either or both of the following formats:

                           (i)  Stock  Withholding:  The  election  to have  the
Corporation  withhold,  from the shares of Common Stock otherwise  issuable upon
the  exercise  of such  Non-Statutory  Option or the vesting of such  shares,  a
portion  of those  shares  with an  aggregate  Fair  Market  Value  equal to the
percentage of the Taxes (not to exceed one hundred percent (100%)) designated by
the holder.

                           (ii) Stock  Delivery:  The election to deliver to the
Corporation,  at the time the  Non-Statutory  Option is  exercised or the shares
vest,  one or more  shares of Common  Stock  previously  acquired by such holder
(other than in connection with the option  exercise or share vesting  triggering
the Taxes) with an aggregate  Fair Market Value equal to the  percentage  of the
Taxes (not to exceed one hundred percent (100%)) designated by the holder.

         III. EFFECTIVE DATE AND TERM OF THE PLAN

                  A. The  Discretionary  Option  Grant,  Automatic  Option Grant
Program and Stock Issuance Programs shall become effective on the Plan Effective
Date and options and  issuances may be granted under the Plan from and after the
Plan  Effective  Date.  However,  no  options  granted  under  the  Plan  may be
exercised,  and no  shares  shall be issued  under  the Plan,  until the Plan is
approved by the Corporation's stockholders.  If such stockholder approval is not
obtained  within  twelve (12) months  after the Plan  Effective  Date,  then all
options  previously  granted  under  this Plan shall  terminate  and cease to be
outstanding,  and no further  options  shall be granted  and no shares  shall be
issued under the Plan.

                                      B-12
<PAGE>

                  B. The Plan shall serve as the  successor  to the  Predecessor
Plan,  and no further  option  grants shall be made under the  Predecessor  Plan
after the Plan Effective  Date. All options  outstanding  under the  Predecessor
Plan as of  such  date  shall,  immediately  upon  approval  of the  Plan by the
Corporations'  stockholders,  be  incorporated  into  the Plan  and  treated  as
outstanding  options  under  the  Plan.  However,  each  outstanding  option  so
incorporated  shall continue to be governed solely by the terms of the documents
evidencing  such option,  and no provision of the Plan shall be deemed to affect
or  otherwise   modify  the  rights  or  obligations  of  the  holders  of  such
incorporated  options  with  respect  to their  acquisition  of shares of Common
Stock.

                  C. One or more  provisions  of the  Plan,  including  (without
limitation) the option/vesting  acceleration  provisions of Article Two relating
to   Corporate   Transactions   and  Changes  in  Control,   may,  in  the  Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plan which do not otherwise contain such provisions.

                  D. The Plan shall  terminate upon the earliest of (i) July 24,
2005,  (ii) the date on which all shares  available for issuance  under the Plan
shall have been issued  pursuant to the  exercise of the options or the issuance
of shares  (whether  vested or unvested) under the Plan or (iii) the termination
of all outstanding options in connection with a Corporate Transaction. Upon such
Plan termination,  all options and unvested stock issuances  outstanding on such
date shall  thereafter  continue to have force and effect in accordance with the
provisions of the documents evidencing such options or issuances.

         IV. AMENDMENT OF THE PLAN

                  A. The Board  shall  have  complete  and  exclusive  power and
authority to amend or modify the Plan in any or all  respects.  However,  (i) no
such amendment or modification shall adversely affect the rights and obligations
with respect to options,  stock appreciation  rights or unvested stock issuances
at the time  outstanding  under the Plan unless the Optionee or the  Participant
consents to such amendment or  modification,  and (ii) any amendment made to the
Automatic Option Grant Program (or any options outstanding  thereunder) shall be
in compliance with the limitations of that program. In addition, the Board shall
not,  without the approval of the  Corporation's  stockholders,  (i)  materially
increase the maximum  number of shares  issuable  under the Plan,  the number of
shares for which options may be granted under the Automatic Option Grant Program
or the maximum number of shares for which any one person may be granted options,
separately  exercisable stock appreciation rights and direct stock issuances per
calendar  year,  except  for  permissible  adjustments  in the event of  certain
changes  in  the  Corporation's  capitalization,   (ii)  materially  modify  the
eligibility requirements for Plan participation or (iii) materially increase the
benefits accruing to Plan participants.

                  B.  Options to purchase  shares of Common Stock may be granted
under the  Discretionary  Option Grant Program and shares of Common Stock may be
issued under the Stock  Issuance  Program that are in each instance in excess of
the number of shares then  available for issuance  under the Plan,  provided any
excess  shares  actually  issued  under those  programs are held in escrow until
there is obtained stockholder approval of an amendment  sufficiently  increasing
the number of shares of Common Stock  available for issuance  under the Plan. If
such  stockholder  approval is not obtained  within twelve (12) months after the
date the first such excess issuances are made, then (i) any unexercised  options
granted  on the basis of such  excess  shares  shall  terminate  and cease to be
outstanding and (ii) the Corporation  shall promptly refund to the Optionees and
the  Participants  the  exercise  or purchase  price paid for any excess  shares
issued  under  the Plan and  held in  escrow,  together  with  interest  (at the
applicable  Short Term  Federal  Rate) for the  period  the shares  were held in
escrow, and such shares shall thereupon be automatically  cancelled and cease to
be outstanding.

         V. USE OF PROCEEDS

         Any cash proceeds  received by the Corporation  from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

         VI. REGULATORY APPROVALS

                  A. The  implementation of the Plan, the granting of any option
or stock  appreciation  right  under the Plan and the  issuance of any shares of
Common Stock (i) upon the exercise of any option or stock  appreciation right or
(ii) under the Stock  Issuance  Program  shall be  subject to the  Corporation's
procurement  of all  approvals and permits

                                      B-13
<PAGE>

required  by  regulatory  authorities  having  jurisdiction  over the Plan,  the
options and stock appreciation  rights granted under it and the shares of Common
Stock issued pursuant to it.

                  B. No shares of Common  Stock or other  assets shall be issued
or  delivered  under the Plan unless and until there shall have been  compliance
with all applicable requirements of Federal and state securities laws, including
the filing and  effectiveness  of the Form S-8  registration  statement  for the
shares of Common  Stock  issuable  under the Plan,  and all  applicable  listing
requirements  of  any  stock  exchange  (or  the  Nasdaq  National  Market,   if
applicable) on which Common Stock is then listed for trading.

         VII. NO EMPLOYMENT/SERVICE RIGHTS

         Nothing in the Plan shall confer upon the  Optionee or the  Participant
any right to  continue  in  Service  for any  period  of  specific  duration  or
interfere  with or otherwise  restrict in any way the rights of the  Corporation
(or any Parent or  Subsidiary  employing  or  retaining  such  person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's  Service at any time for any reason,  with or without
cause.

                                    APPENDIX

         The following definitions shall be in effect under the Plan:

         A. Automatic Option Grant Program shall mean the automatic option grant
program in effect under the Plan.

         B. Board shall mean the Corporation's Board of Directors.

         C. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:

                  (i) the acquisition,  directly or indirectly, by any person or
related group of persons  (other than the  Corporation or a person that directly
or indirectly  controls,  is controlled by, or is under common control with, the
Corporation),  of beneficial  ownership (within the meaning of Rule 13d-3 of the
1934 Act) of  securities  possessing  more than fifty percent (50%) of the total
combined voting power of the Corporation's  outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's  stockholders  which
the Board does not recommend such stockholders to accept, or

                  (ii) a change in the composition of the Board over a period of
thirty-six  (36)  consecutive  months or less such that a majority  of the Board
members  ceases,  by  reason  of one  or  more  contested  elections  for  Board
membership,  to be  comprised  of  individuals  who  either  (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or  nominated  for  election as Board  members  during such period by at least a
majority of the Board  members  described in clause (A) who were still in office
at the time the Board approved such election or nomination.

         D. Code shall mean the Internal Revenue Code of 1986, as amended.

         E. Common Stock shall mean the Corporation's common stock.

         F.   Corporate   Transaction   shall  mean  either  of  the   following
stockholder-approved transactions to which the Corporation is a party:

                  (i) a merger or consolidation  in which securities  possessing
more  than  fifty  percent  (50%)  of the  total  combined  voting  power of the
Corporation's  outstanding  securities  are  transferred  to a person or persons
different from the persons holding those  immediately prior to such transaction;
or

                  (ii)  the  sale,  transfer  or  other  disposition  of  all or
substantially  all  of the  Corporation's  assets  in  complete  liquidation  or
dissolution of the Corporation.

                                      B-14
<PAGE>

         G. Corporation shall mean Accom, Inc., a Delaware corporation.

         H.  Discretionary  Option Grant  Program  shall mean the  discretionary
option grant program in effect under the Plan.

         I. Domestic  Relations  Order shall mean any judgment,  decree or order
(including  approval  of a property  settlement  agreement)  which  provides  or
otherwise  conveys,   pursuant  to  applicable  State  domestic  relations  laws
(including  community  property laws),  marital property rights to any spouse or
former spouse of the Optionee.

         J. Eligible Director shall mean a non-employee Board member eligible to
participate  in the  Automatic  Option  Grant  Program  in  accordance  with the
eligibility provisions of Article One.

         K.  Employee  shall  mean an  individual  who is in the  employ  of the
Corporation (or any Parent or Subsidiary),  subject to the control and direction
of the employer  entity as to both the work to be  performed  and the manner and
method of performance.

         L.  Exercise  Date shall mean the date on which the  Corporation  shall
have received written notice of the option exercise.

         M. Fair Market  Value per share of Common  Stock on any  relevant  date
shall be determined in accordance with the following provisions:

                  (i) If the  Common  Stock is at the time  traded on the Nasdaq
National  Market,  then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question,  as such price is reported by
the National  Association of Securities Dealers on the Nasdaq National Market or
any successor  system. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.

                  (ii) If the  Common  Stock is at the time  listed on any Stock
Exchange,  then the Fair Market  Value shall be the  closing  selling  price per
share of Common Stock on the date in question on the Stock  Exchange  determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price  is  officially  quoted  in the  composite  tape of  transactions  on such
exchange.  If there is no closing selling price for the Common Stock on the date
in question,  then the Fair Market Value shall be the closing  selling  price on
the last preceding date for which such quotation exists.

                  (iii)  For  purposes  of  option  grants  made on the date the
Underwriting  Agreement is executed and the initial public offering price of the
Common Stock is  established,  the Fair Market Value shall be deemed to be equal
to the  established  initial  offering  price per share.  For purposes of option
grants made prior to such date, the Fair Market Value shall be determined by the
Plan  Administrator   after  taking  into  account  such  factors  as  the  Plan
Administrator shall deem appropriate.

         N.  Hostile   Take-Over  shall  mean  a  change  in  ownership  of  the
Corporation effected through the following transaction:

                  (i) the acquisition,  directly or indirectly, by any person or
related group of persons  (other than the  Corporation or a person that directly
or indirectly  controls,  is controlled by, or is under common control with, the
Corporation)  of beneficial  ownership  (within the meaning of Rule 13d-3 of the
1934 Act) of  securities  possessing  more than fifty percent (50%) of the total
combined voting power of the Corporation's  outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's  stockholders  which
the Board does not recommend such stockholders to accept, and

                  (ii)  more  than  fifty  percent  (50%) of the  securities  so
acquired are accepted from persons other than Section 16 Insiders.

         O.  Incentive   Option  shall  mean  an  option  which   satisfies  the
requirements of Code Section 422.

                                      B-15
<PAGE>

         P. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:

                  (i) such  individual's  involuntary  dismissal or discharge by
the Corporation for reasons other than Misconduct, or

                  (ii) such individual's  voluntary  resignation following (A) a
change in his or her position with the Corporation which materially  reduces his
or her  level  of  responsibility,  (B) a  reduction  in his  or  her  level  of
compensation  (including base salary,  fringe benefits and any non-discretionary
and  objective-standard  incentive  payment or bonus award) by more than fifteen
percent  (15%) or (C) a relocation of such  individual's  place of employment by
more than fifty (50)  miles,  provided  and only if such  change,  reduction  or
relocation is effected by the Corporation without the individual's consent.

         Q.  Misconduct   shall  mean  the  commission  of  any  act  of  fraud,
embezzlement or dishonesty by the Optionee or Participant,  any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary),  or any other intentional  misconduct
by such person  adversely  affecting the business or affairs of the  Corporation
(or any Parent or Subsidiary)  in a material  manner.  The foregoing  definition
shall not be  deemed  to be  inclusive  of all the acts or  omissions  which the
Corporation  (or any Parent or  Subsidiary)  may  consider  as  grounds  for the
dismissal  or  discharge  of any  Optionee,  Participant  or other person in the
Service of the Corporation (or any Parent or Subsidiary).

         R. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

         S.  Non-Statutory  Option  shall mean an option not intended to satisfy
the requirements of Code Section 422.

         T.  Optionee  shall mean any person to whom an option is granted  under
the Discretionary Option Grant or Automatic Option Grant Program.

         U. Parent shall mean any corporation (other than the Corporation) in an
unbroken  chain of  corporations  ending  with the  Corporation,  provided  each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination,  stock possessing fifty percent (50%) or more of the total
combined  voting power of all classes of stock in one of the other  corporations
in such chain.

         V.  Participant  shall mean any  person who is issued  shares of Common
Stock under the Stock Issuance Program.

         W.  Permanent   Disability  or  Permanently  Disabled  shall  mean  the
inability  of the  Optionee  or the  Participant  to engage  in any  substantial
gainful  activity  by reason of any  medically  determinable  physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more.  However,  solely for the purposes of the Automatic  Option
Grant  Program,  Permanent  Disability or  Permanently  Disabled  shall mean the
inability of the non-employee Board member to perform his or her usual duties as
a Board  member by  reason  of any  medically  determinable  physical  or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more.

         X. Plan shall mean the Corporation's 1995 Stock  Option/Stock  Issuance
Plan, as set forth in this document.

         Y. Plan  Administrator  shall mean the particular  entity,  whether the
Primary Committee, the Board or the Secondary Committee,  which is authorized to
administer  the  Discretionary  Option Grant and Stock  Issuance  Programs  with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its  administrative  functions under those programs with respect to
the persons under its jurisdiction.

         Z. Plan Effective Date shall mean the date on which the Plan is adopted
by the Board.

         AA.  Predecessor Plan shall mean the  Corporation's  existing  Restated
1990 Stock Option Plan.

                                      B-16
<PAGE>

         BB.  Primary  Committee  shall  mean the  committee  of two (2) or more
non-employee   Board  members   appointed  by  the  Board  to   administer   the
Discretionary  Option Grant and Stock Issuance  Programs with respect to Section
16 Insiders.

         CC. Qualified  Domestic Relations Order shall mean a Domestic Relations
Order which substantially complies with the requirements of Code Section 414(p).
The Plan  Administrator  shall have the sole  discretion to determine  whether a
Domestic Relations Order is a Qualified Domestic Relations Order.

         DD. Secondary Committee shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Discretionary  Option Grant and
Stock Issuance  Programs with respect to eligible  persons other than Section 16
Insiders.

         EE.  Section 16  Insider  shall  mean an  officer  or  director  of the
Corporation  subject to the short-swing  profit liabilities of Section 16 of the
1934 Act.

         FF. Section 12(g)  Registration Date shall mean the first date on which
the Common Stock is registered under Section 12(g) of the 1934 Act.

         GG. Service shall mean the provision of services to the Corporation (or
any  Parent  or  Subsidiary)  by a person  in the  capacity  of an  Employee,  a
non-employee  member of the board of directors or a  consultant  or  independent
advisor,  except to the extent otherwise  specifically provided in the documents
evidencing the option grant or stock issuance.

         HH. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.

         II. Stock Issuance  Agreement shall mean the agreement  entered into by
the  Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

         JJ. Stock  Issuance  Program shall mean the stock  issuance  program in
effect under the Plan.

         KK. Subsidiary shall mean any corporation  (other than the Corporation)
in an unbroken chain of corporations  beginning with the  Corporation,  provided
each corporation  (other than the last  corporation) in the unbroken chain owns,
at the time of the  determination,  stock possessing fifty percent (50%) or more
of the total  combined  voting power of all classes of stock in one of the other
corporations in such chain.

         LL. Take-Over Price shall mean the greater of (i) the Fair Market Value
per  share  of  Common  Stock  on the  date the  option  is  surrendered  to the
Corporation in connection with a Hostile  Take-Over or (ii) the highest reported
price per share of Common  Stock paid by the tender  offeror in  effecting  such
Hostile  Take-Over.  However,  if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

         MM. Taxes shall mean the Federal, state and local income and employment
tax  liabilities  incurred  by the holder of  Non-Statutory  Options or unvested
shares of Common Stock in connection with the exercise of such holder's  options
or the vesting of his or her shares.

         NN. 10% Stockholder  shall mean the owner of stock (as determined under
Code  Section  424(d))  possessing  more  than ten  percent  (10%) of the  total
combined  voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

         OO.  Underwriting  Agreement  shall  mean  the  agreement  between  the
Corporation  and the  underwriter  or  underwriters  managing the initial public
offering of the Common Stock.

                                      B-17
<PAGE>

                                  AMENDMENT TO
                                   ACCOM, INC.
                      1995 STOCK OPTION/STOCK ISSUANCE PLAN

         Pursuant to the Amendment to Equity  Incentive Plans (the  "Amendment")
approved on October 29, 1998 by the Board of Directors  (the  "Board") of Accom,
Inc.,  a  Delaware  corporation  (the  "Company"),   the  Company's  1995  Stock
Issuance/Stock Option Plan (the "Plan") is amended as follows:

         1. Article Two, Section III.I of the Plan is added to read:

                  "I. Any provisions in this Section III that accelerate vesting
periods shall not apply to any options granted to the Company's  employees after
October  29,  1998.   However,   nothing  in  this  paragraph  shall  limit  the
applicability  of such provisions to the officers,  directors and consultants of
the Company."

         2. Article Four, Section II.E of the Plan is added to read as follows:

                  "E. Any provisions in this Section II that accelerate  vesting
periods shall not apply to any options granted to the Company's  employees after
October  29,  1998.   However,   nothing  in  this  paragraph  shall  limit  the
applicability  of such provisions to the officers,  directors and consultants of
the Company."

         3. Article Five, Section VIII is added to read as follows:

                  "VIII. INFORMATION

                           Each Participant  granted Options or Shares of Common
Stock under this Plan after October 29, 1998 shall receive financial  statements
of the Company at least annually. However, such statements shall not be provided
to key employees  whose duties in connection with the Company assure them access
to equivalent information."

         The  undersigned  certifies  that the terms of the Amendment  have been
duly approved by the Board as of October 29, 1998.

                                             /S/ Junaid Sheikh
                                    -----------------------------------

                                               Junaid Sheikh
                                           Chairman of the Board

                                      B-18
<PAGE>

                                  AMENDMENT TO
                                   ACCOM, INC.
                      1995 STOCK OPTION/STOCK ISSUANCE PLAN

         Article Four of the 1995 Stock Option/Stock Issuance Plan is hereby
amended and restated as of July 20, 1999 to read in full as follows:

                                  "ARTICLE FOUR

                         AUTOMATIC OPTION GRANT PROGRAMS

I.       OPTION TERMS

         A. Grant  Dates.  Option  grants  shall be made on the dates  specified
below:

                  1. Each Eligible Director who is first elected or appointed as
a  non-employee  Board member after the Section  12(g)  Registration  Date shall
automatically be granted on the date of such initial election or appointment (as
the case may be) a  Non-Statutory  Option to  purchase  10,000  shares of Common
Stock.

                  2. On the  date  of each  Annual  Stockholders  Meeting,  each
individual  who is to  continue  to serve as an  Eligible  Director  after  such
meeting,  shall  automatically  be granted,  whether or not such  individual  is
standing  for  re-election  as  a  Board  member  at  that  Annual  Meeting,   a
Non-Statutory  Option to purchase an  additional  5,000 shares of Common  Stock,
provided such individual has served as a non-employee  Board member for at least
six (6) months prior to the date of such Annual Meeting. There shall be no limit
on the number of such  5,000-shares  option grants any one Eligible Director may
receive over his or her period of Board service.

         B. Exercise Price.

                  1. The exercise  price per share shall be equal to one hundred
percent  (100%) of the Fair Market Value per share of Common Stock on the option
grant date.

                  2. The  exercise  price shall be payable in one or more of the
alternative  forms  authorized  under the  Discretionary  Option Grant  Program.
Except to the extent the sale and remittance  procedure specified  thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

         C. Exercise and Term of the Options.

                  1. Each  option  granted  on or after  July 20,  1999 shall be
immediately  vested and exercisable  and not subject to any repurchase  right of
the  Corporation.  The term of each such option shall be ten (10) years from the
option grant date, subject to the provisions of Section I.D. below.

                  2.  Each   option   granted   before   July  20,   1999  shall
automatically  accelerate on July 20, 1999 so that at such time each such option
shall become fully vested and  exercisable for all of the shares of Common Stock
then subject to such option and may be exercised  for any or all of those shares
as  fully-vested  shares of Common Stock that are not subject to any  repurchase
right of the Corporation.

         D. Effect of  Termination of Board  Service.  The following  provisions
shall  govern the  exercise of any option  held by the  Optionee at the time the
Optionee ceases to serve as a Board member:

                  (i) The Optionee  (or, in the event of Optionee's  death,  the
         personal  representative  of the  Optionee's  estate  or the  person or
         persons to whom the option is  transferred  pursuant to the  Optionee's
         will or in  accordance  with the laws of the descent and  distribution)
         shall  have a  twelve  (12)-month  period  following  the  date of such
         cessation of Board service in which to exercise each such option.

                                      B-19
<PAGE>

                  (ii) During the twelve (12)-month  exercise period, the option
         may not be exercised in the  aggregate  for more than the number vested
         of shares of Common  Stock for which the option is  exercisable  at the
         time of the Optionee's cessation of Board service.

                  (iii) In no event shall the option  remain  exercisable  after
         the  expiration of the option term.  Upon the  expiration of the twelve
         (12)-month)  exercise period or (if earlier) upon the expiration of the
         option term, the option shall terminate and cease to be outstanding for
         any vested shares for which the option has not been exercised. However,
         the option shall,  immediately  upon the Optionee's  cessation of Board
         service,  terminate and cease to be outstanding to the extent it is not
         exercisable  for vested  shares on the date of such  cessation of Board
         service.

II.      CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKEOVER

         A. Corporate  Transactions.  Immediately  following the consummation of
any  Corporate  Transaction,  each  outstanding  automatic  option  grant  shall
terminate  and cease to be  outstanding,  except to the  extent  assumed  by the
successor corporation (or parent thereof).

         B. Changes in Control.  In connection with any Change in Control,  each
outstanding  option  shall remain  exercisable  until the  expiration  or sooner
termination of the option term or the surrender of the option in connection with
a Hostile Take-Over.

         C. Hostile Take-Overs.  Upon the occurrence of a Hostile Take-Over, the
Optionee  shall  have a thirty  (30)-day  period  in which to  surrender  to the
Corporation  each  automatic  option held by him or her for a period of at least
six (6) months.  The Optionee shall in return be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the surrendered option over
(ii)  the  aggregate   exercise  price  payable  for  such  shares.   Such  case
distribution  shall be paid within five (5) days  following the surrender of the
option to the Corporation. No approval or consent of the Board shall be required
in connection with such option surrender and cash distribution.

         D.  Corporation's  Rights.  The grant of  options  under the  Automatic
Option  Grant  Program  shall in no way affect the right of the  Corporation  to
adjust,  reclassify,  reorganize  or  otherwise  change its  capital or business
structure or to merge, consolidate,  dissolve, liquidate or sell or transfer all
or any part of its business or assets.

III.     AMENDMENT OF THE AUTOMATIC OPTION GRANT PROGRAM

         The  provisions of this Automatic  Option Grant Program,  together with
the option grants outstanding  thereunder,  may not be amended at intervals more
frequently than once every six (6) months, other than to the extent necessary to
comply with applicable Federal income tax laws and regulations.

IV.      REMAINING TERMS

         The remaining  terms of each option granted under the Automatic  Option
Grant  Program  shall be the same as the terms in effect for option  grants made
under the Discretionary Option Grant Program."

                                      B-20
<PAGE>

                                   APPENDIX C

                                      PROXY

                                   ACCOM, INC.

                  Annual Meeting of Stockholders, June 14, 2001

   This Proxy is solicited on behalf of the Board of Directors of Accom, Inc.

         The undersigned revokes all previous proxies,  acknowledges  receipt of
the Notice of the Annual Meeting of Stockholders to be held on June 14, 2001 and
the Proxy Statement and appoints Junaid Sheikh and Donald K. McCauley,  and each
of them, as the Proxy of the undersigned,  with full power of  substitution,  to
vote all  shares  of Common  Stock of  Accom,  Inc.  (the  "Company")  which the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
any entity or entities,  at the Annual Meeting of Stockholders of the Company to
be held at the Company's  facilities  located at 1490 O'Brien Drive, Menlo Park,
California  94025,  on  Thursday,  June  14,  2001 at  9:00  a.m.  (the  "Annual
Meeting"),  and at any adjournment or postponement  thereof, with the same force
and effect as the undersigned  might or could do if personally  present thereat.
The shares represented by this Proxy shall be voted in the following matter:

1.       To elect two Class 2 directors to each serve a three-year term.

         |_| FOR all the nominees listed below (except as indicated).

         |_| WITHHOLD authority to vote for all nominees listed below.

         If you wish to withhold authority to vote for any individual nominee,
         strike a line through that nominee's name in the list below:

                  THOMAS E. FANELLA
                  DAVID A. LAHAR

2.       To approve an increase by 2,000,000  (from  2,196,468 to  4,196,468) of
         the number of shares of Common Stock  reserved  for issuance  under the
         Company's 1995 Stock Option/Stock Issuance Plan.

                  |_|  FOR          |_|  AGAINST              |_|  ABSTAIN

3.       To ratify the appointment of Ernst & Young LLP as independent  auditors
         of the Company for the fiscal year 2001.

                  |_|  FOR          |_|  AGAINST              |_|  ABSTAIN

4.       To transact such other  business as may properly come before the Annual
         Meeting or any adjournment thereof.

                  |_|  FOR          |_|  AGAINST              |_|  ABSTAIN

The Board of Directors  recommends a vote FOR each of the directors listed above
and a vote FOR the other proposals.  This Proxy, when properly executed, will be
voted as  specified  above.  THIS  PROXY WILL BE VOTED FOR THE  ELECTION  OF THE
DIRECTORS LISTED ABOVE AND FOR THE OTHER PROPOSALS IF NO SPECIFICATION IS MADE.

                                            Please print the name(s) appearing
                                            on each share certificate(s) over
                                            which you have voting authority:


                                            ------------------------------------
                                              (Print name(s) on certificate)


                                            Please sign your name(s):

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

                                            ------------------------------------
                                                 (Authorized Signature(s))

                                            Date:
                                                 -------------------------------


                                      C-1
